Madagascar: US$ 52 Million Poverty Reduction Support

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Tunis, 24 July, 2006 – In response to the political and economic stability prevailing in Madagascar, the African Development Bank Group has decided to provide a budget support loan to the country to help the government implement its reform programme.

The 35 million Units of Account loan (US$ 52 million or 113 billion ariary) approved by the Board of Directors of the African Development Fund on Monday in Tunis, will help in the implementation of the updated Malagasy Poverty Reduction Strategy covering the 2006-2007 period.

The Malagasy government has chosen to focus on three strategic areas: governance, accelerated broad-based growth and human resources development, in order reduce the poverty rate to 36.8% by 2015 as against 68.9% in 2005.

The ADF loan will bolster the efforts of the government to implement the reforms envisaged under strategic thrusts 1 (governance) and 2 (growth). Under Strategic Thrust 1, the Bank will support the decentralisation process designed to improve the delivery of public services to the rural population, thereby helping Madagascar to achieve that Millennium Development Goal (MDG). The Bank’s efforts under Strategic Thrust 2 will focus on stabilising the macroeconomic development framework and developing the private sector, especially by fostering public-private partnerships.

The planned reforms will result in a GDP growth rate of 6.6% in 2007, lower inflation rate from 27% in 2004 to 7% in 2007. They will also increase fiscal pressure from 10.1% of GDP in 2005 to 11.8% in 2007, and reduce the overall budget deficit from 4.3% of GDP in 2005 to 2.7% in 2006.

Sustained economic growth and a stabilised macroeconomic framework will ensure better access to basic social amenities for the population and help to reduce poverty. As rural communities gain access to safe drinking water, they will avoid water-borne diseases, while at the same time water collection will become a lot easier for rural women.

With a per capita income of USD 290, Madagascar is among the poorest countries in the world, ranked 146th out of 177 countries, in the UNDP Human Development Index.

ADB Group operations in Madagascar commenced in 1977. To date, its commitments in the country stand at 7,811 billion of Ariary in 73 operations.

Project Brief

  • Sources of financing: ADF, World Bank (USD 40 million), European Union (42.2 million Euros), France (EUR 12.6 million)
  • Estimated start-up date and duration: September 2006, for 15 months
  • Disbursement: The loan will be disbursed in two equal tranches of UA17.5 million, subject to the fulfillment by the Borrower of the specific conditions for the disbursement of each tranche.

* UA 1 = USD 1.47937 = MGA 3,239.25 as at 24/07/2006


Chawki Chahed Phone: +216 71 10 27 02