The IMF Executive Board approves an additional $ 171.9 million disbursement under the RCF to Madagascar to help fight the COVID-19 pandemic
July 30, 2020
- This is the second disbursement under the Rapid Credit Facility (RCF), which increases the IMF’s total COVID-19 emergency aid to the Republic of Madagascar to $ 337.9 million.
- Madagascar’s macroeconomic outlook has been hurt by weaker foreign demand, the spread of the pandemic and significant revenue losses.
- The additional funding under the RCF will help meet urgent funding needs to mitigate the effects of the pandemic, including spending on health and social protection, and to support the most vulnerable and catalyze additional donor resources.
Washington, DC –
The board of directors of the International Monetary Fund (IMF) today approved the disbursement of $ 171.9 million (SDR 122.2 million, 50 percent of the quota) to the Republic of Madagascar under the Rapid Credit Facility (RCF). This is the second emergency payout since the pandemic began and will help fund the country’s urgent balance of payments and financial needs. This is followed by the approval of the Management Board for the payment of US $ 165.99 million on April 3, 2020 (see
IMF Press Release No. 20/133
This second payment was made possible both by the decision of the IMF Executive Board to double the annual access limit under the RCF to 100 percent of the quota (see IMF Policy Paper No. 20/018) and by the recent decision on a temporary change the Fund’s annual PRGT access limits (see
IMF Press Release No. 20/267
). This additional payout brings the IMF’s total COVID-19 support to Madagascar to $ 337.9 million.
Madagascar’s economic outlook has deteriorated since the first RCF application was approved due to a further deterioration in the global environment and an intensification of the effects of the COVID-19 pandemic, with GDP now expected to shrink by 1 percent in 2020 as a result of the Urgent balance of payments needs increased due to pandemic, with the funding gap now estimated at around $ 580 million, while budgetary positions have been severely impacted by additional lost revenue and the diversion of budget funds towards critical spending, including increased social spending to help the most vulnerable. The additional disbursement under the RCF will help fund health and economic aid spending under the government’s national contingency plan to fight the pandemic and continue to catalyze continued donor support. Authorities are committed to transparency and accountability to ensure that RCF resources are used appropriately and for their intended purpose.
Following the board discussion. Ms. Antoinette Sayeh, Deputy Managing Director and Acting Chairwoman, made the following statement:
“The COVID-19 pandemic continues to severely impact key sectors of Madagascar’s economy, including tourism and export-oriented manufacturing, and further weakens the macroeconomic outlook. Negative growth is forecast for 2020 and the urgent balance of payments needs due to the pandemic have increased. Additional emergency assistance under the Quick Loan Facility after a 3.
“Given a high level of uncertainty, more support may be needed to reduce the adjustment effort. The decision by the authorities to apply for the G-20 and Paris Club-supported debt suspension initiative and to use the released funds to fund spending on COVID-19-related health and economic aid is welcomed.
“The authorities are taking action to manage the humanitarian and economic impact of the pandemic while maintaining macroeconomic stability. These include strengthening the health system and social protection, supporting the private sector, maintaining the stability of the financial sector and maintaining the flexible exchange rate regime.
“To ensure that the funds made available are used efficiently to cope with the crisis, the authorities have committed to increasing transparency, including through the publication of procurement contracts related to the pandemic response and post-crisis audits.
“The risk of a sovereign debt crisis in Madagascar remains moderate, but the risks to the outlook are substantial. This underscores the importance of maintaining the sustainability of public finances after the crisis has subsided. The authorities remain determined, beyond their immediate response to the crisis, to pursue the reforms needed for higher, more inclusive and sustainable growth. ”
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