ADF approves loan for economic recovery

The African Development Fund (ADF) has approved a loan of US $34.4 million to Madagascar for assisting humanitarian and economic recovery programmes, following the political crisis that crippled the island nation in 2002. The ADF announced on Wednesday that financing for the Fourth Structural Adjustment Programme in Madagascar was meant to "alleviate the effects of the post-electoral crisis of 2002 and create the necessary conditions for strong growth in order to reduce poverty". "It comprises on one hand an emergency component, including ... humanitarian programmes in favour of the most vulnerable people; the re-establishment of traffic on the major roads linking the capital to the provinces; support to the private sector for economic take-off; preservation of the campaign for the commercialisation of agricultural products, and on the other [hand] a short- and long-term development component, with the institution of microeconomic and good governance mechanisms," the ADF statement said. The Indian Ocean island was plunged into turmoil by the dispute between the current head of state, President Marc Ravalomanana, and former president Didier Ratsiraka, over the outcome of a December 2001 presidential election. In the nine months following the disputed elections, when the two leading figures controlled different parts of the country, Madagascar looked to be heading for civil war. As a result of the conflict, industry ground to a halt and an estimated 400,000 jobs were lost after the closure of factories across the island. Hit-and-run guerrilla style clashes between supporters of Ratsiraka and Ravalomanana, including the bombing of key bridges, left at least 70 dead and hundreds wounded during the crisis. The government now faces the task of rebuilding a shattered economy and sourcing funds to repair damaged infrastructure. According to the ADF, "the external funding needs of the Malagasy government for the period 2002-2004 are estimated at ... US $1.3 billion. These funding needs are covered to the tune of ... $1.2 billion, by disbursements in the form of direct investments, non-counterpart transfers and loan draw-downs [as well as] debt relief with the IMF [International Monetary Fund], the World Bank, the European Union, France and Mauritius". "The residual funding gap is estimated at ... US $41.3 million, of which the ADF loan [of US $34.4 million] will cover a large part," the institution noted.