From the Executive Board

• Pages: 13-14

Page 13

Beginning with this issue, the IMF Survey will publish excerpts of recent IMF press releases. The full texts are available on the IMF's web site (http://www.imf.org) under the heading NEWS or on request (fax only, please) from the IMF's Public Affairs Division (fax: (202) 623-6278).

MADAGASCAR: ESAF

The IMF approved a three-year loan for Madagascar under the enhanced structural adjustment facility (ESAF), for an amount equivalent to SDR 81.4 million (about $118 million), to support the government's economic reform program for 1996-99. The first annual loan, equivalent to SDR 27.1 million (about $39 million), is available in two equal semiannual installments.

Medium-Term Strategy and the 1996-97 Program

The government's medium-term objectives are to restore confidence to create the conditions for a sustained recovery of private investment and to seek a reduction in poverty. Economic growth is programmed to reach 4.5 percent by 1999 from 2 percent in 1996, while year-on-year inflation is expected to fall to 3 percent in 1999 from 10 percent in 1996.

Consistent with the medium-term framework, the program for 1996-97, which is supported by the first annual ESAF loan, aims to increase real GDP growth to 3 percent in 1997; reduce inflation to 7 percent by the end of 1997; and contain the external current account deficit (excluding official transfers) at 7.2 percent of GDP in 1997. To these ends, the government intends to reduce the overall fiscal balance (excluding grants) to 6.9 percent of GDP in 1997 from 8.5 percent in 1996.

Structural Reforms

Structural reforms under the program will seek to improve the business environment, divest public enterprises, strengthen tax and customs administration and reform the value-added tax, improve government operations, combat poverty by improving basic health and primary education facilities as well as public security, raise agricultural productivity, and complete the liberalization of the foreign exchange market. The government will also initiate a civil service reform aimed at attracting, training, and motivating skilled personnel.

Addressing Social Issues

The government's strategy to alleviate the pervasive poverty in Madagascar lies in improving the provision of...