Press Release No. 05/248

Press Release: Statement by IMF First Deputy Managing Director Anne O. Krueger on the Republic of Madagascar

November 4, 2005

Ms. Anne O. Krueger, First Deputy Managing Director of the International Monetary Fund (IMF), issued the following statement today after a meeting with the Republic of Madagascar's Minister of Finance and Budget, Benjamin Radavidson, and a visiting Malagasy delegation:

"Today, I held very open and constructive discussions with Minister Radavidson and a visiting delegation from Madagascar. The discussions, part of our ongoing dialogue with the authorities, covered key macroeconomic aspects of the government's program, which aims at strengthening economic growth and accelerating poverty reduction in coming years. In addition, the focus was on fiscal developments in 2005 and on the 2006 budget.

"I welcomed recent steps to address the sizable tax revenue shortfalls earlier in 2005, and preliminary data for October indicate that these steps are beginning to bear fruit. I was also reassured that the authorities are developing an action plan for addressing the severe financial and structural problems facing the public utility company (JIRAMA), which has important macroeconomic implications.

"As a result of these discussions, the IMF staff will return to Madagascar in early December to continue the discussions on a program that could be supported by an arrangement under the Fund's Poverty Reduction and Growth Facility (PRGF). The conclusion of the discussions will need to await verification of a turnaround in revenue collection during the fourth quarter of 2005 and finalization of the JIRAMA action plan. This could be assessed by a short mission in the early part of 2006 and, if the outcome is line with expectations, an Executive Board discussion on a new PRGF arrangement could take place in early Spring 2006."