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Madagascar

Author(s):
International Monetary Fund
Published Date:
August 2000
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Madagascar: Basic Data
Area, population, and GDP per capita
Area: 582,000 square kilometers Population
Total: 14.6 million (1999)
Growth rate: 3.0 percent (1999)
GDP per capita: US$255.2 (1999)
19951996199719981999

Est.
National acounts(In billions of Malagasy francs)
GDP at current prices13,47916,22418,05120,34323,379
GDP at constant prices1,9311,9732,0462,1262,225
(Annual percentage change at 1984 prices)
GDP at market prices1.72.13.73.94.7
Primary sector (at factor cost)1.92.51.92.13.4
Secondary sector (at factor cost)1.82.04.75.34.2
Tertiary sector (at factor cost)1.52.14.75.15.5
(In percent of GDP)
Consumption96.493.796.395.495.0
Gross domestic investment10.911.611.912.512.9
Gross domestic savings3.66.33.74.65.0
Current account balance 1/-7.0-3.7-2.4-4.8-2.7
Price movements(Annual percentage change)
GDP deflator45.217.87.38.49.8
Consumer price index (traditional basket) 2/37.38.34.86.414.4
Government finance(In billions of Malagasy francs)
Current revenue and grants1,541.82,090.72,703.22,872.63,509.9
Current expenditure1,523.41,703.81,960.22,146.12,175.0
Capital expenditure850.41,179.61,176.91,673.11,615.9
Overall balance on a cash basis (deficit -)-786.8-790.0-573.3-1,048.5-213.4
Net domestic financing-38.0-15.0-119.0901.5246.4
Of which: domestic banks (net)-43.2-44.8-146.0741.2167.1
(In percent of GDP)
Overall deficit (commitment basis)
Excluding total grants-9.1-9.1-7.7-8.1-4.8
Overall balance on a cash basis (deficit -)-5.8-4.9-3.2-5.1-0.9
Money and credit(In billions of Malagasy francs)
Foreign assets (net)616.31,175.31,771.11,172.01,711.5
Domestic credit
Claims on the government (net)811.3784.5680.11,453.31,706.5
Claims on the economy1,563.71,599.41,814.11,828.21,955.4
Broad money2,717.33,209.73,846.24,169.14,972.5
(Annual percentage change)
Domestic credit
Claims on the Government (net)-3.1-3.3-13.392.68.1
Claims on the economy15.32.313.415.819.1
Broad money16.218.119.88.419.5
Balance of payments(In millions of SDRs, unless otherwise indicated)
Exports, f.o.b.344.6360.6366.7382.6434.8
Imports, f.o.b.414.0444.0495.6495.5550.2
Trade balance-69.4-83.4-128.8-112.9-115.4
Services (net)-193.4-171.6-157.3-168.0-139.4
Of which: interest payments due112.3112.975.867.239.8
Unrequited transfers (net)116.5151.7224.4147.4181.2
Private transfers (net)49.560.784.261.378.1
Public transfers (net) 3/67.091.0140.286.1103.1
Current account balance
In percent of GDP 4/-7.0-3.7-2.4-4.8-2.7
Capital account (net)-37.026.681.46.868.8
Of which: drawings54.960.0152.383.368.1
amortization-142.8-104.8-72.6-89.7-71.0
direct investment6.47.010.011.942.7
Overall balance-183.3-76.819.7-126.6-4.8
Debt relief and cancellation0.00.0803.038.040.8
IMF (net)-9.41.90.7-10.34.8
Arrears (reduction -)223.1169.3-783.212.03.1
Reserves (net) (increase -)-39.8-92.6-39.576.6-39.1
Gross official reserves 5/5.912.314.07.89.6
Outstanding external debt 6/2,887.33,082.92,858.32,828.92,948.6
Exchange rates (period averages)
Malagasy francs per SDR6,474.45,882.47,016.17,381.78,585.8
Malagasy francs per U.S. dollar4,265.64,061.35,090.95,441.46,283.8

Including official tranfers.

End of period.

Including project grants.

Including official transfers.

In weeks of imports of goods and services.

Provisional. After debt relief.

Including official tranfers.

End of period.

Including project grants.

Including official transfers.

In weeks of imports of goods and services.

Provisional. After debt relief.

I. Introduction

1. Madagascar is an island economy off the South-East coast of Africa. The population is estimated at 14.6 million of which 72 percent live in rural areas. With a GDP per capita estimated at US$255 in 1999, poverty affects some three-quarters of the population. Madagascar has abundant natural resources, including a rich and unique eco-system, a varied topography, climatic variation, great agricultural diversification and mineral wealth. It is, however, subject to the risks of regional hurricanes, drought, and locust infestation.

2. From the 1970s until to the first half of the 1980s, Madagascar pursued a development strategy based on economic nationalism and pervasive state control. These policies resulted in severe macroeconomic imbalances, declining output, and increased poverty (in the 1960s poverty is estimated to have affected only 45 percent of the population). From the second half of the eighties, Madagascar adopted more pragmatic policies in the context of a structural adjustment program based on disengagement of the state, fiscal and administrative reform, and economic and financial liberalization. Continued though halting progress has been accomplished. Between 1991 and 1993, political instability slowed economic reforms but in 1995-96 the stabilizing effects of the renewed policy came into evidence. In November 1996, the current Poverty Reduction and Growth Facility (PRGF) (former ESAF) program was approved by the Executive Board, and the World Bank approved the first and second Structural Adjustment Credits in 1997 and 1999, respectively. The following sections describe the progress made over the last three years.

II. Production, Income, and Prices

A. Production and Income

3. Real GDP growth has increased steadily since 1995 from an annual average of 1.9 percent during 1995-96 to 4.1 percent between 1997 and 1999 (Table 1 and Figure 1). As a result, several years of decline in real per capita income were reversed and per capita income rose by an average of 1 percent in Malagasy Franc terms per year during the period 1997-99. The tertiary sector was the major source of overall growth, its value added increasing at an annual average rate of 5 percent in the period 1997 to 1999. Transport services for passengers, including tourism and private services, were the largest contributors. The secondary sector, while accounting for only 12.5 percent of output, has also been growing rapidly. The primary sector, with slower growth and therefore a slowly declining share of real value added, grew by over 3 percent in 1999, as a result of a surge in forestry output, despite the effect of swine fever on livestock production.

Table 1.Madagascar: Selected Economic and Financial Indicators, 1995-99
19951996199719981999
(Annual percentage change, unless otherwise indicated)
National accounts and prices
Real GDP at market prices1.72.13.73.94.7
GDP deflator45.217.87.38.49.8
Traditional consumer price index
Average 2/49.019.84.56.29.9
End of period 2/37.38.34.86.414.4
Overall consumer price index (average) 3/48.520.05.47.89.7
Money and credit 4/5/
Net foreign assets, excl. long-term external liabilities10.420.618.6-15.612.2
Net domestic assets5.5-1.61.924.18.5
Of which: net domestic credit7.80.33.412.311.2
government-1.1-1.0-3.34.92.8
economy8.91.36.77.48.4
Broad money (M3)16.218.119.88.419.5
Velocity of money (GDP/end-of-period M3)5.05.14.74.94.7
External sector (in terms of SDRs)
Exports, f.o.b.10.34.61.74.313.6
Imports, c.i.f.8.77.211.60.011.0
Terms of trade (deterioration -) 6/-0.8-17.3-2.75.9-2.4
Nominal effective exchange rate 7/-6.7-4.2-8.8-6.9-4.5
Real effective exchange rate 7/24.31.2-6.0-1.95.9
(In percent of GDP)
National accounts
Gross domestic investment10.911.611.912.512.9
Private sector (including public enterprises)4.94.95.64.86.5
Public sector6.06.86.37.76.4
Gross national savings3.85.46.35.07.4
Private sector3.76.55.34.65.0
Public sector0.1-1.11.00.42.4
Central government financial operations
Total revenue8.58.79.710.611.4
Of which: tax revenue8.38.59.49.811.0
Total expenditure17.617.817.418.816.2
Interest obligations5.14.73.02.72.1
Noninterest current expenditures6.05.76.97.47.2
Capital expenditure 8/6.37.36.58.26.9
Primary balance 9/-1.1-0.20.6-1.90.9
Overall balance (commitment basis; excl. restructuring operations)
Excluding grants-9.1-9.1-7.7-8.1-4.8
Including grants-6.2-4.9-2.4-4.7-1.2
Overall balance (cash basis)-5.8-4.9-3.2-5.2-0.9
Net balance of structural reforms0.00.00.0-1.2-1.6
Total balance (cash basis; incl. restructuring operations)-5.8-4.9-3.2-6.3-2.5
(In percent of GDP)
External current account
Excluding official transfers10.2-7.1-7.8-7.9-6.5
Including current official transfers-6.2-5.6-7.5-5.5
Including current and capital transfers-7.0-3.7-2,4-4.8-2.7
External capital account-1.81.03.20.22.5
Public domestic debt 10/11.09.79.612.011.7
External debt (after debt relief) 11/ 13/88.591.1
(In percent of exports of goods and services)
Scheduled external debt service 11/
Before debt relief53.641.329.729.217.8
After debt relief 11/ 14/53.611.321.822.811.8
(In millions of SDRs, unless otherwise indicated)
Trade balance, f.o.b.-69.4-83.4-128.8-112.9-115.4
Overall balance of payments-183.3-76.819.7-126.6-4.8
Net official reserves-3.988.7128.251.690.7
Gross official reserves73.7167.6207.8120.9164.8
In weeks of imports of goods and nonfactor services5.912.314.07.89.6
External debt (after debt relief) 11/ 13/2.887.33,082,92,858.32,828.92,948.6
Exchange rates (period average)
Malagasy francs per SDR6,474.45,882.47,016.17,381.78,585.8
Malagasy francs per French franc855.0792.5874.3922.91,020.4
Nominal GDP at market prices (in billions of Malagasy francs)13,47916,22418,05120,34323,379
GDP per capita (U.S. dollars)238291251258255
Sources: Malagasy authorities; and Fund staff estimates and projections.

Based on the traditional household consumption basket.

Based on the overall consumption pattern, 75 percent of which is represented by the traditional basket and 25 percent by the modern consumption basket.

In percent of beginning-of-period stock of broad money.

The scenarios and estimates for 1998 and 1999 exclude the effect of asset restructuring at two state-owned banks. In 1999, the high rate of growth of credit to the economy in the program reflects the financing of the purchase of shares in public enterprises by resident investor. In the event, the amount of local share purchases estimated for 1999 is now very small because of delays and light participation of resident investors.

Based on 1993 trade weights.

Depreciation (-). Effective exchange rates have been revised to reflect base 1990=100.

Including foreign loans on-lent to public enterprises.

Overall balance, excluding interest obligations.

Excluding domestic arrears.

Reflects Paris Club flow rescheduling on Naples terms obtained for the period January 1997-July 2000 and assumes that agreements with all Paris Club creditors became effective in March 1997.

Total external debt here differs from estimates in Table 1 of the Staff Report, Selected Economic and Financial Indicators. The latter are based on the Debt Sustainability Analysis in EBS/99/116 of 7/8/99.

Actual cash debt-service payments in 1996; Madagascar had no rescheduling agreements in place in 1996. Actual debt service in 1999 was less than programmed because of a) savings on interest payments as a result of delays in concluding rescheduling agreements and b) overestimated interest on new loans.

Sources: Malagasy authorities; and Fund staff estimates and projections.

Based on the traditional household consumption basket.

Based on the overall consumption pattern, 75 percent of which is represented by the traditional basket and 25 percent by the modern consumption basket.

In percent of beginning-of-period stock of broad money.

The scenarios and estimates for 1998 and 1999 exclude the effect of asset restructuring at two state-owned banks. In 1999, the high rate of growth of credit to the economy in the program reflects the financing of the purchase of shares in public enterprises by resident investor. In the event, the amount of local share purchases estimated for 1999 is now very small because of delays and light participation of resident investors.

Based on 1993 trade weights.

Depreciation (-). Effective exchange rates have been revised to reflect base 1990=100.

Including foreign loans on-lent to public enterprises.

Overall balance, excluding interest obligations.

Excluding domestic arrears.

Reflects Paris Club flow rescheduling on Naples terms obtained for the period January 1997-July 2000 and assumes that agreements with all Paris Club creditors became effective in March 1997.

Total external debt here differs from estimates in Table 1 of the Staff Report, Selected Economic and Financial Indicators. The latter are based on the Debt Sustainability Analysis in EBS/99/116 of 7/8/99.

Actual cash debt-service payments in 1996; Madagascar had no rescheduling agreements in place in 1996. Actual debt service in 1999 was less than programmed because of a) savings on interest payments as a result of delays in concluding rescheduling agreements and b) overestimated interest on new loans.

Figure 1:Madagascar: Selected Economic and Financial Indicators, 1995-99

Source: IMF, African Department.

1/ In percent.

2/ Percentage change in consumer prices based on traditional price index (yearly average).

3/ In percent of beginning-of-period stock of broad money.

4/ In percentage of GDP.

5/ Excluding grants.

6/ Commitment basis.

4. Agriculture accounts for about 55 percent of current value added in the primary sector, while livestock and fisheries represent some 28 percent and forestry 18 percent (Table 2). Real growth in the primary sector fell from 2.5 percent in 1996 to 1.9 percent in 1997, driven by a decline in agriculture, as a result of bad weather. The 1997’s cyclone damage to coffee plantations in the north lowered production by 19 percent. However, the cotton crop, from the south, increased by 39 percent. In 1998, agricultural value added declined as a result of the effects of locust infestation on major food crops, including rice and corn. Any effects of the locusts on livestock were offset by increased investment in fisheries where shrimp producers restructured their operations in anticipation of the removal of an embargo by the European Union (EU). Swine fever reduced livestock value added in 1999 but very rapid growth in forestry boosted primary sector growth to over 3 percent.

Table 2.Madagascar: Growth and Structure of GDP, 1995-99
19951996199719981999
(Annual change in percent at 1984 prices)
Primary sector1.92.51.92.13.4
Agriculture2.51.6-1.65.3
Livestock and fishery1.80.64.5-2.7
Forestry5.57.68.317.5
Secondary sector1.82.04.75.34.2
Food, beverages, and tobacco9.62.48.94.2
Energy8.417.2-1.64.1
Free trade zone24.79.720.022.4
Other-12.20.71.30.4
Tertiary sector1.52.14.75.15.5
Transport5.48.54.54.4
Construction7.04.713.311.6
Retail and wholesale3.32.82.93.3
Government2.30.00.10.0
Other services-2.93.68.610.0
GDP at market prices1.72.13.73.94.7
Real GDP per capita0.4-0.80.70.91.6
GDP deflator45.217.87.38.49.8
(In percentage of current GDP at current market prices)
Primary sector30.529.629.228.127.2
Agriculture19.116.616.215.414.9
Livestock and fishery7.58.48.07.97.5
Forestry3.94.75.04.84.8
Secondary sector12.712.612.412.512.5
Food, beverages, and tobacco6.06.05.65.95.7
Energy1.21.31.41.31.4
Free trade zone0.91.51.81.82.0
Other4.73.93.73.63.4
Tertiary sector51.152.152.052.552.3
Transport18.217.317.918.017.3
Construction1.31.41.31.51.5
Retail and wholesale10.112.912.411.711.2
Government4.34.24.95.25.4
Other services17.316.415.516.216.9
Imputed charges-1.4-1.2-1.2-1.2-1.3
GDP at factor cost92.993.192.591.990.7
Indirect taxes7.16.97.58.19.3
Net imports of goods and nonfactor services7.35.38.27.97.9
Total available resources107.3105.3108.2107.9107.9
Consumption96.493.796.395.495.0
Gross investment10.911.611.912.512.9
Gross domestic savings3.66.33.74.65.0
Sources: Ministry of Finance and Economy; Ministry of Budget and Development of Autonomous Provinces; and Fund staff estimates.

Excluding public enterprises.

Sources: Ministry of Finance and Economy; Ministry of Budget and Development of Autonomous Provinces; and Fund staff estimates.

Excluding public enterprises.

5. Growth in the secondary sector is estimated to have increased from 1.9 percent on average in 1995-96 to 4.7 percent in the period 1997-99 largely because of the good performance of the beverages and tobacco industries. The food and beverage industry contributes about 6 percent to total value added, and represents about half of output in the secondary sector. The free trade zone, which is an important contributor to exports and a significant source of employment in the manufacturing sector, but represents just 2 percent of total current value added, but grew rapidly from 17 percent on average in 1996-97 to 21.2 percent on average in 1998-99.

6. The growth of the tertiary sector averaged 5.1 percent in 1997-99, up from 1.8 percent in 1995-96. Transport and services, excluding government administration, and the retail and wholesale trade are the most important contributors to current value added in this sector. While passenger transport is less than a quarter of value added in the transport sector, it recorded strong growth of on average 13.5 percent in 1998-99. This reflects an average expansion of 38.7 percent in tourist nights over this period. In line with the policy of reducing the government’s dominant role in the economy, growth in government services has been virtually zero between 1997 and 1999. Rising incomes and the expansion of capacity in the tourism industry have contributed to the growth rates of over 10 percent in the construction industry in 1998 and 1999.

B. Domestic Demand

7. Domestic savings increased from 3.6 percent of GDP in 1997 to 5 percent in 1999, as public savings were raised from -1.2 percent of GDP in 1997 to 1.8 percent in 1999 while private savings were broadly stable. Over the same period, overall investment rose by 1 percentage point of GDP to 12.9 percent in 1999, with public investment (excluding public enterprises) rising by 0.1 percentage points to 6.4 percent of GDP in 1999. Private investment shows a broadly positive trend, rising from 5.6 percent to 6.5 percent of GDP between 1997 and 1999. The most dynamic sectors have been the export-processing zone, fisheries, and tourism.

C. Prices

8. In 1997, the average rate of inflation, as measured by the traditional consumer price index, declined to 4.5 percent from 19.8 percent in 1996. This decline is attributable to tight financial policies implemented by the government in the framework of the PRGF-supported program. Consumer inflation rose modestly in 1998, to reach 6.4 percent in the 12-month period to December; the rise was much more marked in 1999 as inflation reached 14.4 percent on an end-year basis as a result of faster money growth and shortages in key food items because of an epidemic that decimated the pig herd.

III. Fiscal Developments

A. Overall Fiscal Developments

9. Reflecting progress made in the context of the Fund-supported program adopted in late 1996, the financial situation improved between 1997 and 1999. The primary balance1 (which excludes foreign-financed investment expenditure) improved slightly from a deficit of 0.2 percent of GDP to a surplus of almost 1 percent of GDP at end-December 1999 (Tables 3 and 4). The fiscal deficit on a commitment basis, excluding grants, was cut almost in half, reaching 4.8 percent at end-December 1999, down from 9.1 percent of GDP in 1997. Similarly, the total overall fiscal balance on a cash basis narrowed by 0.7 percentage points of GDP, down from 3.2 percent of GDP in 1997. On the financing side, after repaying domestic bank credit of FMG 119 billion (equivalent to 0.7 percent of GDP) in 1997, borrowing from domestic banks increased to FMG 902 billion (4.4 percent of GDP) in 1998, but declined again to FMG 246 billion (1.1 percent of GDP) in 1999.

Table 3.Madagascar: Central Government Accounts, 1995-99(In billions of Malagasy francs)
19951996199719981999
Total revenue and grants1,5422,0912,7032,8733,510
Total revenue1,1501,4071,7472,1652,667
Budgetary revenue1,1491,4051,7472,0772.667
Of which: tax revenue1,1211,3741,6881,9842,580
Capital revenue 2/13000
Grants392683956708842
Current grants3111637860172
Project grants362567579648671
Total expenditure2,3742,8833,1373,8193,791
Current expenditure1,5231,7041,9602,1462,175
Budgetary expenditure1,4981,6791,8022,0522,172
Personnel4445236708261,001
Other noninterest expenditure366397583672679
Foreign interest obligations624629504467325
Domestic interest obligations641314587168
Treasury operations 1/2525120943
Emergency expenditure 2/3/003900
Capital expenditure8501,1801,1771,6731,616
Domestic financing197284275466430
Foreign financing6548959021,2081,186
Of which: reconstruction
Overall balance (commitment basis)
Including grants-832-793-434-947-281
Excluding grants-1,224-1,476-1,390-1,654-1,123
Changes in domestic arrears 2/453-139-10268
Overall balance (cash basis)-787-790-573-1,048-213
Net cost of structural reforms 4/000-237-370
Exceptional revenue000046
Cost of structural reforms000237415
Total overall balance (cash basis)-787-790-573-1,285-583
Financing7877905731,285583
Foreign (net)825805692379285
Drawings2993291,029672516
Amortization due-795-604-509-662-608
Change in external arrears1,3201,080-5,4608928
External debt relief005,632281349
Financing gap00000
Domestic (net)-38-15-119902246
Banking system-43-15-146741167
Nonbanking system5302716079
Divestment revenue000452
Sources: Ministry of Finance and Economy; Ministry of Budget and Development of Autonomous Provinces; and Fund staff estimates.

Beginning in 1999, treasury revenue is classified as a negative outlay in treasury expenditures, which from then on are reported on a net basis.

Expenditures projected under the revised program for 1997 include contingent once-and-for-all outlays of FMG 9 billion and an additional FMG 13 bi repayment of arrears, as specified in page 12, paragraph 24, footnote 11 of EBS/97/159.

For 2000 the government budgetized FMG 69 billion to address exceptional developments related to the resurgence of a cholera epidemic and the devastating effects of recent cyclones.

The net cost of structural reforms comprise (i) as receipts, loan recovery by the debt-recovery unit that holds the nonperforming loans of the two (form public banks (BFV and BTM) after their assets have been financially restructured; and (ii) as expenditures, those related to civil service reform (i.e. traini and wage decompression); to the upgrading of pay and equipment in the justice services; to privatization (severance pay, administrative costs, transfers to regional development fund that provides grants and concessional loans for basic social infrastructure purposes or to employees affected by privatization, and indemnization payments to formerly expropriated owners); and to the capital transfers for the asset restructuring at the two insolvent banks (BFV anc

Sources: Ministry of Finance and Economy; Ministry of Budget and Development of Autonomous Provinces; and Fund staff estimates.

Beginning in 1999, treasury revenue is classified as a negative outlay in treasury expenditures, which from then on are reported on a net basis.

Expenditures projected under the revised program for 1997 include contingent once-and-for-all outlays of FMG 9 billion and an additional FMG 13 bi repayment of arrears, as specified in page 12, paragraph 24, footnote 11 of EBS/97/159.

For 2000 the government budgetized FMG 69 billion to address exceptional developments related to the resurgence of a cholera epidemic and the devastating effects of recent cyclones.

The net cost of structural reforms comprise (i) as receipts, loan recovery by the debt-recovery unit that holds the nonperforming loans of the two (form public banks (BFV and BTM) after their assets have been financially restructured; and (ii) as expenditures, those related to civil service reform (i.e. traini and wage decompression); to the upgrading of pay and equipment in the justice services; to privatization (severance pay, administrative costs, transfers to regional development fund that provides grants and concessional loans for basic social infrastructure purposes or to employees affected by privatization, and indemnization payments to formerly expropriated owners); and to the capital transfers for the asset restructuring at the two insolvent banks (BFV anc

Table 4.Madagascar: Fiscal Indicators, 1995-99(In percent of GDP, unless otherwise indicated)
19951996199719981999
Total revenue and grants11.412.915.014.115.0
Total revenue8.58.79.710.611.4
Of which: tax revenue8.38.59.49.811.0
Grants2.94.25.33.53.6
Current grants0.20.72.10.30.7
Project grants2.73.53.23.22.9
Total expenditures17.617.817.418.816.4
Current expenditure11.310.510.910.59.5
Noninterest expenditure6.05.76.97.47.2
Personnel3.33.23.74.14.3
Other noninterest expenditure2.72.43.23.32.9
Interest obligations5.14.73.02.72.1
Treasury operations 1/0.20.20.70.50.2
Emergency expenditure 2/3/0.00.00.20.00.0
Capital expenditure6.37.36.58.26.9
Primary balance-1.1-0.20.6-1.90.9
Overall balance (commitment basis)
Including grants-6.2-4.9-2.4-4.7-1.2
Excluding grants-9.1-9.1-7.7-8.1-4.8
Changes in domestic arrears 2/0.30.0-0.8-0.50.3
Overall balance (cash basis)-5.8-4.9-3.2-5.2-0.9
Net cost of structural reforms 4/0.00.00.0-1.2-1.6
Exceptional revenue0.00.00.00.00.2
Cost of structural reforms0.00.00.01.21.8
Total overall balance (cash basis)-5.8-4.9-3.2-6.3-2.5
Financing5.84.93.26.32.5
Foreign (net)6.15.03.81.91.2
Drawings minus amortization-3.7-1.72.90.1-0.4
Change in external arrears9.86.7-30.20.40.1
External debt relief0.00.031.21.41.5
Financing gap0.00.00.00.00.0
Domestic (net)-0.3-0.1-0.74.41.1
Divestment revenue0.00.00.00.00.2
Memorandum items:
Education expenditure1.91.61.62.02.0
Health expenditure1.00.81.01.41.4
Nominal GDP (in billions of Malagasy francs)13,47916,22418,05120,34323,379
Sources: Ministry of Finance and Economy; Ministry of Budget and Development of Autonomous Provinces; and Fund staff estimates.

Beginning in 1999, treasury revenue is classified as a negative outlay in treasury expenditures, which from then on are reported on a net basis.

Expenditures projected under the revised program for 1997 include contingent once-and-for-all outlays of FMG 9 billion and an additional FMG 13 billion of repayment of arrears, as specified in page 12, paragraph 24, footnote 11 of EBS/97/159.

For 2000 the government budgetized FMG 69 billion to address exceptional developments related to the resurgence of a cholera epidemic and the devastating effects of recent cyclones.

The net cost of structural informs comprise (i) as receipt, loan recovery by the debt-recovery unit that holds the nonperforming loans of the two (former) public banks (BFV and BTM) after their assets have been financially restructured; and (ii) as expenditures, those related to civil service reform (i.e. training, be and wage decompression); to the upgrading of pay and equipment in the justice services; to privatization (severance pay. administrative regional development fund that provides grants and concessional loans for basic social infrastructure purposes or to employees affected by privatization and indemnization payments to formerly expropriated owners); and to the capital transfers for the asset restructuring at the two insolvent banks (BFV and BTM

Sources: Ministry of Finance and Economy; Ministry of Budget and Development of Autonomous Provinces; and Fund staff estimates.

Beginning in 1999, treasury revenue is classified as a negative outlay in treasury expenditures, which from then on are reported on a net basis.

Expenditures projected under the revised program for 1997 include contingent once-and-for-all outlays of FMG 9 billion and an additional FMG 13 billion of repayment of arrears, as specified in page 12, paragraph 24, footnote 11 of EBS/97/159.

For 2000 the government budgetized FMG 69 billion to address exceptional developments related to the resurgence of a cholera epidemic and the devastating effects of recent cyclones.

The net cost of structural informs comprise (i) as receipt, loan recovery by the debt-recovery unit that holds the nonperforming loans of the two (former) public banks (BFV and BTM) after their assets have been financially restructured; and (ii) as expenditures, those related to civil service reform (i.e. training, be and wage decompression); to the upgrading of pay and equipment in the justice services; to privatization (severance pay. administrative regional development fund that provides grants and concessional loans for basic social infrastructure purposes or to employees affected by privatization and indemnization payments to formerly expropriated owners); and to the capital transfers for the asset restructuring at the two insolvent banks (BFV and BTM

10. The reduction in the primary deficit over the period 1997-99 reflected an increase in government revenue, but also a reduction in current expenditure. Total revenue (excluding grants) increased from 9.7 percent of GDP in 1997 to 10.6 percent in 1998 and 11.4 percent in 1999. Income taxes rose by 20 percent during the period 1997-99 on account of renewed economic growth and improved collection efforts from the authorities. Taxes on goods and services rose from 2 percent of GDP in 1997 to 2.8 percent in 1999, mainly as a result of higher revenue from the value-added tax (VAT) on local goods. The revenue from international trade reached 6.3 percent of GDP in 1999, up from 5.2 percent in 1997, attributable essentially to increased revenue from the VAT on imported goods.

B. Expenditure Developments

11. In the expenditure area, overall expenditure (including the net cost of structural reforms) remained broadly stable at about 17.8 percent of GDP during the period 1997-99, reaching 17.4 percent of GDP in 1997, surging to 19.9 percent in 1998, and then declining again to 17.8 percent in 1999. Current expenditure fell from 10.9 percent of GDP in 1997 to 9.9 percent in 1999, mainly on account of restraint on nonwage outlays and lower interest payments. To contain the growth of the wage bill, the authorities are working on civil service reform; the first step being the introduction in 2000 of a system of bonus payments based on performance. At the same time, capital expenditure rose modestly from 6.5 percent of GDP in 1997 to 6.9 percent in 1999, after reaching 8.2 percent in 1998.

12. As a result of the priority given to the social sectors, more resources are devoted to education and health. Total spending on health and education increased by almost 1 percentage point of GDP, from 2.6 percent in 1997 to 3.4 percent in 1999 (see Box 1). With respect to capital expenditure, the increase was more modest, as they rose from 0.6 percent of GDP in 1997 to 0.8 percent in 1999. Meanwhile, a mechanism is being put in place to ensure that budgeted resources are effectively provided to targeted groups in the local communities. At the same time, the number of teachers has increased by 3,000 in 1999. Despite these recent efforts, health and education’s basic requirements are not met, and poverty is still widespread. In the face of such daunting challenges, the authorities are developing a national poverty reduction strategy, with the participation of local and foreign nongovernmental organizations (NGOs), civil society, and bilateral and multilateral donors and creditors.

Box 1.Government Spending on Social Sectors, 1995-99

19951996199719981999
(In billions of Malagasy francs)
Education
Current172.1173.7196.2293.9319.3
Capital84.085.992.6113.0148.3
Total256.1259.6288.8406.9467.6
Health
Current68.620.7118.8166.3153.7
Capital66.2109.161.7118.5173.6
Total134.8129.8180.5284.8327.3
(As a percentage of GDP)
Education1.91.61.62.02.0
Health1.00.81.01.41.4

13. Public investment rose from the equivalent of 6.5 percent of GDP in 1997 to 8.2 percent in 1998, and 6.9 percent in 1999 (Table 4). Although investment remains largely funded by foreign resources, the share of domestic financing increased to 1.8 percent of GDP in 1999, up from 1.5 percent in 1997, and 2.3 percent in 1998. With regards to foreign financing of investment, the share of grants declined from 3.2 percent of GDP in 1997 to 2.9 percent in 1999. At the same time, external borrowing rose from 1.8 percent of GDP to 2.1 percent in 1999. The rise in investment over the period 1997-99 reflects the growing allocation of resources to the health, education, and infrastructure sectors.

14. The rise in public capital spending in health, education, and infrastructure was made possible by the significant lowering of the external debt service after 1997. External debt service declined from 58 percent of government revenue in 1997 to 35 percent in 1999. This reduction reflects a decline of the scheduled debt service due following the March 1997 debt relief granted by the Paris Club. In particular, Madagascar benefited from a flow rescheduling of maturities consisting of a 67 percent reduction in the net present value of eligible debt falling due in the period January 1, 1997 to November 30, 1999 (in 1999, the rescheduling was extended to cover the period December 1, 1999 to July 31, 2000).

15. During 1997 and 1998, FMG 241 billion of domestic arrears was repaid. In 1997, in connection with the March 1997 rescheduling agreement concluded with the Paris Club, FMG 5,460 billion of external arrears were cleared. In 1999, there was a modest accumulation of new domestic and external arrears (FMG 68 billion and FMG 28 billion, respectively). The domestic arrears represent mainly the float between expenditure committed and paid, while the external arrears reflect the delay in concluding bilateral agreements with non Paris Club creditors.

16. Expenditure for structural reforms rose from 1.2 percent of GDP in 1998 to 1.8 percent in 1999. It includes funding for civil service reform, privatization, bank restructuring, and indemnizations for past expropriations.

C. Tax and Budgetary Reform

17. To improve fiscal management, important measures were introduced in recent years with a view to simplifying the tax system and extending the tax base, improving tax and customs administration, and tightening expenditure management. The VAT base was extended and exemptions for imported goods removed by June 1999, and the incentives granted under the Investment Code (abrogated in 1996) are now in part integrated in the tax code, with the provision that they will not be renewed as they expire. With respect to expenditure management, measures were taken to tighten the expenditure process and improve monitoring, including social outlays. A new classification harmonizing budgetary and treasury accounts was introduced effectively in June 1999, on the basis of which the 2000 budget was elaborated. Regarding customs administration, the computerization system was upgraded in 1998-99. Finally, additional staff resources were allocated to the revenue department.

18. In line with the tax reform under the COMESA regional agreement, the custom tariff structure was rationalized in 1999 and now includes only the rate bands of 5, 15, 25, and 30 percent. The fourth rate band will be maintained for an interim period, during which most goods will be reclassified into lower categories. In January 2000, the preferential rate for Mauritius and the Comoros was raised to 100 percent, up from 80 percent.

IV. Monetary Developments and Structure of the Financial Sector

A. Structure of the Banking System

19. There are currently six banks operating in Madagascar; a seventh entity, the Banque de Solidarité Malgache (BSM), has recently applied for a banking license. There are also two nonbank financial institutions—Investco and the recently licensed Equipbail2—a number of mutually owned financial institutions, mainly in the micro-finance sector, a national savings bank, and a postal checking system. The deposits of the latter two institutions are included in the monetary survey. All the six currently operating banks are subsidiaries of foreign banks:3 BNI/CLM, BFV/SG, BTM-BOA, BMOI, UCB, and SBM are subsidiaries of Crédit Lyonnais, Société Générale, African Financial Holdings-Bank of Africa (AFH-BOA), Banque Nationale de Paris, Mauritius Commercial Bank, and the State Bank of Mauritius, respectively. The first three, formerly publicly owned banks, are now privatized; the BFV and the BTM were restructured and privatized over the last 18 months (see Box 2).

B. Monetary Policy

20. The Central Bank of Madagascar (BCM) is responsible for the implementation of monetary policy. Established in the context of the new Banking Law, which went into force in 1996, the Commission on Banking and Financial Supervision (CSBF) has been responsible for supervising and regulating all financial services in Madagascar (with the exception of the insurance sector, which is still regulated by the Ministry of Finance and Economy). The two main instruments of monetary policy are a required reserve ratio and a treasury-bill auction system, both of which influence the liquidity of the banking system; the latter is becoming increasingly the main determinant of interest rates in the economy, especially for the shorter maturities. In addition, the BCM uses its discount rate to signal changes in its monetary policy stance. From November 1996 to April 1999, the required reserve ratio was set at 20 percent of all bank deposits, with reserves held either as cash or as unremunerated current account deposits at the central bank.4 In April 1999, a distinction was introduced between sight deposits, on which the reserve ratio was raised to 23 percent, and term deposits, on which the reserve ratio was lowered to 5 percent. While providing an incentive to banks to actively seek out term deposits, by reducing the cost of intermediation, the new reserve ratios released some additional liquidity to the banks. When it became clear, later in the year, that monetary policy was too loose (see below), the central bank raised the ratio on sight deposits to 25 percent in August 1999. The treasury-bill auction system in its present form dates from May 1997 when a fortnightly system of auctions of 4-, 12-, and 24-week bills was launched. While the primary market has grown rapidly and has been opened to an increasingly wide-range of qualified bidders, through a lowering of minimum bids, prices were considerably higher, thus giving a much lower return to buyers, compared with those in the primary market.5

21. From a system of administered interest rates, Madagascar is moving rapidly to a system of market-determined rates. While the central bank fixes a base rate (taux directeur (TD)—currently 15 percent), since August 1999, its rediscount rate is fixed as the average bid rate on 12-and 24-week bills at the previous treasury-bill auction, plus a margin—currently 50 basis points—which can be adjusted by the central bank as a signal to markets on tightening or loosening of monetary conditions.6 This discount rate is also applied to the central bank’s statutory advances to the Treasury.7

C. Monetary Developments

22. As inflation was squeezed out of the economy, interest rates on treasury bills declined rapidly from their very high levels of 1996, and bottomed out in early 1998; the average bid at auction on all maturities of treasury bills dropped from over 35 percent in the first quarter of 1996 to just under 6 percent in the first quarter of 1998 (Figures 2 and 3). In 1998 and 1999, treasury-bill rates moved up again reaching just over 17 percent in August 1999. This resulted in part from the significant tightening of monetary policy by the authorities to counter accelerating inflation; the central bank’s base rate (TD) was increased from 10 percent to 12 percent in April and again to 15 percent in August. The commercial banks’ excess reserves also declined significantly in the course of 1999, from 21.9 percent of required reserves in February to 2.2 percent in November 1999, though they jumped again sharply at the end of the year as seasonal crop credits were repaid, to 21 percent in December and 22.9 percent in January 2000 (Figure 4).

Figure 2.Madagascar: Interest Rates, 1995-99

(in percent per annum)

Figure 3.Madagascar: Commercial Banks’ Interest Rates and Inflation, 1995-99

(in percent per annum)

1/ End of period rate of change.

2/ Weighted average.

Figure 4.Madagascar: Bank Liquidity, 1995-99

(in percent of required reserves)

23. The interest rates charged by the banks, and paid on deposits, have generally tracked the same pattern as treasury-bill rates, falling through mid-1998 before subsequently firming again in 1999.8 Nevertheless, with the return of higher inflation in the course of 1999, interest rates paid by the banks on term deposits have again turned negative in real terms. The banking intermediation margin remains very high in Madagascar due to limited competition among banks and to risk factors; and this is reflected in the profitability of the banks. Net bank earnings increased by 12 percent in 1998 and are set to increase even faster in 1999. With the reduction in the need to make provisions for nonperforming portfolios, as the balance sheets of the two public banks were cleaned up, net bank profits, after tax, more than doubled to FMG 103 billion in 1998 and had already reached a similar level in the first nine months of 1999. It should be noted that transactions in foreign exchange are also a very important profit center for the Malagasy banks.

24. In 1998, the growth of broad money slowed dramatically to 8.4 percent, compared with an average yearly increase of 19 percent in 1996-97, as the net foreign assets of the banking system declined by the equivalent of 15.6 percent of beginning broad money (Tables 5 and 6). Further pressure on the net foreign assets resulted from rapid growth in claims on the economy, up by 15.8 percent, excluding the impact of bank restructuring, and a massive increase in net credit to government, which nearly doubled, even before taking account of the issue of special treasury bills resulting from the restructuring and privatization of the BFV. The weakness in the public finances and the balance of payments in 1998 reflected the slowdown in capital inflows resulting from the interruption in the Fund- supported PRGF program after the first annual program was completed and the delay in agreeing on a second annual program.

Table 5.Madagascar: Monetary Survey, 1995-99(In billions of Malagasy francs; end of period)
19951996199719981999
DecemberMar.Jun.Sep.DecemberMar.Jun.Sep.December
BeforeAfterBeforeAfter
BFV RestructuringBTM Restructuring
Net foreign assets616.31,175.31,771.11,716.31,632.41,431.11,172.01,172.01,303.11,323.11,390.51,681.31,711.5
Central bank (net)111.1713.41,105.31,092.21,001.9850.0596.1596.1762.4773.4784.61,055.31,055.3
Commercial banks (net)505.2461.9665.8624.0630.5581.2576.0576.0540.6549.6605.9626.0656.2
Long-term foreign liabilities-162.7-186.4-206.8-208.0-201.1-203.9-211.2-211.2-217.5-239.3-239.7-261.0-261.0
Net domestic assets2,263.72,220.82,281.92,243.72,386.22,743.53,208.23,208.23,031.53,160.23,328.23,563.23,522.0
Net credit to government811.3784.5680.1763.4800.8920.51,309.81,453,31,469.01,550.71,545.61,570.61,706.5
Central bank725.8687.4387.7406.3479.1654.61,031.11,031.1886.91,049.41,097.31,220.61,220.6
Commercial banks49.343.0196.6259.8206.5148.1150.9294.4450.6371.8317.7204.1340.0
Other36.154.295.897.4115.2117.8127.8127.8131.5129.5130.6145.8145.8
Credit to the economy1,563.71,599.41,814.11,751.51,834.42,070.02,100.31,828.21,792.61,904.12,038.02,177.51,955.4
Central bank12.614.115.115.115.315.415.915.915.415.415.815.815.8
Commercial banks1,540,81,572.01,797.61,727.21,813.92,045.42,083.91,811.81,769.51,886.32,022.12,159.61,937.5
Other10.313.31.49.25.39.20.50.57.72.40.12.12.1
Other items (net)-111.2-163.1-212.3-271.2-249.0-247.0-201.8-73.2-230.1-294.5-255.4-184.9-139.9
Valuation adjustments, losses (+)356.0362.5240.3213.7213.0248.5225.7225.7137.728.192.465.965.9
Other-467.3-525.6-452.7-484.9-462.0-495.5-427.6-299.0-367.8-322.7-347.9-250.8-205.8
Broad money (M3)2,717.33,209.73,846.23,751.93,817.63,970.74,169.14,169.14,117.14,244.04,479.04,983.54,972.5
Currency758.7831.21,025.6974.61,005.81,117.11,168.21,168.21,101.71,179.91,292.81,434.91,434.9
Demand deposits1,083.61,349.51,658.61,619.71,727.21,725.81,801.21,801.21,850.61,870.21,929.92,156.02,145.0
Quasi money875.01,029.01,161.91,157.61,084.61,127,81,199.71,199.71,164.81,193.91,256.41,392.61,392.6
Of which:
Residents’ deposits in foreign currency284.6285.1441.9434.7465.0446.7474.7474.7445.0534.2538.3614.5614.5
Short-term bonds59.495.570.498.3104.4135.2129.8129.8137.9145.6158.7151.8151.8
Source: Central Bank of Madagascar.
Source: Central Bank of Madagascar.
Table 6.Madagascar: Summary Accounts of the Central Bank, 1995-99(In billions of Malagasy francs; end of period)
19951996199719991998
DecemberMar.Jun.Sep.Dec.Mar.Jun.Sep.Dec.
Net foreign assets111.1713.41,105.31,092,21,001.9850.0596.1762.4773.4784.61,055.3
Foreign assets375.01,043.41,492.71,477.71,353.11,184.6926.61,101.11,120,91,232.51,486.9
Foreign liabilities (short term)-15.3-14.2-18.8-14.0-14.7-9.7-16.9-11.4-22.5-18.6-20.1
Poverty Reduction and Growth Facility-248.6-315.8-368.6-371.4-336.5-324.9-313.6-327.3-324.9-429.3-411.5
Long-term foreign liabilities-136.6-161.5-173.5-175.6-175.7-179.2-186.1-191.1-204.6-199.2-190.8
Net domestic assets1,167.01,022.9768.3732.6831.71,121.31,446,61,187.31,246.41,395,31,479.7
Claims on government (net)725.8687.4387.7406.3479.1654.61,031.1886.91,049.41,097.31,220.6
Credit to government1,278.61,294.91,253.81,154.31,179,01,510.41,689.31,681.11,702.91,746.31,857.4
Statutory advances112.3162.2143.753.743.160.4107.987.936.2113.2197.3
Consolidated loans1,099.61,099.61,099.61,099.61,099.61,099.61,099.61,099.61,099.61,099.61,099.6
Foreign currency loan0.00.00.00.00.0266.0441.0493.6550.9520.6544.9
Treasury bills0.00.00.00.031.582.231.90.08.80.00.0
Other66.733.010.51.04.72.29.00.07.412.915.5
Government deposits552.8607.5866.1748.1699.9855.7658.2794.2653.5649.0636.7
Of which: counterpart funds238.8269.6392.8361.5352.8318.2298.8311.1314.5316.4307.5
foreign currency deposits154.277.3155.5126.039.5297.156.7110.029.9111.9100.7
Claims on the economy12.614.115.115.115.315.415.915.415.415.815.8
Net claims on banks150.1-24.257.341.156.5112.1102.7101.792.582.675.1
Claims on banks175.1127.5107.3116.1104.5112.1102.7101.792.582.675.1
Reverse auction-25.0-151.7-50.0-75.0-48.00.00.00.00.00.00.0
Other items (net)278.5345.6308.2270.0280.9339.1296.9183.389.1199.6168.1
Valuation adjustments, losses (+)345.8355.6248.7215.9215.3251.8226.0140.931.396.475.7
Operating losses (+)-2.616.947.0-2.73.7-1.28.58.03.318.3-4.1
Other-64.7-26.912.456.861.988.462.434.454.584.996.5
Reserve money1,133.91,573.31,697.11,646.31,637.31,783.51,847.01,742.81,806.91,946.32,322.0
Currency outside banks758.7831.21,025.6974.61,005,81,117.11,168.21,101.71,179.91,292.81,434.9
Currency in banks26.529.526.325.938.430.536.837.958.148.977.4
Bank deposits348.7712.6645.3645.8593.1635.8642.0603.2568.9604.7809.7
Other demand deposits0.00.00.00.911.73.96.215.78.134.316.9
Other term deposits0.00.00.00.02.00.00.00.00.00.00.0
Residents’ deposits in foreign currency7.51.53.02.06.94.73.50.30.10.15.2
Source: Central Bank of Madagascar.
Source: Central Bank of Madagascar.

25. In 1999, the demand for money accelerated once again and broad money increased by 19.5 percent (excluding the effect of the restructuring of the BTM), more than double the programmed rate of 8.7 percent. The measures taken to tighten monetary policy in August 1999 have not yet had a noticeable effect on the growth of money supply at end-December. As the needs of the Treasury fell sharply in 1999 to the equivalent of 2.8 percent of beginning-of-period broad money stock (compared with 4.9 percent in 1998), the banking system was able to increase its net foreign assets by the equivalent of 12.2 percent of beginning broad money (compared with a loss of 15.6 in 1998), and still increase credit to the private sector by 19 percent (compared with 15.8 percent in 1998); all these figures exclude the impact of bank restructuring.

26. In both 1998 and 1999, most of the Treasury’s need for bank financing was met by the central bank. As the Treasury’s recourse to statutory advances from the central bank in domestic currency is legally limited to 15 percent of the previous year’s budgetary revenue,9 the Treasury started borrowing foreign exchange from the central bank in the third quarter of 1998 in order to service its external debt obligations. While these transactions are executed in dollars, and the interest rate is keyed to the U.S. Federal Government’s overnight rate, the debt is actually denominated in SDRs. The Treasury’s exchange risk in this operation is offset in a small part by some treasury deposits, which are held at the central bank in foreign currency. Under current legislation, the central bank is not permitted to bid on its own account in the primary treasury-bill auctions. Thus, the smallholdings shown in the data in 1998 and in June 1999 reflect rediscounts or other secondary market transactions.

Box 2.Restructuring of the Privatized Banks, BFV and BTM

One of the most important elements of the authorities efforts to reform and strengthen Madagascar’s financial sector over the past two years has been the restructuring and privatization of the two remaining publicly owned banks, the BFV (Bank Fampandrosoana ny Varotra, or National Bank of Commerce) and the BTM (Bankin’ny Tantsaha Mpamokatra, or Bank for Rural Development).10 While, in both cases, the end result was the same, namely, transfer of the sound assets of both businesses into the hands of solvent banks with majority foreign ownership and strong management drawn from major international banking groups, the route to such an end differed significantly. In the case of the BFV, the existing bank was restructured and recapitalized, with a majority shareholding (70 percent) of the going concern then being sold to the Société Générate Group of France at the end of 1998. In the case of the BTM, the chosen foreign partner (the AFH/Bank of Africa Group, with participation of the IFC and the Dutch FMO) first set up a new locally licensed bank in Madagascar in the fourth quarter of 1999, which then bought the sound elements of BTM’s balance sheet from the government for cash and a 15 percent shareholding in the new bank. Because both the new banks are majority foreign owned and thus, under Malagasy law, cannot own real estate in Madagascar, the property holdings of the old banks were leased to the new banks.

Although the subject of earlier restructurings and reorganizations at the end of the 1980s, both banks experienced continuing financial and managerial difficulties in the 1990s, accumulating significant portfolios of nonperforming loans, having difficulty in maintaining the required level of reserves at the Central Bank, and both becoming effectively insolvent. Both banks were then put under receivership while audits were carried out and a search conducted by consultants for suitable purchasers. This process received significant technical assistance from the World Bank. While the original intention had been to conduct an open bidding process for the banks, in the end, a lack of interest led to both sales being negotiated with a single qualified buyer.

The nonperforming loans of both banks were transferred to debt recovery units (Société Financière de Realisation—SOFIRE, in the case of the BFV, and Société Générale de Recouvrement—SGR, in the case of BTM); amounts recovered by these companies will be paid to the Treasury to offset, in part, the cost of the special treasury bills issued to fill the resulting gaps in the banks’ balance sheets. The net cost to the Treasury will nevertheless remain substantial; the government also provided funds to cover redundancy payments to excess personnel at both banks. The Treasury issued FMG 95.5 billion and FMG 147.9 billion of special treasury bills for BFV and BTM, respectively. In both cases, the bills are to be amortized over five years, in semiannual installments in the case of the BFV, and in annual installments in the case of the BTM, and carry an interest rate pegged to movements in the Central Bank’s discount rate, but subject to floors and ceilings. In the case of the BFV, the Treasury also committed all the proceeds from the sale to Société Générale to filling the gap in the old BFV’s balance sheet.

V. Balance of Payments and External Debt

A. Balance of Payments

27. Between 1997 and 1999, the overall strength of Madagascar’s external position mainly reflected its access to the Fund’s PRGF facility, with inflows in support of the adjustment program11 supplementing a stable or improving current account. The current account deficit (excluding official transfers) narrowed to 6.5 percent of GDP in 1999 from an average of 7.8 percent in 1997-98, as a result of growth in exports of goods and services, slower import growth, and private transfers (Table 7). Official transfers and the capital account were markedly stronger in 1997 and 1999, as compared with 1998 when elections and the accompanying political activity slowed the adjustment process and the PRGF program lapsed.

Table 7.Madagascar: Summary Balance of Payments, 1995-99(In millions of SDRs, unless otherwise indicated)
19951996199719981999

Prov.
Trade balance-69.4-83.4-128.8-112.9-115.4
Exports, f.o.b.344.6360.6366.7382.6434.8
Imports, f.o.b.-414.0-44.0-495.6-495.5-550.2
Services (net)-193.4-171.6-157.3-168.0-139.4
Service receipts162.1210.7200.3217.2245.8
Service payments-355.5-382.2-357.6-385.2-385.2
Of which: investment income-114.5-114.9-80.8-72.2-46.2
scheduled public interest-108.2-111.1-71.7-63.2-38.0
Private unrequited transfers (net)49.560.784.261.378.1
Current account balance, excluding net official transfers-213.3-194.3-201.9-219.6-176.7
Public unrequited transfers (net)67.091.0140.286.1103.1
Current grants11.222.657.812.625.8
Balance of payments grants1.78.545.78.121.3
Other current grants (net) 1/9.514.112.14.54.6
Project grants55.868.482.473.577.3
Current account balance, including net official transfers-146.3-103.3-61.7-133.5-73.6
Capital account-37.026.681.46.868.8
Public sector (net)-93.1-50.874.9-6.4-2.9
Drawings54.960.0152.383.368.1
Amortization142.8-104.8-72.6-89.7-71.0
Long-term liabilities (net) 2/-5.2-6.0-4.80.00.0
Private sector (net)56.177.46.513.271.7
Commercial banks (net)-14.925.3-18.617.32.9
Direct investment6.47.010.011.942.7
Of which: privatization proceeds0.00.00.00.715.4
Other (including errors and omissions)64.645.115.1-16.026.1
Overall balance-183.3-76.819.7-126.6-4.8
Financing183.376.8-19.7126.64.8
Net foreign assets (increase -)-39.8-92.6-39.576.6-39.1
Use of Fund credit (net)-9.41.90.7-10.34.8
Net repurchases-0.60.00.00.00.0
Enhanced Structural Adjustment Facility (ESAF) disbursements0.013.613.60.013.8
ESAF repayments-8.8-11.6-12.9-10.3-9.0
Change in other liabilities0.6-0.60.00.00.0
Change in gross assets (increase -)-31.0-93.9-40.286.9-43.9
Change in central bank arrears (increase +)0.00.00.00.00.0
Net change in arrears (excluding central bank)223.1169.3-783.212.03.1
Cash payments and arrears accumulation-24.712.00.0
Debt rescheduling-758.50.00.0
Debt relief and cancellation0.00.0803.038.040.8
Residual financing gap0.00.00.00.00.0
Memorandum items:
External current account / GDP (in percent)
Excluding net official transfers-10.2-7.1-7.8-7.9-6.5
Including net official transfers-7.0-3.7-2.4-4.8-2.7
Gross official reserves73.7367.6207.8120.9164.8
(in weeks of imports)5.912.314.07.89.6
Scheduled external debt service 3/4/
Before debt relief53.641.329.729.217.8
After debt relief53.641.321.822.811.8
Public sector scheduled debt service 5/
Before debt relief147.190.557.954.635.1
After debt relief147.190.540.139.322.1
Annual percentage changes
Export volume9.318.63.35.913.0
Import volume6.80.614.712.17.7
Real GDP1.72.13.73.94.7
Sources: Central Bank of Madagascar; and Fund staff estimates.

Other official grants less payments due to scholarships and contributions to international organizations.

Involves liabilities arising from Madagascar debts bought by certain organizations.

In percent of exports of goods and nonfactor services.

Including obligations to the IMF; and takes into account flow reschedulings for 1997-98.

In percent of government revenue.

Sources: Central Bank of Madagascar; and Fund staff estimates.

Other official grants less payments due to scholarships and contributions to international organizations.

Involves liabilities arising from Madagascar debts bought by certain organizations.

In percent of exports of goods and nonfactor services.

Including obligations to the IMF; and takes into account flow reschedulings for 1997-98.

In percent of government revenue.

28. The external current account improvement was based on strengthening of both the trade balance and services account. Traditional exports have been volatile, but nontraditional products, such as shrimp and manufactures, especially textiles and the products of the free trade zone, have proved more robust. In 1997, the trade balance deteriorated by over 50 percent as a result of import growth and a decline in traditional exports (coffee and vanilla) following the 1997’s cyclone damage to production. In addition, the European Union placed a sanitary embargo on imports of shrimps and meat from Madagascar. Shrimp exports were not much affected because the exporters found alternative markets and responded rapidly with the required sanitation measures. But as a result of these restrictions, fledging meat exports fell in both 1997 and 1998. In 1998, traditional exports recovered somewhat, growing by 17 percent in value terms, mainly as a result of higher prices. Nontraditional exports grew moderately, but cotton cloth exports more than doubled in value, reflecting the expansion of the export-processing zone. In all, exports rose by 5 percent in SDR value terms and by 5.9 percent in volume. In 1999, export performance was strong (growth of 13.6 percent in value and 13 percent in volume), reflecting a near tripling of international clove prices and increased vanilla production, as well as the increasing exploitation of the sapphire sector. Estimates of official sapphire exports quadrupled to SDR 8.3 million in 1999. Malagasy sapphires are similar in quality but lower in price than those from established sapphire markets; and international dealers are therefore attracted to the Madagascar market. In addition, the sugar industry was able to meet both the European Union and U.S. quotas in 1999, doubling sugar exports to SDR 11.6 million. These improvements more than compensated for the cyclical decline in shrimp exports and a further decline in cotton prices.

29. Import fluctuations reflect the investment activity boosted by structural reforms and the related inflow of foreign financing, as well as increased consumption fuelled by growth and rising incomes. Overall imports grew by an average of 13.4 percent in volume in 1997-98, but the growth declined to 7.7 percent in 1999. Imports of equipment, raw materials, and spare parts rose by 5.8 percent in 1997 and by 4.7 percent in 1999 but fell by 3 percent in 1998. Consumer goods import growth rose to 21 percent on average between 1997 and 1998, before slowing to 3 percent in 1999.

30. The service account deficit remained constant at about 6 percent of GDP during 1996-98 before narrowing to 5.5 percent in 1999. Starting in 1997, the service account improved steadily, reflecting the agreement reached with the Paris Club in March 1997, which reduced substantially interest charges.12 In 1998, tourism receipts increased significantly. Tourist arrivals are estimated to have increased by 21.9 percent in 1997 and 20.3 percent in 1998 as a result of investment in the tourism sector and the liberalization of the air transport market. In late 1996, the permitted entry of an air charter company improved access from the European market and this was reinforced by a September 1997 decree, which allowed visas to be obtained at the port of entry. In 1999, net service receipts improved mainly as a result of increased foreign companies’ contributions to the costs of local subsidiaries and continued good tourism sector growth.

31. Private transfers appeared to react positively to progress on adjustment. After rising by 39 percent in 1997, private transfers fell by 27 percent in 1998 when political uncertainty slowed the adjustment process, and rose by 27.4 percent in 1999. In 1999, the increase reflects a rise in the receipts of nongovernmental organizations (NGOs).

32. Official grants, the release of which is often linked to IMF program approval, and inflows on the capital account have responded positively to the approval of the PRGF. In 1997, grants in support of the balance of payments surged and the capital account improved by over 200 percent as a result of program loans of almost SDR 100 million, obtained from the World Bank Group and the African Development Fund; amortization payments also declined following the Paris Club agreement. In 1998, delays in approving the second annual PRGF arrangement caused a decline in official grants and program loans. The surplus on capital account fell to 0.2 percent of GDP from 3.2 percent in 1997. It rose again to 2.5 percent in 1999 following approval by the Executive Board of the second annual arrangement under the PRGF in July. In addition, in 1999, the capital account benefited from significant private investment flows, including the first significant inflows from the privatization program; the capital inflows also reflected suppliers’ credit obtained by the petroleum company, SOLIMA.

33. Madagascar’s exchange rate is determined on the interbank foreign exchange market established in 1994. In the last three years, the Malagasy franc has tended to depreciate in line with Madagascar’s higher rate of inflation relative to trade partners; overall, therefore, the real effective exchange rate has been broadly stable (see Figure 5), as a depreciation of 8 percent in 1997-98 was followed by an appreciation of 5.9 percent in 1999. The Malagasy franc has depreciated gradually following a steady trend, with limited volatility except in mid-1999, when some large fluctuation occurred in response to large private transactions.

Figure 5:Madagascar: Exchange Rate Developments, 1990-99 1/

(Average 1990=100)

Source: IMF, Information Notice System; and Ministry of Finance and Economy.

34. Madagascar is a member of three regional trade groupings: the Indian Ocean Commission (IOC), the Common Market for Eastern and Southern Africa (COMESA), and the Cross-Border Initiative (CBI) and has been actively pursuing trade liberalization. As agreed under the IOC, in September 1999 an 80 percent reduction in tariffs on goods with at least 45 percent value added was introduced on trade between Madagascar and Mauritius and the tariffs were completely eliminated for both the Comores and Mauritius in January 2000. Trade between Mauritius and Madagascar, while growing steadily since 1995, remains very small (6.9 percent of Madagascar’s exports and 1 percent of imports in 1998). In line with CBI objectives, the budget for 2000 amended the tariff structure by eliminating 10 and 20 percent rates to arrive at a four-rate structure (5, 15, 25, and 30). When revenue performance is sufficiently resilient, the intention is to eliminate the 30 percent rate to arrive at the three-rate CBI-mandated structure.

B. External Debt

35. In March 1997, Madagascar reached its eighth agreement with members of the Paris Club, obtaining Naples terms (a 67 percent reduction in the net present value of the eligible debt) for debt relief. Most creditors achieved the reduction by according relief on debt service; only three accorded a debt stock reduction. As a result, at end-1997, outstanding debt had fallen to 2.9 billion SDR, 44 percent of which was owned by international institutions, from 3.1 billion in 1996 (Table 8). The debt-service ratio (before debt relief) fell from 41.3 percent at the end of 1996 to 17.8 percent at the end of 1999. By end-1998, Madagascar had cleared all its arrears to the international institutions. Its main international creditors are the International Development Association (IDA) and the African Development Fund (AfDF). The second largest group of creditors are Paris Club members. Other important creditors are the Arab development funds and several non-Paris Club bilateral debtors. Most of this debt (92 percent) is in arrears and the authorities are in negotiation in order to reach bilateral agreements on terms comparable to those of the Paris Club-agreed minute of 1997. Madagascar is expected to reach the decision point under the enhanced HIPC Initiative in July 2001.

Table 8.Madagascar: Stock of External Debt, 1995-1999(In millions of SDRs)
19951996199719981999
Medium and long-term official debt 1/1,657.11,617.02,448.92,473.22,562.4
Bilateral creditors554.5480.01,187.21,173.11,173.4
Paris Club 2/532.7460.01,169.71,153.91,144.7
Other countries21.819.917.619.328.6
International Organizations1,079.41,124.21,256.61,296.51,386.8
IMF48.950.851.541.245.8
Others1,030.51,073.41,205.21,255.31,341.0
Of which: World Bank Group759.3811.3903.4953.01,020.7
African Development Bank41.033.928.623.523.5
African Development Fund137.3136.2189.2194.4194.4
Private creditors23.312.85.03.62.3
Commercial banks13.65.90.70.50.4
Others9.66.94.33.11.9
Total arrears 1/1,230.21,465.9409.4355.7386.2
Paris Club 2/931.81,126.275.34.240.0
Other bilateral creditors249.4268.4301.0317.0312.3
International organizations23.641.81.00.00.0
Private creditors25.429.532.134.533.9
Total external debt outstanding, after debt relief 3/2,887.33,082.92,858.32,828.92,948.6
Memorandum items:
Total external debt before debt relief2,887.33,082.92,985.83,014.43,281.6
Total external debt/GDP (in percent)
Before debt relief138.7111.8111.1102.6108.3
After debt relief138.7111.8116.1109.4120.5
Total external debt before debt relief in percent of exports of goods and nonfactor services575.0545.3531.9510.6486.9
Total debt to official creditorsafter debt relief2,838.63,040.72,821.22,790.82,912.5
Source: Central Bank of Madagascar; and Fund staff estimates.

Provisional.

Reflects Paris Club flow rescheduling on Naples terms obtained for the period January 1997- July 2000 and assumes that agreements with all Paris Club creditors became effective in March 1997.

Total external debt here differs from estimates in Table 1 of the Staff Report, Selected Economic and Financial Indicators. The latter are based on the Debt Sustainability Analysis in EBS/99/116 of 7/8/99.

Source: Central Bank of Madagascar; and Fund staff estimates.

Provisional.

Reflects Paris Club flow rescheduling on Naples terms obtained for the period January 1997- July 2000 and assumes that agreements with all Paris Club creditors became effective in March 1997.

Total external debt here differs from estimates in Table 1 of the Staff Report, Selected Economic and Financial Indicators. The latter are based on the Debt Sustainability Analysis in EBS/99/116 of 7/8/99.

VI. Structural Reforms

36. Madagascar’s structural reform program focuses on three broad strategies: (i) state disengagement from key sectors through privatization of state-owned companies, particularly in the power and energy sectors, telecommunications, and transport; (ii) the establishment of a regulatory framework to promote efficient operation of the privatized and other enterprises; and (iii) an improved legal and administrative business environment.

37. The first phase of the privatization program targets 46 public enterprises.13 The program emphasizes transparency and competition in the privatization process; this is being achieved through a public information campaign, the publication of bidding results, and the provision of regular reports to the press and the general public. It also provides for severance payments to employees laid off in the process of privatization, as well as funds for the retraining of such employees. In addition, 10 percent of the privatization proceeds will go toward setting up a regional social development fund. While the program aims at obtaining strategic foreign investment partners, allowance is being made for more widespread share ownership through the setting up of a share-warehousing fund, whose contents are to be sold to small investors as incomes increase and interest in shareholding develops. The combined state and fund participation in any privatized enterprise is to remain below the 33 percent, which is the controlling minority stake.

38. Three of the initial 46 companies are particularly significant: SOLIMA (the petroleum company), Air Madagascar (the national airline), and TELMA (the telecommunications company). The first two are scheduled for privatization in 2000. SOLIMA, which held the state monopoly in petroleum product imports, refining, and distribution, was split up into several components for the purpose of its sale—the refinery and terminal, four distribution companies, a logistical company, the aviation fuel company, and lubricant, transport, and gas companies (in addition to subsidiaries outside of the petroleum sector). The refinery/terminal was purchased by a consortium of companies, as was one of the distribution companies. In March 1999, in preparation for ending the petroleum monopoly, the importation of refined petroleum products was liberalized and distribution companies were given unrestricted access to storage facilities. In June 1999, a regulatory body (Office Malgache des Hydrocarbures) was established. Following adoption of a new price formula, which would allow the price at the pump to approach international prices gradually, the major components of SOLIMA were sold in May/June 2000.

39. The privatization of Air Madagascar is taking place in the context of an open skies policy, which allowed early entry of charter companies to improve competition in the sector. Initially, Air Madagascar is to continue to operate its eight national routes with permitted entry by other technically certified (according to international standards) carriers, without bilateral agreements, after a five-year period. The regulatory framework was established in March 1998 and the regulatory body became operational in 1999. In December 1999, a new civil aviation law was passed. At least 65 percent of Air Madagascar is to be sold before the end of 2000, ensuring that the state does not have a controlling minority, since the company already has private shareholders. In addition to the airline, concessions for the operation of two of Madagascar’s main airports are to be sold, as is the company (SOFITRANS) operating airport duty-free shops, catering, and handling services for Air Madagascar.

40. In 1996, a new telecommunications law liberalized the sector, allowing competition in all services; in 1998, four licenses were granted for cellular services and an interconnection decree was approved, giving all companies equal access to the fixed network operated by TELMA. The state is committed to selling 34 percent of TELMA by early 2001; 33 percent is already owned by a private company. Shortly after its sale, another license for the operation of a fixed network will be awarded.

41. The procedures being put in place to promote private sector development include a number of legal and judicial reforms. Among the most important are the following:

  • Legal instruments for long-term land lease have been established to address the inability of nonnationals to own outright Malagasy property, and recommended procedures to effect a lease in 60 days are to be published. Five industrial and five tourist zones, in which lots will be sold or leased to investors, are being created to facilitate entry into these sectors.
  • Arbitration has been introduced to resolve commercial disputes; the 1998 Arbitration Law became effective in 1999, and three pilot arbitration bodies were established in the first quarter of 2000.
  • Several reforms identified by the Commission on the Reform of Business Law were carried out in 1999, including the passing of laws on partnerships, enterprise transparency, and the trader’s statute.
  • Work has started on improving the work conditions and professional capacity of magistrates through the provision of libraries, journals, and continued training.
  • Civil service reform has begun in earnest with the elimination of Active employees from the government’s payroll in 2000; a new civil service statute and code of conduct should be adopted in 2000. Reorganization began in six pilot ministries in 1999.

42. In addition to general and administrative legislation, the laws and rules governing sectors of particular importance have been or are in the process of reform. In the mining sector (Madagascar has important deposits of nickel and titanium, in addition to small deposits of precious stones), a new Mining Code was passed in July 1999 and is to be followed by the adoption of environmental regulations. The aim of the new Code is to enhance transparency in the allocation of mining concessions. In addition, a law on large investments in the sector (over US$200 million) is under consideration and will be submitted to the National Assembly during 2000.

43. In the fisheries sector (shrimp are Madagascar’s single largest export), the aim was to put in place a transparent, nondiscretionary and competitive system of licenses, while increasing government revenue and providing licensees with an incentive to preserve the fishing stock. In 1999, the number of fishing licenses was frozen until a study of exploitation feasibility could be completed. At present, there are 69 industrial licenses on the West Coast where there are two exclusive zones and one communal zone; and six industrial licenses, a communal zone, as well as 36 artisanal licenses on the East Coast. In early 2000, the new system for the award of shrimp licenses was adopted. This system treats the fishing license as a right of access to fishing in Madagascar, valid for 20 years, which can be transferred among private operators. It also establishes a system for monitoring performance in the sector. Initially, 20 percent of licenses can be reallocated annually on the basis of auctions, which would determine the licensing fee payable, with all existing licensees paying the new fees. The system thereafter will be adjusted as a function of the operating information initially obtained.

APPENDIX I
Madagascar: Summary of the Malagasy Tax System, December 1999(All amounts in Malagasy francs)
TaxType of TaxDeductions and ExemptionsTax RateTax Reporting
1. Taxes on Net Income and Profits
1.1 Taxes on corporations
1.1.1 Tax on company profit [Impól sur les bénéfices des Sociétés-IBS] Corporate profit tax (IBS) (General Budget)Article 01.01.02

Annual tax on the full range of profits earned by companies headquartered in Madagascar as well as income generated by the possession of property (assets) or the practice of a gainful activity in Madagascar.
Article 01.01.03
  • Income earned by partnerships, religious missions and churches, or cultural associations is exempt from tax. However, the tax is payable in respect of their establishments engaged in sales or the provision of services.
  • Interest paid by the Caisse d’Epargne de Madagascar.
  • Capital gains on sales of real estate.
  • Income and capital gains deriving from the sales of stocks and shares held by SCRs.


Income earned by nonprofit organizations or associations exclusively engaged in the promotion of small- and medium-scale enterprises.
Article 01.01.16

IBS at 35 percent



Taxable minimum:



200,000 + 5 per mill of turnover: agriculture, crafts, industry, mining, hotel trade, tourism, or transportation



800,000 + 5 per mill of turnover for the rest.



Article 01.01.06 6è

Deficit may be carried forward for a period of three years.
Article 01.01.17
  • Prior to May 1 N (calendar year)
  • Prior to October 1, N (June 30)
  • Within the two months following the end of the fiscal period (plus 50 percent).


On collection:



Article 20.01.41

Estimated payments

(A) Payable on a semiannual basis

Article 20.01.42

Payable at customs

(B) 3 percent c.i.f. value if registered 5 percent of c.i.f. value in other cases

Value of raw materials Consumer goods, products.
1.1.2 Global tax [Impól synthétique] (General budget)Article 01.06.02

FMG 600,000/year<turn over

exclusive of tax⇐FMG 12,000,000/year:

  • Representative (and affording full discharge in respect of) the TP, the IRNS, and TCA;
  • Tax earmarked for the financing of the regionalized investment program;


Individuals engaging in an independent activity, whether or not liable for the TP tax.
Article 01.06.03
  • Corporations;
  • Wholesale and semi-wholesale merchants [commerçants de gros et demi-gros].
Article 01.06.06

6 percent, although may not be less than FMG 25,000.
Article 01.06.07

Tax return filed prior to March 31⇒liable for the TPtax.

Article 01.06.08

In the 3 months following the issuance of the certificate of payment of tax [titre de liquidation]⇒other.
1.2 Taxes on individuals
1.2.1 Tax on capital income [Impóts sur les revenus de capitaux mobiliers-IRCM] (General Budget)Article 01.04.01

Occasional tax collected upon the distribution of profits.
Article 01.04.25 et sea.

  • Amortization and repayment of principal realized upon liquidation of real estate assets.
  • Loans or obligations of cooperatives, central mutual credit fund organizations.


Article 01.04.32

Interest on national loans [emprunts]:

  • Contracted for purposes of investment with external financial institutions.
Article 01.06.07
  • 25 percent
  • 30 percent for individuals - the IRCM is in discharge of the IRNS.
Article 04.01.14 and 04.01.15

Before April 30, N

(fiscal period ending the second semiannual period).

Payment of income, or October 2 for the rest.
1.2.2 Capitalization tax

[Taxe d’incorporation] (General Budget)
Article 04.01.33

Occasional tax collected upon the capitalization of profits or reserves.
Article 01.04.34

Not collected to the extent that the capitalization of reserves or profits has as its counterpart the prior acquisition

of capital goods or acquisition of equity holdings in the new capital of other firms, or expenditures on the occupational training of local personnel, or creation of additional jobs.
Article 01.04.33

8%
1.2.3 Tax on transfers abroad [Taxe forfaitaire sur les transferts] (General Budget)Article 01.05.01 and 01.05.02 Tax payable on payments or transfers for the benefit of individuals located abroad and not taxed in Madagascar for purposes either of the income tax [Impóts sur le revenu] or the professional tax [Taxe professionnelle].Article 01.05.03
  • Amounts received in connection with scholarships;
  • Sale price of immovable or movable assets;
  • Products already liable for the IRCM;
  • Repayment of principal on loans;
  • Standard price for purchases of imported merchandise;
  • Interest paid by the Public Treasury or the Central Bank;
  • Interest on national loans [emprunts]: (01.04.32)
Article 01.05.05

15%
Withheld at source.
1.2.4 Real estate capital gains tax [Impót sur la plus- value immobilière—IPVI] (General Budget)Article 02.12.02

Taxed assessed on transfers (for valuable consideration) of real estate assets or claims.
Article 02.12.03

Capital gains on sales of real estate included in current inventories [stock en cours] by Société immobilière.
Article 02.12.07

Graduated by branches

  • 5% < FMG 10,000,000
  • 10% between FMG 10,000,001 and FMG 20,000,000
  • 15% between FMG 20,000,001 and FMG 30,000,000
  • 20% between FMG 30,000,001 and FMG 40,000,000
  • 25% for amounts in excess of FMG 40,000,000.
1.2.5 Personal income tax (IRSA) (General Budget)Article 03.01.07
  • Wage earners Tax on wages, remunerations, and fringe benefits, withheld at source.


Article 01.03.08

Taxation of cashless benefits

  • FMG 50,000/month/vehicle rated ≤ 10 HP
  • FMG 80,000/month/vehicle rated > 10 HP
  • 50 percent of the rent or rental value. Maximum: 25 percent of remuneration established in cash
  • 2 percent of remuneration established in cash /domestic
  • 3 percent for other benefits.
Article 01.03.03
  • Permanent or temporary allowances for damage repair;
  • Allowances for dependents;
  • Renumeration associated with honorary awards;
  • Pay for citizens called to serve in the armed forces in a military or civilian capacity;
  • Civilian or military retirement pensions where the amount of the pension is determined by length of service record;
  • Renumeration earned by majority managers-partners in limited liability companies (SARLs).
Article 03.01.16

Scale A

Up to FMG 150,000 per month-FMG 1,500
  • FMG 151,000-250,000 – 2%
  • FMG 251,000-500,000 – 10%
  • FMG 501,000-750,000 – 15%
  • FMG 751,000-1,000,000 – 20%
  • FMG 1,001,000-1,500,000 – 25%
  • 1,501,000-2,500,000 – 30%
  • Over FMG 2,500,000 – 35%.


Minimum

  • FMG 1,500 if ⇐ FMG 150,000
  • FMG 2,000 between FMG 150,000 and FMG 250,000
  • FMG 2,500 if > FMG 250,000.


Dependent credit [Réduction pour charge de famille]



Article 01.03.19
  • FMG 500/month without exceeding FMG 6,000/per year
Article 01.03.12



Withheld and paid prior to the 15th of the following month in each case.
1.2.6 IRNS (General Budget)Article 01.02.02
  • Sole proprietorship;
  • Income earned from engaging in an independent profession;
  • Corporate income, not liable for IBS tax;
  • Remuneration of SARL majority managers/partners;
  • Profits of firms engaged in industrial or commercial, crafts-related, tourism-related, or service-providing activities, or farms;
  • Income from land;
  • Income earned in connection with the functions and responsibilities of persons not having the status of merchants [non-commercants].
Article 01.02.03
  • Net income from developed real estate occupied by the owner as a principal residence;
  • Capital gains earned on selling the property;
  • Interest on bearer cash vouchers [bons de caisse anonymes];
  • Interest on the recorded balances of savings accounts, when such accounts are blocked for 6 consecutive months;
  • Interest paid by the Treasury on a national loan [emprunt national].
Article 01.02.12

Taxable base

Nondeductibility of deficits incurred in connection with

commercial, hotel related, tourism related, mining or

transport deficits, or in respect of land

income or investment income.

Deficit may be carried forward for a period of 3 years.

The amount of the deficit to be carried forward is deducted prior to the deduction for deferred amortization.



Article 01.02.36:

Tax scale

Accounts-based (itemized) system [régime réel] and small-and medium-scale enterprises

Up to FMG 250,000 per year (fixed) FMG 10000

FMG 251,000-FGM 600,000 – 5%

FMG 601,000-1,000,000 – 10%

FMG 1,001,000-1,500,000 – 15%

FMG 1,501,000-2,500,000 – 20%

FMG 2,501,000-5,000,000 – 25%

FMG 5,001,000-10,000,000 – 30%

Amounts exceeding FMG 10,000,000 – 35%
B5

Article 01.02.17

Accounts-based (itemized) system (prior to May 1) N 1. Prior to October 1, N, 2 months from end of fiscal period plus 25 percent.



Article 20.01.41

An advance payment [acompte provisionnel] is due every bimonthly period.



Article 20.01.42

An advance payment [acompte] is to be made at customs:

  • 3 percent of c.i.f. value for registered businesses;
  • 5 percent of c.i.f. value for nonregistered businesses.


Value: raw materials, consumer goods, and products.
1.2.7 Ims registration tax [IRNS Greffe] (01.02.50) (General Budget)Article01.02.20

Small- and medium-scale enterprises (criteria):

  • Number of employees ⇐ 50
  • Pretax turnover below FMG 250,000,000
  • Principal responsibilities in production, sale where the management is undertaken by individuals venturing their own capital.


Article 01.02.24 Microenterprise (criteria):

  • Turnover < FMG 100,000,000 per year for agricultural, crafts-related, or purchase/resale activity
  • Turnover < FMG 50,000,000 per year for the provision of services.
Article 01.02.37

Minimum amounts for all activities liable for tax TP>5th class = 4 TP



Article 01.02.38:

Party subject to IRNS registration tax (minimum)



For agricultural activities:

  • ½ IFT [land tax] for arable land having a surface area of less than 5 hectares
  • IFT for land between 5-10 hectares
  • 2 IFT for land exceeding 10 hectares
  • 2 TP: activities classed under the 6th, 7th, and 8th classes of the TP
  • 3 TP: activities classed in the 5th class of the TP
  • 4 TP: liable for the 4th class of the TP; activities categorized under the 4th class of the TP
  • 4 TP: livestock dealers.


Yes, and only if the turnover < the thresholds indicated in the pertinent column.
Article 01.02.21

System applicable to small- and

medium-scale enterprises

(Tax return to be filed prior lo

March 1, N in the year in which the option is exercised).



Article 01.02.25



Registered system [régime greffé] (Tax return prior to March 1)
1.2.8 Professional taxes. Professional tax1/[Taxe professionnelle—TP] (Budget of the Autonomous Province)Article 10.01.01

Professional tax payable in

connection with engaging in gainful activity in Madagascar.
Article 10.01.11
  • Limited partners in limited partnerships [sociétés en commandite];
  • Wage earners
  • University cafeterias or canteens;
  • Farmers; Fishery and hunting enterprises (with a maximum of five people working for them);
  • Agricultural contractors;
  • Artists;
  • Directors of independent technical and general schools;
  • Newspaper and magazine salesmen;
  • Operations for the provisioning of the (Fokontany) local authorities;
  • Medical operations of enterprises;
  • Intermediaries in government contracts markets for supplies financed by foreign aid;
  • Military joint mess clubs, Army residential establishments, and military rest homes.
Article 10.01.15

Table A and B

Fixed tax, according to the type of business, population of the community where the enterprise is located, and the

number of employees and equipment used in the enterprise (1,500-240,000).

Proportional taxes based on rental value of premises, including equipment used.

Proportional tax:
  • Liberal professions 1/5 VL;
  • Commercial activities, 1st, 2nd, and 3rd classes, 1/10 VL;
  • Industries, trades, and services rendered (2nd and 3rd classes), commercial activities (4th and 5th classes), 1/20 VL;
  • Other activities, 1/30 VL.


Article 10.01.38

Professional tax is representative and in full discharge of the IRNS (4TP, 3TP, 2TP)

→ B.G cf. Article 01.02.38: Registered IRNS (minimum)
Article 10.01.33

Before October 15, N.
1.2.9 Business license tax 1

1/[Impól de licence] (Budget of the Autonomous Province)
Article 10.06.01

Professional tax payable on sales of alcoholic beverages.
Article 10.06.06

Sales by nonprofits, including:

  • University cafeterias;
  • Military mess halls;
  • Canteens, residential establishments, clubs attached to the Army;
  • Pharmacists and drug depositaries in connection with retail sales of raw spirit alcohol;
  • Restaurateurs and hotel restaurant operators, under certain conditions.
Article 10.06.08

Rate as follows:

  • Category of licenses (3 categories);
  • Population of the community where the firm is located.
Article 10.06.63

In the first 20 days of each quarter

⇒ pre-existing operation

First 20 days of operation ⇒ new sales licence.

Article 10.06.64

Prior to operation

⇒ huckster’s license tax [impót de licence foraine].
2.0 Taxes on Property
2.1 Land tax [Impót fancier sur les terrains—IFT)] (Budget of the settlement communes [communes d’implantation])1/Article 10.02.01

Tax levied on the estimated

productive value of land based on type of crop use.
Article 10.02.03
  • Land owned by government, decentralized local authorities, or public institutions assigned to perform a public service or a service deemed to be in the public interest, that generates no revenue.
  • Land earmarked (free of charge) for medical or social charities, free education, or worship.
  • Land envisaged in Article 10.4.02, liable for the IFPB.
Article 10.02.07

Rate expressed in FMG per hectare (1st -5th category)

  • 1 percent of market value (6th category).
Article 10.02.08

Prior to October 15, N.
2.2 Tax on buildings1/ [Impóts sur les immeubles bâtis—IFPB] (Commune Budget)Article 10.03.02

Tax levied on rental value of buildings.
Article 10.03.03
  • Buildings owned by government, decentralized local authorities, or public institutions assigned to perform a public service or a service deemed to be in the public interest, that generate no revenue.
  • New constructions for a period of five years from their completion date subject to presentation of habitation or occupancy permit (Article 10.03.05).


Buildings reserved (on a free-of-charge basis) for charities, medical activities, [free] education, or worship.
Article 10.03.10

Rates set by vote (by the municipal government) based on the rental value determined by the real estate assessment committee.



Maximum rate: 5%

Minimum rate: 2%



May not be less than FMG 5000 per building.
Article 10.03.11

Prior to October 15, N.
2.3 TAFB 1/(Commune Budget)Article 10.04.01

Taxes associated with the tax on buildings based on the rental value of real estate.
Same rules as those governing the IFPB, excluding the temporary exemption and the permanent exemption.Article 10.04.05

Rate set by vote (by the municipal government):



Maximum rate: 5%

Minimum rate: 2%.
Prior to October 15, N.
2.4 Additional tax on registration tax [Taxe additionnelle uux droits d’enregistrement]Article 10.05.01

Tax in addition to movable and immovable property, sales by auction transfer duties [Droits d’enregistrement sur les actes et les mutations à litre onéreux des biens immeubles et meubles).
Article 10.05.02

Rates set by vote (by municipal government)



Minimum rate: 2%
2.5 Tax on company cars [Taxe sur les véhicules de tourisme des sociétés] (General Budget)Article 02.08.01

Annual tax levied on all private cars registered in the name of a company.
Article 02.08.02

FMG 300,000/year for all vehicles rated as not exceeding 9 HP;

FMG 30,000/year and per CF 9 HP.
Article 02.08.03

Prior to end-January N ⇒ vehicles

in circulation as at January 1 of the year;

Month purchased ⇒ vehicles purchased in the course of the year

(brand-new or second-hand).
2.6 Tax on motor vehicles

[Taxes sur les véhicules à moteur] (Tax disc) [Vignette] (General Budget)
Article 02.07.01

Annual tax on all vehicles in circulation.
Article 02.07.06
  • Vehicles registered in the name of the State;
  • Vehicles exempt from tax pursuant to the terms of international conventions;
  • Special vehicles (bulldozers, mechanical handling equipment, etc.);
  • Tractors used exclusively for agricultural activities;
  • Vehicles intended for sale or resale (automobile dealers) and brand-new or second-hand mechanical engines.
Article 02.07.01

Rate
Taxable horsepower1

To
5

To
10

To
13

To


>15
Age491215
<510,50012,00013,50019,50028,500
5<<107,50013,00010,50016,50025,500
10⇐204,50010,5007,50010,50013,500
>20 years2,2503,0003,7507,50012,000


Article 10.05.02:2%

Commercial vehicles used exclusively for mass transit = FMG 4,000/CF; however, vehicles over 10 years old are taxed on only half their power.

Airplanes: FMG 600,000/year/aircraft. Service vehicles of charities and social welfare organizations: FMG 4,000/CF
Article 02.07.02

Prior to end-June N ⇒ automobiles and boats in active service



- Month acquired or time of engineering inspection or time the insurance policy is renewed ⇒ vehicles previously tax-exempt.
2.7 Registration Duties [Droils d’Enregistrement] (General Budget)Article 02.01.02

Tax levied on registration of all transactions pertaining to the transfer of property, proportional to the value of the assets in question.



Article 02.02.24

Taxes on judgments, arbitration awards, and decisions resulting in conviction.
Article 02.11.01

Special regimes and exemptions:

  • Central government and decentralized local governments;
  • Societies, associations recognized as being in the public interest;
  • Religious missions and churches;
  • Social housing;
  • Procedural documents [actes de procédure] and judicial decisions with respect to electoral matters;
  • Instruments and acts of registration; judgments relating to civil status;
  • Transactions in cases of expropriation in the public interest;
  • Instruments and transactions, contracts pertaining to agricultural or socially oriented credit extended by banks.
Article 02.02.39

Buildings and goodwill: 8%



Special rates:



Sales of immovable assets



Association RUP = 6% (Art. 2.02.39)

Developable land for housing ⇐500m2=8% (Art. 02.02.39)

Traditional housing - 10%

Agricultural land 1/2 12% (Art. 02.02.39)





Other assets



8% (Art. 02.02.44)

Negotiable securities: 4% (Art. 02.02.46)



Estate tax (Art. 02.03.32-A)

Rate - Portion of taxable value (in FMG)



2%--FMG 1-10 million

4% -- FMG 2-20 million

6% -- FMG 20-30 million

8% -- FMG 30-40 million

10%--> FMG 40 million

Memoranda nf incorporation:

(Art. 02.02.32) Rate graduated

by tranche of capital:

  • 2% … < FMG 50,000,000
  • 1% … between FMG 50,000,000 and FMG 500,000,000
  • 0.5% for amounts in excess of FMG 500,000,000.


Claims: 1.50$ (Art. 02.02.48)

Prenuptial agreement [contrat de mariage]: l% (Art. 02.02.19)

Exchange of building: 4% (Article 02.02.20)

Partition: 1% (Art. 02.02.28)

Annuities [Rentes]: 1.5% (Art. 02.02.30)

Fixed-term lease: 2% and 4% (Art. 02.02.12)

kife tenancy: 8% and 12% (Art. 02.02.13)

Art. 02.02.04 through 02.02.06

Fixed taxes:

  • FMG 10,000 ⇒ Supreme Court decision ⇒ administrative
  • FMG 20,000 ⇒ Decision of the Court of Appeal, Criminal Court
  • FMG 40,000 ⇒ Decision of the Supreme Court ⇒ judicial.
2.8 Tax on real estate advertising [Taxe de publicité foncière] (General Budget)Article 02.04.01 Tax levied on:

  • Recording of real estate conveyancing transactions [mutations];
  • Procedural steps involved in inclusion in land ownership registries.
Article 02.04,09
  • Central government and decentralized local governments;
  • Societies, associations recognized as being in the public interest;
  • Religious missions and churches;
  • Social housing.
Article 02.04.05
  • 1% of the value (for leases);
  • 2% ⇒ in all other cases;
  • 1% of value in the case of unconditional partitions [portage pur el simple].
2.9 Tax on Insurance Policies [Taxe sur les contrats d’assurances] (General Budget)Article 02.09.01

Tax levied on all insurance contracts providing coverage against risks or in respect of annuities.
Article 02.09.03 and Article 02.09.04
  • Risks covered outside of Madagascar;
  • Reinsurance;
  • Insurance in respect of work-related accidents;
  • Insurance against risks associated with shipping or civil aviation, whether inbound or outbound.
Article 02.09.02
  • 4.5% in general;
  • 20% for fire insurance;
  • 3% for life insurance;
  • 4% for insurance against risks associated with shipping, inland water transportation, or civil aviation;
  • 5% for annuities [rente viagère],
Article 02.09.05 Within the first 20 days of each

quarter ⇒ estimated payment,

June 15, N ⇒ general tax payment.
2.10 Stamp Tax [Droit de timbre] (General Budget)Article 02.06.01

Tax levied on all paper documents intended for civil and judicial proceedings as well as for instruments that can be produced in court and entered into evidence.
Article 02.06.16 Size tax

FMG 2000, paper 0.42 x 0.59

FMG 1500, paper 0.29 x 0.42

FMG 1000, paper 0.29x0.21

Tax per double-sided page reduced by half when one of the sides is cancelled.

Article 02.06.28 Proportional tax 5 per mill

Article 02.06,40 receipt tax

At the rate for the proportional tax 5 per mill.
Article 02.06.44

In the form of a statement, within the 20 days following the end of each month.
3. Taxes in goods, products, arid services
3.1 Turnover tax 1/[Taxe sw le chiffre d’affaires—TCA] (General Budget, Budget of the Decentralized Local governments—Article 06.01.01)Article 06.01.02 and Article 06.01.03

Tax levied on:

  • Commercial, industrial, crafts-related, mining, note I-related, or service-providing transactions;
  • The liberal professions;
  • Particular types of operations, such as importation and delivery for personal use.


Article 06.01.35
  • The public investment program (TIP) financed from external sources.
Article 06.01.06

Exemptions or exonerations
  • Wages;
  • Books, brochures, similar printed materials;
  • Pharmaceutical drags and products, medical equipment;
  • Materials and inputs used in the manufacturing of drugs;
  • Packaging used in the retail sale of drugs;
  • Newsprint; importation, publication, and sale of newspapers and magazines;
  • Subject to the requirement of reciprocal treatment, the purchases of diplomatic missions holding diplomat status;
  • Postage stamps and legal tender coins.
Article 06.01.12

VAT - 0% 20% (recoverable)

Article 06.02.15

TST: 5% (nonrecoverable)
Article.06.01.16

Monthly for turnover > FMC 1 billion

Quarterly for turnover < FMG 1 billion.



Article 06.02.11

TST: Bimonthly Prior to the 20th of the month following each bimonthly period.
3.2 Transaction Tax [Taxe sure les transactions-TST]Article 06.02.01

(Budget of the decentralized local governments)
Article 06.02.04 and Article 06.02.05
  • Assets brought into companies;
  • Services rendered in the context of the health-care professions;
  • School fees;
  • Supply of water and electric power to public local authorities for domestic use, to medical training centers.
Article 06.02.15

5%
Article 06.02.11

In the first 20 days of the month

following each bimonthly period.
3.3 Excise Tax [Drotis d’accises-DA] (General Budget)Article 03.01.01
  • Tax levied on particular manufactured or imported products, such as:
  • Alcoholic beverages or liquids;
  • Tobacco;
  • Cosmetic preparations;
  • Mining products;
  • Audiovisual equipment, etc.
Article 03.01.02
  • Products included as raw materials in other products already subject to Excise Tax (DA);
  • Products and materials included in the manufacture of pharmaceuticals;
  • Materials for refrigerated production used by professionals.
In accordance with excise tax table:

  • Rate from 20%-180%;
  • 50% tax deduction for cigarettes whose reference price does not exceed the price set pursuant to a decree [arr&e] issued by the Minister (03.01.01).
Within the first 20 days of the month following each bimonthly period.
3.4 Special tax [Taxe spéciate] (FNPDJSL)Article 03.02.01

Tax payable by manufacturers

and importers of:

  • Alcoholic beverages;
  • Manufactured tobacco. Tax payable by operators of gambling establishments
Article 03.02.02

Rates set pursuant to regulations.
Article 03.02.04

Within the first 20 days of the month

following the three-month period

within which the product was

manufactured or the revenue

collected.
3.5 “Redevance” fees [Redevances] General Budget)Article 04.01.01

Levied on the following products:

manufactured tobacco, chemical matches,

wheat or maslin flour, alcoholic beverages (excluding group 2) using locally produced or imported sugar.
Article 04.01.04

  • Same product used as in respect of raw materials;
  • Export sales.
Article 04.01.10

Rates set in accordance with regulations.
Article 04.01.16

Products imported ⇒ prior to removal; Products manufactured locally and in accordance with conditional relief arrangements [régime suspensif] ⇒ within the first 20 days of the month after the goods are released for home use.
3.6 Tax on gambling establishments [Prélévements sur les maisons dejeux]



Annual tax on slotmachines, etc. [Taxe annuellesur les appareils automatiques] (Commune Budget)1/
Article 10.07.01

Tax payable in connection with the operation of automatic devices known as “slot machines” and other such equipment
Article 10.07.02
  • Slot machines: FMG 2,000,000 per apparatus
  • Other equipment: FMG 500,000 per apparatus.
Article 10.07.02

On an annual basis—must be made

at the time that a statement is issued

to the effect that the equipment in

question has come on line.
3.7 Stamp tax [Droit de timbre] (General Budget)Article 03.02.12

Tax payable upon admittance to gambling halls.
Article 03.02.13

By share:

  • FMG 50,000 pass valid for one day.
  • FMG 200,000 – pass valid for one week.
  • FMG 700,000 – pass valid for one month.
  • FMG 3,000,000 – pass valid for one year.
Article 03.02.12

Prior to the 10th of the following month
3.8 Tax on gambling products [Prélèvement sur les produits desjeux] (Decentralized local government budget to be allocated by decree)1/Article 10.07.03

Tax (in full discharge of the VAT) applied to the gross proceeds from money gambling activities engaged in within clubs, gambling houses, and hotel facilities.
Article 10.07.03

Gambling engaged in at clubs and gambling houses:

Graduated by threshold of annual earnings:

  • Up to FMG 10,000,000 – 10%;
  • FMG 10,000,001-30,000,000 – 20%;
  • FMG 30,000,001-60,000,000 – 40%;
  • FMG 60,000,001-100,000,000 – 50%;
  • For amounts exceeding FMG 100,000,000 – 60%.


Gambling activities engaged in at hotel: Graduated by threshold of annual winnings:

  • Up to FMG 10,000,000 – 5%;
  • FMG 10,000,001-30,000,000 – 10%;
  • FMG 30,000,001-60,000,000 – 15%
  • 60,000,001-90,000,000 – 20%;
  • FMG 90,000,001-120,000,00 – 25%;
  • FMG 120,000,001-150,000,000 – 30%;


For amounts exceeding FMG 150,000,000 – 40%.

FMG 20,000 per TV per year.
Article 10.07.06

Within the 3 days after the end of

the 10-day period.
3.9 Annual Tax on Televisions [Taxe annuelle sur les téléviseurs] (Budget of the Communes)Article 18

Amending Paragraph I of Article

6 of Order [Ordonnance] No. 78009 of May 3, 1978.
4. Taxes on foreign trade
4.1 Imports
4.1.1 Customs duty (Droit de douaite à I’entrée)Levied mostly on c.i.f. value of imports.Exemptions apply to several products listed in the Code and in the Customs Tariff.Existing rates are 5, 15, and 25 percent; for most products, rates do not exceed 30 percent.
4.1.2 Import duly (Taxe d’importation)Levied mostly on c.i.f. value of imports.Exemptions apply to few products listed in the Code and in the Customs Tariff.Rates vary from 0 percent to 20 percent; most between 0 percent and 10 percent. For any imported product the sum of the custom duty plus import duty should be equal to 5, 15, 25, or 30 percent (maximum rate) (excluding exemptions).

20 percent single-stage lax.
4.1.3 VATLevied mostly on c.i.f. value plus customs duty and import duty.Exemptions apply to several products listed in the Code and in the Customs Tariff.
4.1.4 Excise taxLevied on a few products, mostly

luxury items.
Exemptions apply to most products.Rates varying from 10 to 120 percent. FMG 5,000/K net for secondhand clothing.
4.1.5 Import tax on petroleum products (Taxe unique surproduits petroliers)Levied mostly on volume, except lubricants on c.i.f. value, and gases per K/net.Exemption for lamp oils.Specific taxes vary per product.
5. Other taxes
5.1 Stamp duty (Droits de timbre)Levied on: (1) legal documents, (2) administrative documents, (3) receipts, and (4) commercial instruments issued.Fixed or proportional rates applied according to the type of document. Fixed rates vary from FMG 400 to FMG 1,000. Proportional rates: 0.5 percent on face value of commercial instruments and 0.05 percent on postal checks.
Source: Ministry of Budget and Development of Autonomous Provinces.

Levied on behalf of local authorities.

Source: Ministry of Budget and Development of Autonomous Provinces.

Levied on behalf of local authorities.

APPENDIX II
Table 9.Madagascar: Gross Domestic Product at Constant 1984 Prices, 1995-99(In billions of Malagasy francs at 1984 prices)
19951996199719981999
Primary sector667.3684.0696.9711.8736.0
Agriculture307.6315.2320.4315.2331.9
Livestock and fishery286.0291.0292.9306.0297.9
Forestry73.777.783.690.5106.3
Secondary sector225.4229.8240.5253.3264.0
Food, beverages and tobacco97.4106.7109.3119.0124.0
Energy34.136.943.342.644.3
Free trade zone10.112.613.816.520.2
Other83.973.674.275.175.4
Tertiary sector906.3925.6968.71,017.8. 1,073.7
Transport294.0309.8336.2351.4366.7
Construction26.328.129.433.337.2
Retail and wholesale212.8219.8225.9232.5240.1
Government105.6108.1108.1108.2108.2
Other services267.6259.8269.2292.3321.6
Of which: public sector 1/105.7108.1108.1108.2108.2
Imputed charges-32.0-32.5-33.1-37.1-39.4
GDP at factor cost1,767.11,806.91,872.91,945.72,034.3
Indirect taxes164.1165.8172.6180.4190.8
GDP at market prices1,931.21,972.72,045.52,126.12,225.1
Sources: Ministry of Finance and Economy; Ministry of Budget and Development of Autonomous Provinces; and Fund staff estimates.

Excluding public enterprises.

In thousands of Malagasy francs at 1984 prices.

Sources: Ministry of Finance and Economy; Ministry of Budget and Development of Autonomous Provinces; and Fund staff estimates.

Excluding public enterprises.

In thousands of Malagasy francs at 1984 prices.

Table 10.Madagascar: Availability and Use of Resources at Current Prices, 1995-99(In billions of Malagasy francs)
19951996199719981999
Primary sector4,109.34,807.55,266.25.719.46,366.1
Agriculture2,571.62,686.02,922.03,124.23,483.8
Livestock and fishery1,008.81,360.31,449.61,615.41,761.3
Forestry528.9761.2894.6979.81,121.1
Secondary sector1,716.92,046.62,244.52,549.32,916.7
Food, beverages and tobacco802.2968.01,006.81,190.31,339.6
Energy159.3206.0245.6262.0316.4
Free trade zone127.0246.5330.1368.6465.7
Other628.3626.2662.0728.5795.1
Tertiary sector6,885.48,449.59,389.210,674.412,228.0
Transport2,447.82,800.33,238.03,654.54,034.7
Construction170.3220.8232.5296.4355.0
Retail and wholesale1,359.02,086.42,229.32,386.32,624.2
Government573.7678.6884.01,051.41,266.0
Other services2,334.52,663.42,805.43,285.73,948.1
Imputed charges-186.0-195.4-207.8-237.6-308.6
GDP at factor cost12,525.515,108.216,692.218,705.521,202.6
Indirect taxes953.21,116.21,358.61,637.92,176.5
GDP at market prices13,478.716,224.418,050.820,343.423,379.1
Net imports of goods and nonfactor services989.9858.71,480.71,610.81,848.0
Imports of goods and nonfactor services4,240.64,184.15,419.25,968.47,634.8
Exports of goods and nonfactor services3,250.83,325.53,938.54,357.65,786.9
Total available resources14,468.617,083.119,531.521,954.225,227.1
Consumption12,993.715,195.117,391.919,415.722,211.2
Of which: public sector 1/904.2985.71,378.11,524.91,835.7
Gross investment1,474.91,888.02,139.62,538.53,015.9
Fixed1,474.91,888.02,139.62,538.53,015.9
Private666.2806.21,136.31,394.81,519.6
Public sector 1/808.71,081.81,003.31,143.81,496.3
Change in stocks
Gross domestic savings485.01,029.3658.9927.71,167.9
Public sector 1/249.8-296.5-213.5129.7424.7
Private235.31,325.8872.4798.1743.2
Sources: Ministry of Finance and Economy; Ministry of Budget and Development of Autonomous Provinces; and Fund staff estimates.

Excluding public enterprises.

Sources: Ministry of Finance and Economy; Ministry of Budget and Development of Autonomous Provinces; and Fund staff estimates.

Excluding public enterprises.

Table 11.Madagascar: Production of Rice and Other Food Crops, 1995-99(In thousands of tons)
19951996199719981999
Paddy2,4502,5002,5582,4472,570
Maize177180178152177
Manioc2,4002,3532,4302,4042,641
Sweet potatoes450500510510520
Potatoes275280280280291
Source: Ministry of Agriculture.
Source: Ministry of Agriculture.
Table 12.Madagascar: Rice Production, Imports, and Availability, 1961-99
Population 1/Paddy ProductionStocks (End of year)Net imports (Exports) 2/Total Rice Available 3/Availability
(Thousands)(Millions of tons)(Kg/person)
19615,6161,263-13672120
19625,7291,330-25697122
19635,8421,377-20727124
19645,9591,520-2!805135
19656,0781,44560844139
19666,2001,603-5864139
19676,3421,706-36891140
19686,4871,873-64952147
19696,6361,858-9999151
19706,7881,865-48965142
19716,9431,873251,042150
19727,1021,68723938132
19737,2651,730901,028142
19747,4311,84451221,118150
19757,6041,9720591,135149
19767,8032,0435681,171150
19778,0072,0679931,211151
19788,2161,92271521,196145
19798,4312,04501551,272150
19808,6512,10921761,318152
19818,8772,01281931,278144
19829,1091,9701383511,290142
19839,3482,1471221851,365146
19849,5922,131471111,343140
19859,8432,06001071,409143
198610,1002,116281621,424141
198710,3642,17837941,433138
198810,6352,14913371,385130
198910,9332,38028891,547141
199011,2392,42028761,574140
199111,5542,34230391,525132
199211,8772,45038591,568132
199312,2102,5504051,581129
199412,5762,357531561,605128
199512,9542,450621521,593123
199613,3422,50056321,519114
199713,7422,558561,663121
199814,1552,4471111,619114
1999 4/14,5792,6371631,695116
Source: Ministry of Agriculture; and INSTAT.

Population figures changed by Ministry of Agriculture, Feb. 24, 2000.

Madagascar was a net exporter of rice until 1970 (except for 1965).

Domestic paddy production (less nonhuman consumption) converted to rice equivalent plus net change in stocks and net imports.

Provisional data.

Source: Ministry of Agriculture; and INSTAT.

Population figures changed by Ministry of Agriculture, Feb. 24, 2000.

Madagascar was a net exporter of rice until 1970 (except for 1965).

Domestic paddy production (less nonhuman consumption) converted to rice equivalent plus net change in stocks and net imports.

Provisional data.

Table 13.Madagascar: Retail Prices of Ordinary Rice, 1991-99(In Malagasy francs per kilogram)
Free MarketSecurity Stocks 1/Official Distribution
1991
March624612
June549534525
September665653
December893794700
1992
March980969
June830689932
September805797950
December860875975
1993
March823787875
June630650800
September770759900
December8478611,000
1994
March1,5751,4281,000
June9589141,000
September1,3081,385850
December1,6461,5641,200
1995
March1,7351,7291,200
June1,5551,5061,800
September1,8751,8221,950
December2,0761,9751,950
1996
March2,1682,0662,150
June1,6091,6562,200
September1,7851,7442,200
December2,0551,9192,250
1997
March2,1282,0562,150
June1,6081,6191,950
September1,8761,9062,036
December2,0892,0062,200
1998
March2,1252,0712,167
June1,8752,0002,172
September1,9791,9922,225
December2,4502,5142,417
1999
March2,4732,5432,526
June2,1782,2002,434
September2,2672,2912,354
December2,3792,3832,465
Source: Ministry of Commerce and Consumption.

The data refer to the price of rice sold from the food security stock, or stock tampon.

Source: Ministry of Commerce and Consumption.

The data refer to the price of rice sold from the food security stock, or stock tampon.

Table 14.Madagascar: Production of Major Cash Crops, 1995-99 1/(In thousands of tons)
19951996199719981999
Export crops
Coffee 2/Production68.068.055.060.065.0
Marketed60.060.052.053.057.2
VanillaProduction 3/4.34.44.85.05.5
Marketed 4/0.61.21.11.11.2
ClovesProduction13.013.015.516.512.3
Marketed13.012.515.015.011.2
PepperProduction2.42.11.51.72.0
Marketed1.81.91.51.71.8
CocoaProduction4.04.84.34.34.5
Marketed3.34.54.34.34.5
Butter beansProduction7.87.88.07.87.8
Marketed4.44.57.87.07.0
SisalProduction 5/16.317.018.018.018.0
Industrial crops
Cotton 6/Production 5/24.326.036.238.534.3
SugarcaneProduction2,1002,1502,1602,1802,180
Marketed1,8222,0161,5001,5001,504
GroundnutsProduction30.036.235.834.234.5
Marketed21.422.429.029.029.3
Source: Ministry of Finance and Economy.

Data on total production are approximate; those on marketed production are more accurate.

Unroasted coffee.

Green vanilla.

Prepared vanilla (4.6 kg green = 1 kg prepared).

Most of the production is marketed.

Seed cotton.

Source: Ministry of Finance and Economy.

Data on total production are approximate; those on marketed production are more accurate.

Unroasted coffee.

Green vanilla.

Prepared vanilla (4.6 kg green = 1 kg prepared).

Most of the production is marketed.

Seed cotton.

Table 15.Madagascar: Indicative Producer Prices for Major Crops, 1995-99 1/(In Malagasy francs per kilogram)
Type of Price19951996199719981999

Est.
PaddyIndicative7257267269791,087
CoffeeIndicative6,0004,5703,000-5,0006,5005,500
ClovesIndicative1,8501,9003,0003,9897,500
VanillaFixed10,0005,1505,000-10,00010,50015,000
SugarcaneIndicative759595112112
PepperIndicative2,7002,8503,0003,0332,967
WheatIndicative
SoybeansIndicative
CottonIndicative1,6151,934
Source: Ministry of Agriculture; and INSTAT.

The fixed producer price was lifted in 1986; an official indicative price was announced in 1987. All prices are now market-determined.

Source: Ministry of Agriculture; and INSTAT.

The fixed producer price was lifted in 1986; an official indicative price was announced in 1987. All prices are now market-determined.

Table 16.Madagascar: Index of Industrial Production, 1995-99
Weights19951996199719981999
(1984= =100)
Agro-industry and food industries29.18114.5116.1111.6123.0118.1
Beverages and tobacco7.59105.9129.7142.2152.8177.4
Textiles and clothing14.6378.467.371.567.071.8
Wood industries1.09104.0109.6109.9123.0133.7
Paper and printing4.68113.365.958.656.045.2
Leather goods2.6561.259.425.622.625.5
Electrical goods2.1995.695.6102.8101.199.8
Metal works2.43143.0141.8151.4161.8166.8
Chemical industries9.05112.2115.9120.2121.7128.9
Energy18.27363.5394.0462.2454.7475.0
Construction materials2.19163.7165.2190.0193.5199.5
Transport materials1.2388.190.894.499.6105.1
Extractive industries3.86118.4110.6120.0117.180.2
Other0.96
Total100.0152.5156.5169.6172.1176.1
(Annual change in percent)
Agro-industry and food industries2.81.4-3.910.2-4.0
Beverages and tobacco9.322.59.67.516.0
Textiles and clothing1.8-14.26.2-6.37.1
Wood industries3.45.40.311.98.7
Paper and printing-5.0-41.8-11.1-4.4-19.4
Leather goods-19.7-2.9-56.9-11.812.8
Electrical goods13.30.07.5-1.6-1.4
Metal works31.1-0.86.86.8.3.1
Chemical industries-16.83.33.71.35.9
Energy12.98.417.3-1.64.5
Construction materials10.90.915.01.83.1
Transport materials-6.13.14.05.55.5
Extractive industries15.3-6.68.5-2.4-31.5
Total6.52.68.41.52.3
Sources: Ministry of Industrialization and Handicrafts; and Ministry of Energy and Mining.
Sources: Ministry of Industrialization and Handicrafts; and Ministry of Energy and Mining.
Table 17.Madagascar; Industrial Production, 1995-99
Unit19951996199719981999

Est.
Extractive industries
GraphiteTon16,11911,29515,39718,690
MicaTon4323171,1381,119
ChromileTon105,747139,272133,960134,659
Food industries
TapiocaTon551156309287321
Potato flourTon210400354
Cattle (slaughtered industrially)Head5264,7308,4364,219
Hogs (slaughtered industrially)Head202350373428
Canned meatTon59422321
Cooked pork meatsTon113137
SugarTon90,05287,60874,28079,77570,936
Edible oilsTon7512,0001,4391,280
BeerHectoliters318,842347,795233,520297,407610,074
Condensed milkTon3,2002,2292,2442,2851,355
SaltTon70,56041,75036,76229,74444,409
Tobacco
Chewing tobaccoTon424813177299320
Smoking tobaccoTon766
CigarettesTon1,9693,3712,8263,3033,633
Textiles
Cotton cloth1,000 meters24,25711,05211,57216,118
Bags for packagingTon950825907736
BlanketsTon1,4291,5051,269
StringTon1,2861,1449151,316
Paper
Rag paperTon6,9403,9634,6466,7323,500
Finished paperTon3,6902,2089691,169607
Chemical industries
SoapTon16,65416,50015,12514,51313,865
Accumulatorsunits4,9203,7364,5973,7513,130
CandiesTon2,491584632744
PaintTon1,8552,3502,2582,1311,956
Batteries1,000 units23,95822,71525,16625,16628,572
OxygenCubic meters418,514509,859524,855540,585526,275
AcetyleneCubic meters107,281110,813116,514112,451108,000
Petroleum refining
ButaneCubic meters3,9015,5919,4247,8319,639
GasolineCubic meters64,94170,62196,57392,69498,010
KeroseneCubic meters48,77954,39372,14875,41365,038
Gas oilCubic meters111,07093,689125,317110,784119,039
Fuel oilCubic meters204,533159,500211,522217,764198,848
Construction materials CementTon38,18744,33236,21744,32745,719
Metal works
Sheet metalTon5,4924,7116,1026,4786,670
Trunks and boxesTon1,2591,441408509530
Shoes
Leather1,000 pairs132158126115130
Plastic1,000 pairs547409420396444
Other1,000 pairs120324330107
Electricity
Hydraulic1,000 kilowatt-hours415,000442,430488,718503,000475,000
Thermal1,000 kilowatt-hours137,000120,790127,593139,000184,000
Sources: Ministry of Industrialization and Handicrafts; and Ministry of Energy and Mining.
Sources: Ministry of Industrialization and Handicrafts; and Ministry of Energy and Mining.
Table 18.Madagascar: Economic Activities of Manufacturing Enterprises in the Export Processing Zones (EPZs), 1995-99
19951996199719981999

Est
Number of manufacturing enterprises operating in EPZs98125136
(in percent) 1/1.81.81.5
Of which:
Textiles and hides646972
Wood processing81015
Food, beverages, and tobacco532
Other (mainly jewelry and handicrafts)144347
Total number of employees29,61536,70038,980
(in percent) 1/20.023.020.2
Wages paid (in billions of Malagasy francs)66104117
(in percent) 1/15.320.017.9
Value added (in billions of Malagasy francs)127156250
(in percent) 1/9.39.512.8
Exports (in billions of Malagasy francs)392590747
(in percent)1/38.522.749.9
Imports (in billions of Malagasy francs)191293370
(in percent) 1/13.123.721.9
Source: Project Madio: “Le Secteur Industriel Formel a Madagascar: Caracteristiques, Performance Perspectives.” Various issues, 1995-97.

In percent of the total for manufacturing sector.

Source: Project Madio: “Le Secteur Industriel Formel a Madagascar: Caracteristiques, Performance Perspectives.” Various issues, 1995-97.

In percent of the total for manufacturing sector.

Table 19.Madagascar: Enterprises with Operating Permits Under the Export Processing Zone, 1995-99 1/
199519961997199819991994-99 2/
Firms (Number)Employees (Number)Investments (In billions of FMG)
Sectors
Agro-food processing13320312,34658
Textiles1911157512638,831328
Hides and skins001-1054775
Wood processing42140211,56739
Data processing37510262,16320
Chemicals123-10854917
Electrical and Mechanical0100041295
Mineral Processing400-10538029
Handicrafts621-10151,9519
Jewelry112-1-174479
Other00030314213
Enterprises promoting and managing EPZs00000166112
Total39293112425249,048644
Source: Ministry of Finance and Economy.

Data for 1995-99 represents annual net changes in firms with operating permits, i.e., number of firms obtaining permits less number of firms losing permits.

Number of firms and employees or value of investment resulting from the net cancellation and award of operating permits in the period 1990-99.

Source: Ministry of Finance and Economy.

Data for 1995-99 represents annual net changes in firms with operating permits, i.e., number of firms obtaining permits less number of firms losing permits.

Number of firms and employees or value of investment resulting from the net cancellation and award of operating permits in the period 1990-99.

Table 20.Madagascar: Production and Export of Major Minerals, 1991-99
199119921993199419951996199719981999
Production (thousand tons)
Chromite149.5160.8144.375.0128.5110.1117.8119.9
Graphite11.413.011.714.716.514.314.014.3
Sapphire
Exports (thousand tons)
Chromite129.3108.4143.890.0128.5110.1117.8115.296.2
Graphite13.610.711.215.616.514.314.013.114.8
Sapphire (in million grams)2.53.8
Export value (millions of SDRs)
Chromite6.75.55.63.87.76.86.55.83.3
Graphite7.05.34.85.56.35.45.05.05.8
Sapphire2.09.1
Unit value (SDRs per ton)
Chromite51.950.538.942.259.961.855.250.334.3
Graphite515.0493.0431.0353.1381.8377.6357.1381.7391.9
Sapphire (in grams)780.72377.6
Source: Ministry of Energy and Mining.
Source: Ministry of Energy and Mining.
Table 21.Madagascar: Tourism Indicators, 1991-99
199119921993199419951996199719981999
Number of tourists34,89153,65555,35565,83974,61982,681100,762121,207138,253
Annual growth (in percent)-34.153.83.218.913.310.821.920.314.1
Hotel capacity (number of rooms)3,0403,7504,0005,0006,0666,2466,6377,207
Average capacity utilization (in percent) 1/38.952.055.052.555.057.057.058.063.0
Number of tourist nights334,334436,105608,725722,718770,5701,157,7341,410,6682,302,9332,626,807
Annual growth (in percent)-48.930.439.618.76.650.221.863.314.1
Average length of stay (days)9.68.111.011.010.315.015.020.020.0
Foreign exchange receipts from tourism (in millions of SDRs)20.027.728.432.241.544.652.965.572.9
Annual growth (in percent)-32.938.52.513.428.97.518.623.811.3
Source: Ministry of Tourism.

Coverage is not complete.

Source: Ministry of Tourism.

Coverage is not complete.

Table 22.Madagascar: Production and Consumption of Electricity, 1991-99(In millions of kilowatt-hours)
199119921993199419951996199719981999
Production 1/473506532546552563616642659
Hydroelectric336335382389415442489503475
Thermal137171150157137121128139184
Consumption394410438450439441485528579
Public lighting577777889
Households126145157162169183200226249
Other263258274281264252278293321
Source: Ministry of Energy and Mining.

Electric power generated by the electricity and water company, that is, excluding electricity generated by industries for their own consumption.

Source: Ministry of Energy and Mining.

Electric power generated by the electricity and water company, that is, excluding electricity generated by industries for their own consumption.

Table 23.Madagascar: Prices of Petroleum Products, 1995-99 1/(In Malagasy francs per liter)
19951996199719981999
Dec.Mar.Jun.Sep.Dec.Mar.Jun.Sep.Dec.Mar.Jun.Sep.Dec.Mar.Jun.Sep.Dec.
Gasoline (premium)1,9301,8602,1202,1502,1802,2362,3802,3802,3802,5302,5302,5302,5302,5302,9103,3503,980
Gasoline (regular)1,6101,5501,8001,8301,8601,9132,0002,0002,0002,1062,0902,0902,0902,0902,2902,4802,950
Gas oil1,3201,3401,5101,4601,5001,5531,6501,6501,6501,7271,7001,7001,7001,7001,7701,8402,110
Kerosene1,1901,2201,3801,3001,3401,4201,5001,4501,4501,4501,4501,4501,4501,4601,5201,6301,850
Natural gas 2/25,00025,00029,50029,50034,00034,00034,00034,00034,00042,00042,00045,00045,00045,00055,00055,00055,000
Source: Ministry of Energy and Mining.

Wholesale prices from storage facilities; retail prices are higher by a small, fixed-profit margin. Prices recorded in the capital city only.

Prices are for a 12.5 kilograms container.

Source: Ministry of Energy and Mining.

Wholesale prices from storage facilities; retail prices are higher by a small, fixed-profit margin. Prices recorded in the capital city only.

Prices are for a 12.5 kilograms container.

Table 24.Madagascar: Population and Labor Force, 1991-99(In thousands, unless otherwise indicated)
199119921993199419951996199719981999
Population11,55411,87712,21012,57612,95413,34213,74214,15514,579
Percentage change2.82.82.83.03.03.03.03.03.0
Labor force5,6535,8115,8746,1656,3506,5406,737
Agriculture4,9265,0575,100
Manufacturing and mining828486
Construction444546
Commerce, banking, and insurance141145149
Transportation and telecommunications404142
Administration180193208
Miscellaneous 1/240246243
Sources: National Institute of Statistics; and National Social Security Fund.

No data have been published by the National Social Security Fund after 1993.

Includes craftspeople and domestics.

Sources: National Institute of Statistics; and National Social Security Fund.

No data have been published by the National Social Security Fund after 1993.

Includes craftspeople and domestics.

Table 25.Madagascar: Distribution of Population and Civil Servants, 1990-99(In percent of total)
PopulationCivil Servants
Region1997 Est.1990199719981999
Antananarivo29.042.243.042.842.4
Antsiranana7.86.86.36.36.4
Fianarantsoa21.716.817.116.817.2
Mahajanga11.19.99.69.79.9
Toamasina15.812.812.812.812.7
Toliara14.611.411.211.611.4
Total100.0100100100100
Sources: Ministry of Finance and Economy; and Ministry of Budget and Development of Autonomous Provinces.
Sources: Ministry of Finance and Economy; and Ministry of Budget and Development of Autonomous Provinces.
Table 26.Madagascar: Minimum and Maximum Monthly Wages, 1984-99 1/(In Malagasy francs)
Agricultural 2/Nonagricultural 3/
MinimumMaximumMinimumMaximum
January 1984-July 198418,00072,00017,67570,718
August 1984-June 198518,90074,10018,56372,701
July 1985-September 198620,46077,70020,33176,317
October 1986-February 198722,20080,40021,80478,969
March 1987-June 198724,30086,10023,86784,568
July 1987-January 198826,08092,40025,61890,772
February 1988-February 198929,300100,78028,77299,006
March 1989-February 199032,840111,74032,274109,770
March 1990-January 199135,600121,10035,013119,095
February 1991-December 199341,200140,18040,490137,728
January 1994-February 199563,420158,76062,312155,979
March 1995-October 1996112,435244,080110,550239,993
November 1996-March 1998123,780268,704121,591263,947
April 1998-May 1999142,285308,880139,860303,638
Since June 1999156,514339,768153,846334,002
Source: Ministry of Civil Service, Labor, and Social Laws.

The “minimum” indicates the minimum wage in the lowest wage category, and the “maximum” indicates the minimum wage in the highest wage category.

On the basis of 200 working hours per month.

On the basis of 173.33 working hours per month.

Source: Ministry of Civil Service, Labor, and Social Laws.

The “minimum” indicates the minimum wage in the lowest wage category, and the “maximum” indicates the minimum wage in the highest wage category.

On the basis of 200 working hours per month.

On the basis of 173.33 working hours per month.

Table 27.Madagascar: Consumer Price Index, 1995-99(Period averages; August 1971-July 1972=100)
Weights199519961997199819981999
IIIIIIIVIIIIIIIV
(Traditional households) 1/
Food60.353,3263,9594,1214,3684,3824,3124,2854,4914,6744,7684,9155,272
Lighting and fuel9.142,6563,3443,6624,0114,0424,0513,9504,0024,0014,0194,0594,089
Domestic services1.829491,0521,0521,0521,0521,0521,0521,0521,3311,3311,3311,331
Maintenance, clothing, and medicine14.852,9123,3343,4903,7263,6743,7173,7373,7773,8183,8373,9083,924
Miscellaneous13.843,4664,3274,4764,7004,4084,7074,8384,8474,8995,0915,2665,407
General index100.003,1793,8083,9794,2254,1894,1954,1914,3274,4564,5434,6714,910
Annual change (in percent)49.019.84.56.25.07.16.85.96.48.311.513.5
(Modern households)
Food45.163,1063,8754,2714,9914,7374,9685,1035,1595,2645,3155,5275,592
Lighting and fuel6.082,1362,3282,5893,2113,1333,1573,2463,3083,2323,2503,4943,514
Domestic services11.261,2481,3711,3711,3711,3711,3711,3711,3711,7321,7321,7321,732
Maintenance, clothing, and medicine17.992,8903,3693,6393,9673,9093,9553,9814,0224,1274,1994,3104,386
Miscellaneous19.512,8223,3853,5863,8193,8633,7673,7763,8724,0384,0304,1594,467
General index100.002,7443,3123,5954,0633,9414,0364,1094,1644,2994,3344,4904,595
Annual change (in percent)46.620.78.513.012.515.313.710.79.17.49.310.3
(Household combined) 2/
Combined consumer price index100.003,0703,6843,8834,1844,1274,1554,1704,2864,4164,4914,6264,831
Source: National Institute of Statistics.

Low-income households.

Weights of 0.75 and 0.25 are applied to the index of traditional households and to the index of modern households, respectively.

Source: National Institute of Statistics.

Low-income households.

Weights of 0.75 and 0.25 are applied to the index of traditional households and to the index of modern households, respectively.

Table 28.Madagascar: Budgetary Revenue, 1995-99(In billions of Malagasy francs)
19951996199719981999
Tax revenue1,1211,3741,6881,9842,580
Taxes on net income168258329340398
Companies83164202217207
Individuals59598798129
IRNS13132026106
Tax on wages and salaries (IRSA)4646677223
Other2636412462
Taxes on property1417272325
Taxes on goods and services299342370411662
TUT - TST - VAT242167178206389
Excises1746678128
Fiscal monopoly profits4691112117112
Other99141133
Taxes on foreign trade6347509481,1971,481
Import duties5907329411,1971,481
Customs duty81103132146149
Fiscal duty149181235279265
Value-added tax on imports281258341592624
Petroleum products (TUPP)79156187142340
Other0344638105
Export duties4419700
Export duty4419700
Export surcharge00000
Other taxes77151414
Nontax revenue2830599287
Budgetary revenue1,1491,4051,7472,0772,667
Sources: Ministry of Finance and Economy; and staff estimates.
Sources: Ministry of Finance and Economy; and staff estimates.
Table 29.Madagascar: Current Budgetary Expenditure, 1995-99
19951996199719981999
Economic classification(In billions of Malagasy francs)
Current expenditure1,523.41,703.81,960.22,146.12,175.0
Personnel444.5523.0669.6826.41,000.6
Of which: wages and salaries
Other noninterest expenditure365.8396.9583.0671.9679.0
Goods and services212.0184.2336.7318.0402.2
Transfers and subsidies153.8212.7246.3353.9276.8
Interest on public debt687.9759.2548.9553.8492.8
Foreign interest obligations624.3628.6503.5466.5325.0
Domestic interest obligations63.6130.645.487.3167.8
Treasury operations 2/25.224.7120.194.02.6
Emergency expenditure 3/4/0.00.038.50.00.0
Budgetary expenditure1,498.01,679.11,801.62,052.02,172.0
General expenditure261.9416.9688.7635.9695.0
Of which: defense115.9200.8267.4274.5282.8
Education188.2187.7258.5289.0392.0
Of which: universities40.143.167.275.280.1
Health73.565.998.7141.2150.3
Social and community services10.914.619.327.734.1
Economic services152.578.7122.1120.7143.2
Of which
Agriculture 4/12.549.268.751.955.9
Public works10.98.216.629.441.7
Others 5/811.0915.3614.3837.5757.4
Of which: interest on government debt687.9759.2548.9553.8492.8
Memorandum items:(In percent of GDP)
Noninterest budgetary expenditure6.05.76.93.32.9
Social sector current expenditure 6/2.01.72.12.32.5
Of which: health0.50.40.50.70.6
Defense0.91.21.51.31.2
Source: Ministry of Finance and Economy; Ministry of Budget and Development of Autonomous Provinces; and Fund staff estimates.

Beginning in 1999, treasury revenue is classified as a negative outlay in treasury expenditures, which from then on are reported on a net basis.

Expenditures projected under the revised program for 1997 include contingent once-and-for-all outlays of FMG 9 billion and an additional FMG 13 billion of repayment of arrears, as specified in page 12, paragraph 24, footnote 11 of EBS/97/159.

For 2000 the government budgetized FMG 69 billion to address exceptional developments related to the resurgence of a cholera epidemic and the devastating effects of recent cyclones.

Including national defense and security expenditures.

Including livestock, fishing, water, and forestry.

Including revenue sharing with local government and payments to international organizations.

Including expenditure on education, health, and social and community services.

Source: Ministry of Finance and Economy; Ministry of Budget and Development of Autonomous Provinces; and Fund staff estimates.

Beginning in 1999, treasury revenue is classified as a negative outlay in treasury expenditures, which from then on are reported on a net basis.

Expenditures projected under the revised program for 1997 include contingent once-and-for-all outlays of FMG 9 billion and an additional FMG 13 billion of repayment of arrears, as specified in page 12, paragraph 24, footnote 11 of EBS/97/159.

For 2000 the government budgetized FMG 69 billion to address exceptional developments related to the resurgence of a cholera epidemic and the devastating effects of recent cyclones.

Including national defense and security expenditures.

Including livestock, fishing, water, and forestry.

Including revenue sharing with local government and payments to international organizations.

Including expenditure on education, health, and social and community services.

Table 30.Madagascar: Central Government Personnel Expenditure and Number of Civil Servants, 1995-99(In thousands of Malagasy francs)
19951996199719981999
Personnel expenditure (commitment basis)1/2/444.5523.0669.6826.41000.6
Annual change in percent34.917.728.023.421.1
In percent of current budgetary expenditure29.230.734.238.546.0
In percent of total budgetary expenditure 3/29.731.137.240.346.1
In percent of total government expenditure18.718.121.321.626.4
In percent of GDP3.33.23.74.04.3
Civil servants (number at end-December) 4/
Civilian92714.093476.093971.0
Military21475.021475.021760.0
Total114189.0114951.0115731.00.00.0
Annual change in percent
Memorandum items:
Annual average civil servants’ salary
In thousand of Malagasy francs
Index, 1990=100 5/
Annual change in percent
Total government expenditure2374.02883.03137.03819.03791.0
Nominal GDP13479.016224.018078.020406.023379.0
Sources: Ministry of Finance and Economy; Ministry of Budget and Development of Autonomous Provinces; and Fund staff estimates.

Including only regular staff. Expenditure on some categories of temporary personel is included in goods and services outlays.

Excluding medical expenses.

Consisting of current budgetary expenditure and capital budgetary expenditure.

Data on actual positions filled, which may differ from other sources.

Annual average of civil servants’ salary deflated by the consumer price index (traditional).

Sources: Ministry of Finance and Economy; Ministry of Budget and Development of Autonomous Provinces; and Fund staff estimates.

Including only regular staff. Expenditure on some categories of temporary personel is included in goods and services outlays.

Excluding medical expenses.

Consisting of current budgetary expenditure and capital budgetary expenditure.

Data on actual positions filled, which may differ from other sources.

Annual average of civil servants’ salary deflated by the consumer price index (traditional).

Table 31.Madagascar: Structure and Adjustment of Public Sector Salaries, 1995-99(In thousands of Malagasy francs)
Jan. 1995 - Mar. 1995Apr. 1995 - Dec. 1995Jan. 1996- Dec. 1996Jan. 1997- Dec. 1997Jan. 1998 - Apr. 1998Since May-98Jan. 1999 - Apr-99April- Dec-99
Category I
Minimum110.6129.0135.3208.9239.3264.7267.5
Maximum162.1192.9203.4287.0317.5398.6355.0
(Midpoint)136.4161.0169.4248.0278.4331.6311.3
Category II
Minimum131.8157.3165.3242.8273.5298.1305.7
Maximum195.0228.1241.1331.1365.7501.9408.9
(Midpoint)163.4192.7203.2287.0319.6400.0357.3
Category III
Minimum145.9174.5183.7264.2295.2328.6356.7367.3
Maximum261.9295.5314.0417.7460.5484.6690.0541.8
(Midpoint)203.9235.0248.9341.0377.9406.6523.4454.6
Category IV and V
Minimum177.9210.3321.9308.4341.4357.6548.5399.8
Maximum371.4405.1432.8559.5613.0660.61,076.0702.0
(Midpoint)274.7307.7327.4434.0477.2509.1812.3550.9
Category VI and VII
Minimum209.6242.9257.1350.0385.6414.9639.5452.0
Maximum417.0450.7482.3619.0672.6750.61,358.4818.2
(Midpoint)313.3346.8369.7484.5529.1582.8999.0635.1
Category VIII and IX
Minimum247.6281.1298.5399.4438.4491.3771.8535.6
Maximum506.2540.2579.4734.9800.6926.11,626.81,044.1
(Midpoint)376.9410.7439.0567.2619.5708.71,200.8789.9
Category X
Minimum258.3291.9310.1413.0455.7511.01,500.2667.1
Maximum632.4666.7716.6898.9975.31,198.91,738.81,306.8
(Midpoint)445.4479.3513.4656.0715.5855.01,619.5987.0
Sources: Ministry of Finance and Economy; and Ministry of Budget and Development of Autonomous Provinces.
Sources: Ministry of Finance and Economy; and Ministry of Budget and Development of Autonomous Provinces.
Table 32.Madagascar: Revenue and Expenditure of the National Social Security Fund, 1995-99(In billions of Malagasy francs)
19951996199719981999

Est.
Revenue47.253.657.166.293.6
Social security contributions38.943.749.662.284.7
Employees3.53.24.04.46.8
Employers35.340.545.757.877.9
Interest revenue8.19.46.33.58.1
Other revenue0.30.51.20.40.7
Expenditure61.258.075.6106.8102.2
Social benefits28.936.246.646.050.4
Current expenditure10.311.715.017.114.4
Salaries and wages4.85.66.96.87.5
Goods and services5.55.98.010.26.6
Subsidies and other transfers0.10.10.10.10.2
Capital expenditure13.24.418.540.68.6
Overall surplus/deficit (-)8.75.7-4.53.028.9
Source: National Social Security Fund.
Source: National Social Security Fund.
Table 33.Madagascar: Foreign Reserve Assets and Liabilities of the Central Bank, 1995-99(In millions of SDRs; end of period)
19951996199719981999
DecemberMar.Jun.Sep.Dec.Mar.Jun.Sep.Dec.
Foreign assets73.7167.9208.4199.7186.3164.3121.8134.4124.5140.5165.5
Of which: time deposits43.4112.46.66.611.378.567.430.6110.5120.1121.7
Foreign liabilities52.353.154.152.148.446.443.441.338.651.048.0
Nonresident deposits2.62.32.41.81.81.31.91.32.51.92.1
International organizations0.00.00.30.10.20.10.30.10.00.20.2
IMF49.350.851.550.246.345.141.239.936.148.945.8
External payments arrears0.40.00.00.00.00.00.00.00.00.00.0
Net foreign assets21.4114.8154.3147.6138.0117.978.393.085.989.4117.5
Excluding IMF and arrears71.1165.6205.8197.8184.3162.9119.6133.0122.0138.3163.3
Memorandum item:
Exchange rate: Malagasy francs per SDR (end of period)5,085.56,214.17,161.57,400.37,261.67,210.67,608.28,194.49,003.18,774.58,984.5
Source: Central Bank of Madagascar.
Source: Central Bank of Madagascar.
Table 34.Madagascar: Summary Accounts of the Commercial Banks, 1995-99(In billions of Malagasy francs; end of period)
19951996199719981999
DecemberMar.Jun.Sep.DecemberMar.Jun.Sep.December
BeforeAfterBeforeAfter
BFV RestructuringBTM Restructuring
Reserves375.2742.1671.5671.7631.5666.4678.8678.8641.1627.0653.6887.1887.1
Cash26.529.526.325.938.430.536.836.837.958.148.977.477.4
Deposits at central bank348.7712.6645.3645.8593.1635.8642.0642.0603.2568.9604.7809.7809.7
Net foreign assets505.2461.9665.8624.0630.5581.2576.0576.0540.6549.6605.9626.0656.2
Claims on government (net)49.343.0196.6259.8206.5148.1150.9294.4450.6371.8317.7204.1340.0
Credit to government174.0206.3356.5436.4375.1267.6292.9436.4599.2521.1440.0345.1481.0
Government deposits124.8163.3159.9176.6168.5119.5142.0142.0148.5149.3122.3140.9140.9
Claims on private sector and state enterprises1,540.81,572.01,797.61,727.21,813.92,045.42,083.91,811.81,769.51,886.32,022.12,159.61,937.5
Deposits1,845.32,214.02,650.12,569.62,566.22,582.92,733.12,733.12,722.52,778.42,862.43,226.83,215.8
Demand deposits1,074.71,338.31,643.71,603.01,695.01,702.61,783.11,783.11,818.61,848.81,883.52,126.82,115.8
Time deposits493.4592.1567.4533.9413.1438.3478.8478.8459.2395.5440.8490.7490.7
Foreign exchange deposits277.1283.6439.0432.7458.1442.0471.3471.3444.7534.1538.2609.3609.3
Short-term bonds59.495.570.498.3104.4135.2129.8129.8137.9145.6158.7151.8151.8
Net recourse to the central bank150.1-24.257.341.156.5112.1102.7102.7101.792.582.675.175.1
Long-term foreign liabilities26.024.933.332.425.424.725.125.126.434.740.570.270.2
Net capital389.6535.9645.9698.0724.4650.0537.8399.5445.2415.2437.9490.8445.8
Other items (net)0.1-27.2-125.3-156.8-194.5-63.9-39.0-29.3-31.9-31.617.2-137.9-137.9
Currency gains/losses-10.2-6.98.42.32.33.30.30.33.13.23.99.79.7
Other10.3-20.3-133.7-159.1-196.8-67.3-39.3-29.6-35.0-34.813.3-147.6-147.6
Memorandum items:
Custom duty bills10.313.31.49.25.39.20.50.57.72.40.12.12.1
Post office checking deposits8.911.215.015.820.419.311.911.916.413.212.112.312.3
Private sector savings deposits with the National Savings Fund37.556.382.290.7100.1107.6116.4116.4122.7118.6118.6135.7135.7
Source: Central Bank of Madagascar.
Source: Central Bank of Madagascar.
Table 35.Madagascar: Structure of Market Interest Rates, 1995-99(In percent per annum)
Central BankMoney MarketTreasury Bills
Base rateDiscount rate 1/Lending 2-10 daysOvernight lendingLending on bidDeposits on bidInter-bankOpen marketPrimary marketSecondary market (weighted average)
4 weeks12 weeks24 weeksWeighted average
(End of period)(Weighted period average)
199533.0038.0040.0030.7525.2624.1428.9917.1118.0718.56
199617.0022.0024.0029.8320.0222.7432.0025.0522.9430.67
19979.0014.0016.006.4810.278.137.739.058.346.40
199810.0012.5014.505.4410.4613.209.4811.2911.5911.138.99
199915.0017.19175019.5016.1115.2312.3015.1515.4414.6414.99
1997I15.0020.0022.0010.3311.3511.2911.7311.48
II11.0016.0018.007.447.927.928.458.14
III11.0016.0018.004.5710.274.556.087.376.34
IV9.0014.0016.004.644.216.598.367.026.40
1998I9.0014.0016.005.345.145.896.125.885.14
II9.0014.0016.004.968.755.185.708.688.138.035.04
III10.0012.5014.506.399.9414.778.6513.3415.7013.819.91
IV10.0012.5014.5011.1015.8114.2716.2116.1815.7711.78
1999I10.0012.5014.5010.839.5012.6213.1012.0210.35
II12.0014.5016.5012.5513.2311.4214.6915.2014.3512.09
III15.0017.3717.5019.5016.0017.4614.4617.3617.2016.6816.89
IV15.0017.1917.5019.5016.2216.4714.0416.5116.3515.8515.87
1999Jan10.0012.5014.5014.5012.7215.7916.5115.3211.81
Feb10.0012.5014.509.5012.7112.5412.129.20
Mar10.0012.5014.5010.277.8210.6410.299.729.58
Apr12.0014.5016.5012.559.3213.2413.8513.0011.83
May12.0014.5016.5012.5015.2911.2815.1015.4914.4612.63
Jun12.0014.5016.5012.6218.2314.4017.2217.7016.8812.89
Jul12.0014.5016.5017.7514.6917.1716.4716.4717.81
Aug15.0018.3717.5019.5014.7417.6417.9017.0312.07
Sep15.0017.3717.5019.5016.0017.3913.5617.2717.0516.4116.98
Oct15.0016.9017.5019.5015.9116.5314.1516.5916.2815.8916.08
Nov15.0016.6817.5019.5016.0016.4713.5916.2316.3815.7215.94
Dec15.0017.1917.5019.5016.3516.1314.2316.7416.4215.9315.34
Source: Central Bank of Madagascar.

From August 1999, the central bank discount rate is the average rate on 12-and 24-week Treasury bills at the previous auction plus a margin, currently 50 basis points, subject to the base rate as a minimum. This rate is also charged on the Treasury’s statutory advances from the central bank.

Source: Central Bank of Madagascar.

From August 1999, the central bank discount rate is the average rate on 12-and 24-week Treasury bills at the previous auction plus a margin, currently 50 basis points, subject to the base rate as a minimum. This rate is also charged on the Treasury’s statutory advances from the central bank.

Table 36.Madagascar: Structure of Commercial Bank Interest Rates, 1995-99(In percent per annum)
Base RateLending RatesDeposit RatesLending RatesDeposit Rates
Short termMedium termTime & > one yearForeign currencyShort termMedium termTime & > one yearForeign currency
(Midpoint of the range; end of period) 1/(Midpoint of weighted averages) 2/
199524.1126.0022.5011.753.8521.2020.2412.612.88
199619.7323.2520.7512.002.8921.9022.9513.562.39
199714.0119.0017.907.252.6819.9020.8519.3617.87
199813.5018.2517.385.002.5017.6317.7515.4716.47
199916.5021.1317.757.501.7518.5918.4216.5816.93
1995I20.6822.4019.5010.131.3821.0120.1510.641.25
II21.9821.0022.7512.383.0020.1417.8113.754.40
III22.7724.7522.7512.133.1321.5120.4112.612.37
IV24.1126.0022.5011.753.8522.1622.5813.443.51
1996I24.4925.7524.5014.503.2522.4522.7714.222.17
II24.0025.3823.6314.502.1423.6724.0314.531.58
III24.5325.2523.6312.132.2521.6123.8713.502.17
IV19.7323.2520.7512.002.8919.8821.1412.003.66
1997I17.5019.5021.409.261.7521.6420.6810.171.08
II15.5019.5021.409.132.5020.3921.8810.071.04
III16.0020.0019.157.502.5019.1317.289.481.06
IV14.0119.0017.907.252.6818.4717.629.031.10
1998I12.5018.5016.385.502.5018.3515.548.781.07
II12.5018.1316.134.252.5017.3714.929.541.23
III12.5018.2516.134.252.5017.3815.369.121.33
IV13.5018.2517.385.002.5017.4116.079.862.15
1999I13.5018.2516.635.002.5017.9516.219.801.87
II14.5018.7517.135.752.5017.8016.679.801.27
III16.0420.6317.757.001.7520.9117.0610.311.70
IV16.5021.1317.757.501.7517.7116.3710.881.70
Source: Central Bank of Madagascar.

On new business only; reported as a range by the banks.

Calculated by the banks on their total outstandings; the midpoint is a simple average of the highest and lowest rates reported by the banks.

Source: Central Bank of Madagascar.

On new business only; reported as a range by the banks.

Calculated by the banks on their total outstandings; the midpoint is a simple average of the highest and lowest rates reported by the banks.

Table 37.Madagascar: Issues and Outstandings of Treasury Bills, 1995-99(Nominal values; in billions of Malagasy francs, unless otherwise indicated)
Total IssueOf Which: nonbanking sector 1/Total OutstandingOf Which: nonbanking sector
Treasury preannoun cement 2/Total bidBids acceptedTotal bidBids acceptedNet PurchasesStock at end of periodNet PurchasesStock at end of periodPercentage of total
TotalOf which: competitive market 3/PercentagePercentagePercentagePercentagePercentage
(1)(la)(la)/(1)(2)(2)/(1)(3)(3)/(2)(4)(4)/(la)(5)(5)/(4)(6)(7)(8)(9)(9)/(7)
1995896.1824.592.0-78.8180.931.531.517.4
19961,694.51,387.681.995.7276.647.779.228.6
19971,099.51,059.596.42,909.5264.61,650.056.7286.127.0177.261.9198.4475.049.1128.327.0
19982,338.01,925.082.32,899,0124.01,953.267.4845.543.9632.974.9156.1631.1163.0291.346.2
19992,120.01,875.088.43,289.9155.22,545.177.41,357.671.81,069.678.818.1649.2111.9403.262.1
19971675.0502.874.5178.7455.318.497.621.4
II252.0252.0100.0908.1408.745.0-1.6453.715.3112.924.9
III352.5352.5100.0496.3140.8273.555.194.826.967.971.6-70.0383.7-18.594.424.6
IV495.0455.091.9B30.0167.7465.056.0135.129.771.452.991.3475.033.9128.327.0
1998I475.0350.073.7853.1179.6420.049.2148.742.571.247.973.0548.0-7.4120.922.1
II590.0490.083.1777.5131.8514.866.2204.041.6164.980.838.7586.763.8184.731.5
III600.0480.080.0574.995.8472.482.2180.537.6167.692.944.4631.187.8272.543.2
IV673.0605.089.9693.5103.0546.078.7312.351.6229.273.40.0631.118.8291.346.2
1999I540.0475.088.01,118.8207.2636.556.9388.581.8220.256.7110.0741.1-9.0282.438.1
II675.0625.092.6751.7111.4724.996.4277.844.4266.095.811.3752.429.4311.741.4
III485.0425.087.6606.6125.1524.486.4285.664.9231.681.1-72.3680.144.9356.652.4
IV420.0350.083.3812.9193.5659.381.1405.8115.9351.886.7-30.9649.246.6403.262.1
1999Jan180.0160.088.9324.4180.2182.256.2134.784.277.057.1-1.3629.720.6311.949.5
Feb180.0160.088.9503.1279.5184.536.7154.996.852.934.116.7646.4-50.3261.640.5
Mar180.0155.086.1291.3161.8269.892.698.963.890.491.494.6741.020.8282.438.1
Apr320.0295.092.2356.9111.5337.494.5110.937.6105.895.411.7752.813.0295.339.2
May195.0180.092.3218.5112.0216799.2110.761.5108.998.5-10.3742.424.7320.043.1
Jun160.0150.093.8176.3110.2170.896.956.237.551.291.19.9752.4-8.3311.741.4
Jul170.0160.094.1251.7148.1192.976.678.845.071.090.1-18.8733.621.4333.145.4
Aug190.0175.092.1235.9124.2212.390.0124.971.4107.385.9-2.5731.117.7350.848.0
Sep110.090.081.8155.8141.6119.276.581.991.053.365.1-51.0680.15.8356.652.4
Oct185.0165.089.2413.5223.5300.672.7178.3108.0148.083.011.0691.124.6381.255.2
Nov110.080.072.7194.4176.7183.694.4129.5161.9118.791.7-1.6689.525.9407.159.0
Dec125.0105.084.0205.0164.0175.185.498.093.385.186.8-40.3649.2-3.9403.262.1
Source: Central Bank of Madagascar.

Competitive market only, since May 16, 1997.

Since May 16, 1997 only.

The noncompetitive segment of the market is open only to intermediaries in the secondary market; bills are sold at a price equal to the average of bids in the competitive auction market.

Source: Central Bank of Madagascar.

Competitive market only, since May 16, 1997.

Since May 16, 1997 only.

The noncompetitive segment of the market is open only to intermediaries in the secondary market; bills are sold at a price equal to the average of bids in the competitive auction market.

Table 38.Madagascar: Profitability of Banks, 1995-99(In millions of Malagasy francs)
1992199319941995199619971998

June
1998

Sept.
19981999

Sept.
1. Margin on treasury and financial operations4,76214,46021,605-24,32762,96862,16225,94340,13654,26759,232
Revenue (including short-term placements)15,88120,56344,28066,97688,88762,28125,98140,25755,70059,599
Cost (including refinancing and penalties)11,1196,10322,67591,30325,919119381211,433367
2. Margin on operations with customers70,60350,24482,768147,245120,642110,24860,45197,058142,182136,965
Revenue (interest received on loans)138,646137,237177,537249,042259,291195,23085,334133,959192,290179,597
Cost (interest paid on deposits)68,04386,99394,769101,797138,64984,98224,88336,90150,10842,632
3. Margin on other operations34,33131,744164,164145,539114,743121,03659,93994,040131,508114,758
Revenue38,17435,529180,530173,116138,447164,967129,161221,440314,959303,013
Of which: revenue from foreign exchange operations9,0273,251124,56266,40165,18985,10887,443157,879226,879234,637
Cost3,8433,78516,36627,57723,70443,93169,222127,400183,451188,255
Of which: cost of foreign exchange operations1,41243210,40423,96212,88927,70562,023116,561168,967177,136
4. Net banking earnings (l)+(2)+(3)109,69696,448268,537268,457298,353293,446146,333231,234327,957310,955
5. Other revenues1,8452,1223,4656,1707,8118,3214,6407,3229,6856,083
6. Total net banking earnings (4)+(5)111,54198,570272,002274,627306,164301,767150,973238,556337,642317,038
7. Operating cost52.61257,23379,816114,240132,426144,34374,938115,201169,215137,039
Staff24,01027,69838,54557,02067,11972,97538,11657,56480,27857,745
Overhead28,60229,53541,27157,22065,30871,36836,82257,63788,93779,294
8. Amortization10,49812,74811,64514,60614,21217,6878,99914,41718,57618,715
9. Total costs (7)+(8)63,11069,98191,461128,846146,638162,03083,936129,618187,791155,754
10. Net earnings balance (6)-(9)48,43128,589180,541145,781159,527139,73767,036108,938149,851161,284
11. Net provisions for nonperforming portfolios45,24558,03678,317176,5156,25558,344-1,018-3,267-2,410-266
12. Other provisions4,070-1,23751,70247,90439,853-12,371-3,369-2,3734,820200
13. Other profits and losses-13,9796,823-6,77139,37764-6,730-2,064-1,650-3,167-5,338
14. Corporate tax8,3883,95541,41544,49353,29843,70019,82032,47640,95652,087
15. Net balance (10)-(11)-(12)+(I3)-(14)-23,251-25,3422,335-83,75360,18443,33449,53980,452103,318103,925
Memorandum item:
Ratio of operating costs to total earnings (9)/(6) (in percent56.671.033.646.947.953.755.654.355.649.1
Source: Financial and Banking Supervision Commission (CSBF), Annual Reports.
Source: Financial and Banking Supervision Commission (CSBF), Annual Reports.
Table 39.Madagascar: Composition of Exports, f.o.b., 1995-99(Values in millions of SDRs; volumes in thousand tons; and unit values in SDR per kilogram)
19951996199719981999

Prov.
Coffee
Value61.242.623.929.421.9
Volume39.244.225.930.027.9
Unit price1.61.00.91.00.8
Vanilla
Value27.213.56.911.819.8
Volume0.81.20.70.71.3
Unit price36.311.610.717.314.9
Cloves
Value7.23.68.96.924.7
Volume17.17.115.89.911.9
Unit price0.40.50.60.72.1
Pepper
Value2.02.82.10.91.0
Volume1.41.90.90.40.4
Unit price1.41.52.32.52.5
Shellfish
Value38.843.646.850.944.2
Volume8.28.08.08.57.2
Unit price4.75.45.86.06.1
Sugar
Value9.411.58.25.011.6
Volume22.325.720.611.631.2
Unit price0.40.50.40.40.4
Meat
Value5.82.70.90.10.8
Volume3.81.80.60.00.7
Unit price1.51.61.41.01.1
Cocoa
Value2.52.30.61.00.8
Volume3.32.90.70.91.1
Unit price0.80.80.91.10.8
Cotton cloth
Value7.47.112.328.123.0
Volume2.01.52.56.56.6
Unit price3.74.85.04.33.5
Sisal
Value2.83.51.41.21.2
Volume11.211.03.82.72.7
Unit price0.30.30.40.40.4
Petroleum products
Value10.09.010.68.09.8
Volume185.1121.8162.9159.9152.3
Unit price0.10.10.10.10.1
Chromite
Value7.76.86.55.83.3
Volume128.5110.1117.8115.296.2
Unit price0.10.10.10.10.0
Graphite
Value6.35.45.05.05.8
Volume16.514.314.013.114.8
Unit price0.40.40.40.40.4
Essence of cloves
Value3.72.93.82.84.3
Volume1.61.01.41.01.6
Unit price2.42.92.72.72.7
Rice
Value0.20.00.00.00.0
Volume0.00.00.00.00.0
Unit price0.00.00.00.00.0
Other items 1/
Value82.882.393.182.5110.5
Volume0.60.70.90.91.1
Unit price140.5110.9106.295.896.6
Exports of the export processing zone (EPZ) 1/
Value69.7120.9135.8143.4152.1
Volume0.51.11.31.51.6
Unit price140.5110.9106.295.994.7
Total value344.6360.6366.7382.6434.8
(percentage change)10.34.61.74.313.6
Memorandum items:
Value of traditional exports 2/97.562.541.848.967.3
In percent of total28.317.311.412.815.5
Value of non-traditional exports247.1298.1324.9333.7367.4
In percent of total71.782.788.687.284.5
Value of manufactured exports 3/169.9219.3251.8262.0295.5
In percent of total49.360.868.768.568.0
Sources: Central Bank of Madagascar; and Fund staff estimates.

In 1994 and 1995, EPZ exports include reexports. From 1996 onwards, reexports are included with other items.

Includes coffee, vanilla, cloves, and pepper.

Includes cotton cloth, petroleum, other items, and EPZ exports.

Sources: Central Bank of Madagascar; and Fund staff estimates.

In 1994 and 1995, EPZ exports include reexports. From 1996 onwards, reexports are included with other items.

Includes coffee, vanilla, cloves, and pepper.

Includes cotton cloth, petroleum, other items, and EPZ exports.

Table 40.Madagascar: Composition of Imports, c.i.f, 1995-99
19951996199719981999

Prov.
(In millions of SDR)
Food44.141.535.339.932.8
Rice12.25.912.312.88.6
Other32.035.623.027.124.1
Nonfood consumer goods69.173.888.3108.1111.2
Energy (petroleum)53.273.284.974.890.7
Equipment goods92.7112.7106.3109.6112.8
Raw materials and spare parts100.182.2100.091.297.5
Other imports 1/127.9139.0168.3159.3202.4
ARD
Food3.3
Consumption goods18.7
Capital goods29.2
ZFI
Textiles54.8
Capital goods7.4
Other16.5
Total imports, c.i.f.487.1522.4583.0582.9647.3
Total imports, f.o.b.414.0444.0495.6495.5550.2
(In percent of total imports, c.i.f.)
Food9.17.96.16.85.1
Rice2.51.12.12.21.3
Other6.66.83.94.63.7
Nonfood consumer goods14.214.115.118.517.2
Energy (petroleum)10.914.014.612.814.0
Equipment goods19.021.618.218.817.4
Raw materials and spare parts20.515.717.115.615.1
Other imports 1/26.326.628.927.331.3
ARD
Food0.7
Consumption goods3.8
Capital goods6.0
ZFI
Textiles11.3
Capital goods1.5
Other3.4
Total imports, c.i.f.100.0100.0100.0100.0100.0
Source: Central Bank of Madagascar; and Fund staff estimates.

Includes the imports of the enterprises set up in the export processing zone (ZFI) and enterprises under special tax regimes (ARD).

Source: Central Bank of Madagascar; and Fund staff estimates.

Includes the imports of the enterprises set up in the export processing zone (ZFI) and enterprises under special tax regimes (ARD).

Table 41.Madagascar: Direction of Trade, 1995-99(In percent of total)
19951996199719981999

Est.
Exports, f.o.b.100.0100.0100.0100.0
European Union50.655.254.256.6
Of which: France27.231.734.139.6
Other Europe4.02.53.62.0
United States6.34.24.75.9
Asia and the Middle East7.420.011.98.7
Of which: Japan5.915.83.21.9
Africa12.512.113.012.4
Of which: Mauritius3.73.94.96.9
Réunion (France)5.75.75.53.8
Other countries19.26.112.514.4
Imports, c.i.f.100.0100.0100.0100.0
European Union47.445.541.740.2
Of which: France29.231.026.024.1
Other Europe2.21.11.11.6
United States3.75.05.14.0
Asia and the Middle East25.328.422.727.8
Of which: Iran, Islamic Republic of9.99.12.27.1
China3.24.64.94.7
Japan5.95.87.06.2
Africa0.89.78.28.3
Of which: Mauritius0.50.91.01.1
Réunion (France)0.10.20.20.1
South Africa8.26.36.0
Other countries20.610.321.218.1
Source: Direction Générale de l’lnsititut de la Statistique, cited in: Central Bank of Madagascar, Bulletin d’Information et de Statistiques, Supplement Annuel, 1998.
Source: Direction Générale de l’lnsititut de la Statistique, cited in: Central Bank of Madagascar, Bulletin d’Information et de Statistiques, Supplement Annuel, 1998.
Table 42.Madagascar: Balance of Services, 1995-99(In millions of SDRs)
19951996199719981999

Proj.
Credit162.1210.7200.3217.2245.8
Freight and insurance on goods3.33.33.33.54.1
Other transport44.252.240.442.839.9
Travel38.044.652.965.572.8
Investment income4.65.95.79.56.6
Other services, public16-028.320.919.626.9
Other services, private56.076.477.176.395.6
Debit355.5382.2357.6385.2385.2
Freight and insurance on goods67.572.479.278.689.3
Percent of imports, c.i.f.13.913.913.613.513.8
Other transport37.637.234.333.637.3
Travel39.749.756.984.881.4
Investment income114.5114.980.872.246.2
Interest112.3112.975.867.239.8
Dividends2.22.05.05.06.4
Other services: public53.664.569.478.287.6
Government expenditures10.210.310.714.817.4
Services linked to project loans25.932.833.540.351.0
Services linked to project grants17.521.425.223.119.2
Other services: private42.643.537.037.943.4
Net services-193.4-171.6-157.3-168.0-139.4
Nonfactor services-83.5-62.5-82.2-105.3-99.8
Factor services-109.9-109.0-75.1-62.7-39.6
Sources: Central Bank of Madagascar; and Fund staff estimates.
Sources: Central Bank of Madagascar; and Fund staff estimates.
1Revenue minus noninterest current expenditure, and excluding foreign financial investment expenditure.
2Equipbail is a leasing subsidiary of the BTM-BOA; the latter has just been granted permission by the Central Bank to issue two-five-year certificate of deposits to finance this operation.
3While the BSM is being promoted by a group of Malagasy investors, it will be required to partner with an international banking institution of standing, especially with respect to its senior management.
4Funds placed by the banks with the Central Bank under the deposit auction system (appels d’offres négatifs) were not counted as reserves. There has been no use of this system since August 1998. To mop up bank liquidity, the Treasury now authorizes the Central Bank to auction additional treasury bills, over and above its own need for funds.
5This differential has narrowed significantly from an average of over 200 basis points in 1997-98 to a negative 2 basis points in the final quarter of 1999.
6This new feature of the system has, however, not yet been used by the Central Bank. The TD, moreover, still acts as a minimum discount rate, if the calculated rate falls below it.
7The Central Bank, again since August 1999, has suspended the rediscounting of private bills. Banks can now only discount treasury bills, bought at auctions, or the special treasury bills issued as part of the bank restructuring (see Box 2).
8Both measures of commercial bank interest rates suffer from shortcomings; the end-of-period rates are medians of ranges that are not weighted by the volume of business, whereas the weighted averages include both old and new business and therefore are slow to fully reflect current rates.
9Furthermore, holders of Malagasy treasury bills are believed to consider the unused margin on statutory advances as their first line of defense to ensure timely servicing by the Treasury of its obligations.
10A majority share of a third publicly owned bank, the BNI, was purchased by the Credit Lyonnais of France in early 1991.
11PRGF arrangements were approved in November 1996 and July 1999.
12In particular, following the rescheduling of arrears, late interest due declined.
13The privatization of the state-owned banks is described in Box 2, Section IV.

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