Africa > Madagascar, Republic of

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Luc Eyraud
The purpose of this paper is to assess Madagascar's competitiveness in recent years, using both price and nonprice indicators and an exchange rate assessment of the currency. We estimate the distance between the equilibrium and the actual real exchange rates using three methods: the macroeconomic balance approach, the external sustainability approach, and the reduced-form equilibrium real exchange rate approach. These methods suggest that in the medium term the real exchange rate is only slightly overvalued. We also carry out a comparative analysis of nonprice indicators and find that Madagascar performs less favorably than its competitors on structural competitiveness.
Mr. Jean-Jacques Hallaert
Madagascar plans to start phasing out its customs tariffs on imports from the Southern African Development Community in 2007. This paper uses a CGE model to evaluate the impact of the SADC FTA on Madagascar economy. The results suggest that the SADC FTA would only have a limited impact on Madagascar's real GDP because the liberalization affects only a small share of its total imports. However, Madagascar's trade and production pattern would change and benefit the textile and clothing sector. Removing rigidities in the labor and capital market would increase the gains but they would remain limited. Gains from the SADC FTA become substantial only when the regional liberalization is accompanied by a multilateral liberalization.
International Monetary Fund
This Selected Issues paper and Statistical Appendix analyzes the relationship among prices, income, and money in Madagascar over the period 1982–2004. It finds that a stable long-run relationship for the price level exists, but that the adjustment toward this long-term equilibrium is quite slow. The paper presents an assessment of the real effective exchange rate. It also presents some qualitative competitiveness indicators and examines the performance of exports in Madagascar at an aggregate and product level.
International Monetary Fund
This 2005 Article IV Consultation highlights that macroeconomic developments in Madagascar in 2003 and 2004 were dominated by the sharp depreciation of the national currency, and rising inflation pressures, with year-over-year consumer price inflation reaching 30 percent at end-February 2005. At the same time, the current account deficit widened considerably in 2004. In the medium term, real GDP growth is expected to average 6 percent per year, and fiscal consolidation is projected to continue, driven by an improvement of revenue performance and modest expenditure increases.
International Monetary Fund
Madagascar showed strong economic growth and low inflation under the Poverty Reduction and Growth Facility (PRGF) Arrangement. Executive Directors commended these developments, and stressed the need to restore fiscal discipline, improve governance, strengthen the business climate to encourage private investment, and accelerate structural reforms. They welcomed the plan to privatize and rehabilitate the telecom, cotton, sugar, and utility companies, and agreed that Madagascar has successfully completed the fourth review under the PRGF program, and approved waiver, additional interim assistance, and an extension of the arrangement.
International Monetary Fund
This Selected Issues paper analyzes recent economic developments and policies in Madagascar. Real GDP growth in 2001 was 6 percent, continuing the trend of sustained increase in per capita real GDP that began during the period 1997–2000. The secondary and tertiary sectors were the main sources of growth. The value added of the secondary sector, which accounts for only 13.3 percent of output, increased by 7.6 percent in 2001, following an annual average increase of 5 percent in 1997–2000.
Mr. Arvind Subramanian, Aaditya Mattoo, and Mr. Devesh Roy
This paper describes the United States recently enacted Africa Growth and Opportunity Act (AGOA) and assesses its quantitative impact on African exports. The AGOA expands the scope of preferential access of Africa's exports to the United States in key areas such as clothing. However, its medium term benefits estimated at about US$100-$140 million, an 8 11 percent addition to current non-oil exports would have been nearly five times greater (US$540 million) if no restrictive conditions had been imposed on the terms of market access. The most important of these conditions are the rules of origin with which African exporters of clothing must comply to benefit from duty-free access.
International Monetary Fund
This paper analyzes the basic data, social and demographic indicators of Madagascar. The study outlines the institutional arrangements for the determination and management of the Malagasy franc, and reviews the foreign exchange market developments. The paper assesses the country's international price competitiveness and developments in the export processing zone. This report also provides a Statistical Appendix for the country.
International Monetary Fund
This paper analyzes the recent economic developments in Madagascar under the new Poverty Reduction and Growth Facility Arrangement. It highlights the production, income, and overall fiscal developments; discusses various measures to simplify the tax system, improve tax and customs administration; and tighten the expenditure management of the country. The paper provides a detailed study of the monetary developments, structure of the financial sector, balance of payments, external debt, and structural reforms of the country.
International Monetary Fund
In recent years, the IMF has released a growing number of reports and other documents covering economic and financial developments and trends in member countries. Each report, prepared by a staff team after discussions with government officials, is published at the option of the member country.