Economy
IMF Predicts 4.3% Growth for Madagascar in 2017
By Dipo Olowookere
The International Monetary Fund (IMF) has disclosed that Madagascar’s recent economic performance had been encouraging, with GDP growth reaching 4.2 percent in 2016.
From March 9–22, 2017, a team from the IMF led by Mr Marshall Mills, Mission Chief for Madagascar, visited Antananarivo from to conduct the 2017 Article IV Consultation and hold discussions on the first review of Madagascar’s economic reform program supported by the IMF’s three-year Extended Credit Facility (ECF).
At the end of the mission, Mr Mills said the macroeconomic outlook in the near term was generally positive, aided by growth in public investment, continued strength in export processing zones, and a recovery in mining.
He said this outlook was diminished by a drought in the central plateau and the cyclone that hit the northeast, saying the full impact was not yet clear, and the Fund was continuing discussions with the authorities and development partners to help identify the scale of the damage and financing to address urgent needs.
Growth is currently projected to reach 4.3 percent in 2017, while inflation is expected to remain contained at 7.7 percent. Positive external developments prior to the cyclone enabled the central bank to boost reserves significantly, reaching USD 1.12 billion at end-February 2017, he said.
“The authorities have achieved significant progress under the ECF-supported program, although challenges remain. All quantitative performance criteria for end-December 2016 were met, supported by prudent monetary policy and improving revenue collection that surpassed targets. The government also implemented the measures envisioned in most of the program’s structural benchmarks, although some with a delay.
“Difficulties at state-owned enterprises, especially JIRAMA and Air Madagascar, continue to weigh on the budget and the economy. The difficulties of the public utility JIRAMA, aggravated by drought, will require additional transfers of around 0.5 percent of GDP. However, new management is developing a business plan to restructure operations, which will reduce costs, improve revenue, and contain transfer needs. Air Madagascar is negotiating a strategic partnership, which is expected to involve a substantial, one-off transfer from the government to offset past losses. Staff and the authorities are continuing discussions on recapitalizing Air Madagascar, including obtaining financial assurances, and on restructuring JIRAMA.
“In the medium-term, the authorities aim to break Madagascar’s pattern of low growth by scaling up priority spending and accelerating structural reform. Drawing on substantial pledges of grants and concessional loans at the donor conference of December 2016, the authorities intend to boost investment and social spending steadily from 2017 to 2019, while maintaining a moderate risk of debt distress. To ensure the success of the scaling up and to minimize risks, the authorities are enhancing their investment management and monitoring capacity. Revised frameworks to encourage private investment are also under consideration for mining, petroleum, and special economic zones. Staff stressed the need to incentivize private investment efficiently, without undermining the government’s key objectives of enhancing revenue and containing fiscal risks.
“The authorities continue to make progress in strengthening the legal and institutional framework for enhancing governance and fighting corruption. The government is committed to submitting draft laws on asset recovery, international cooperation, and combating anti-money laundering to the next parliamentary session. It remains important to follow through with implementation.
“The central bank has successfully maintained stable inflation while pursuing reforms to improve monetary policy effectiveness and financial stability. Enhancing the effectiveness of policy instruments, which requires an efficient interbank and repo markets, is a priority. Reforms are being put in place to deepen financial intermediation and inclusion, such as the new law on electronic money. Revisions under preparation to banking and microfinance laws will reinforce stability, as will the ongoing audit of two government-owned non-bank financial institutions.
“The mission met with President Hery Rajaonarimampianina, Speaker of the National Assembly Jean Max Rakotomamonjy, Prime Minister Olivier Solonandrasana, Minister of Finance and Budget Gervais Rakotoarimanana, Minister of Economy and Planning and interim Minister of Energy and Hydrocarbons Herilanto Raveloharison, Central Bank of Madagascar Governor Alain Rasolofondraibe, Commissioner General Léon Rajaobelina, and other members of parliament, senior officials, as well as private sector representatives, civil society and development partners,” Mr Mills said.
By Adedapo Adesanya
Crude oil prices fell on Friday as traders gained confidence that renewed conflict between the United States and Iran was growing less likely.
The price of Brent crude futures settled at $93.09 a barrel, down $1.94 or 2.04 per cent, and the US West Texas Intermediate (WTI) crude futures finished at $90.54 a barrel, down $2.50 or 2.69 per cent.
President Donald Trump said the US will win the conflict with Iran either “militarily or on paper,” referring to the fitful negotiations with the Iranian government, and he suggested he could meet with Iran’s reclusive supreme leader “if it was to make a deal.”
He also said he had no desire to meet with Iranian Supreme Leader Mojtaba Khamenei, who has not been seen since the outbreak of violence on February 28 and was reportedly seriously injured in US-Israeli air strikes. He, however, added that if the two sides reached a deal, it was possible the two leaders would meet.
Meanwhile, Hezbollah leader Naim Qassem rejected on Thursday a US-brokered agreement between Israel and the Lebanese government to halt the fighting. Iran has made a ceasefire in Lebanon a condition for any peace deal with America.
Oman said operations at Mina al Fahal port were unaffected after it was reported that oil loading had been suspended following an explosion near its mooring berths. Oman exports 800,000 to 900,000 barrels per day of crude from the terminal.
As the US-Iran war peace talks dragged on, traffic in the Strait of Hormuz, where a fifth of the world’s oil passes, remained limited. Gains have been capped by oil inventories lasting longer than expected, rerouted exports and falling demand.
The Organisation of the Petroleum Exporting Countries and its allies (OPEC) is sticking to its oil demand growth forecast of 1.2 million barrels per day for this year, its Secretary General Haitham Al Ghais said, despite the Middle East conflict and closure of the Strait of Hormuz.
OPEC crude output fell last month, hitting its lowest level in decades as the US blockade of Iran and disruption in the Persian Gulf continued to curb production.
Output from its 11 current members dropped by 1.22 million barrels per day to 16.33 million a day in May, with Iran accounting for more than half of the decline, according to a Bloomberg survey. That was the lowest in at least 37 years. The data excludes the United Arab Emirates, which left the organisation last month after six decades.
Key members of the OPEC+ are expected to nudge up targets by a modest 188,000 barrels again in July during a video conference on Sunday. The session is one of four online meetings OPEC and its allies are due to hold that day.
By Adedapo Adesanya
Crude production under the collective Organisation of the Petroleum Exporting Countries (OPEC ) fell in May to its lowest level in at least 37 years as the blockade of Iran by the United States and disruptions in the Persian Gulf, continued to limit output.
According to a Bloomberg survey released on Friday, output from the organisation’s 11 current members, including Nigeria, dropped by 1.22 million barrels per day to 16.33 million barrels per day last month.
Iran accounted for more than half of the decline. The data excludes the United Arab Emirates (UAE), which departed the cartel last month after six decades of membership.
War between a US-Israeli alliance and Iran has reduced oil supplies from the Middle East, largely closing the Strait of Hormuz waterway. Saudi Arabia, Iraq, the UAE and Kuwait have been forced to cut crude production. Iranian shipments face additional pressure following a US blockade of its ports imposed in mid-April.
Iranian output fell by 710,000 barrels per day to a five-year low of 2.34 million barrels per day in May, the survey showed. Central Command reported that US forces have redirected 127 commercial vessels to enforce the blockade of all maritime traffic entering and exiting Iranian ports.
Kuwait recorded the second-largest decline last month, with production falling by 310,000 barrels per day to 490,000 barrels per day, less than one-fifth of pre-war levels. Saudi Arabia, the group’s leader, saw output decrease by 240,000 barrels per day to 6.57 million barrels per day.
The production reductions have not prevented OPEC and its allies from raising quotas over recent months, continuing a year-long process of restoring output halted several years ago.
This comes ahead of a meeting scheduled to be held on Sunday, June 7, where a sub-group of seven members is expected to increase targets by 188,000 barrels again in July. The session is one of four online meetings OPEC and its partners plan to hold that day.
Delegates indicated the alliance has plans for two additional monthly quota increases in August and September. UAE output rose by 300,000 barrels per day to 2.44 million barrels per day in May, according to the survey.
By Aduragbemi Omiyale
The 2025 third quarter Budget Implementation Report from the Budget Office of the Federation has shown that the federal government exceeded the funds allocation for repayment of debts for the first nine months of the fiscal year by about 18 per cent.
In a report by Punch, the sum of N10.74 trillion was budgeted for debt servicing between January and September 2025, but the government used N12.63 trillion for the purpose, N1.90 trillion or 17.65 per cent more than the allocation for the year.
The funds were spent on domestic debts, foreign debts and sinking fund by the central government in nine months.
Business Post reports that for the whole year, the amount approved by the National Assembly and signed by President Bola Tinubu for debt repayments was N14.31 trillion.
Looking at the nine-month figures, domestic debt service gulped N6.23 trillion, exceeding its N5.39 trillion provision, while foreign debt service was N6.30 trillion versus the budget provision of N5.06 trillion.
According to the report, the figures indicated that 67.2 per cent of the federal government’s retained revenue of N18.63 trillion was spent on debt service in the first nine months of 2025. When the sinking fund is included, debt-related payments consumed about 67.8 per cent of revenue.
It was also observed that aggregate federal government revenue underperformed the budget by N12.03 trillion or 39.24 per cent, as actual revenue of N18.63 trillion fell short of the N30.67 trillion projected for the first three quarters.
In the third quarter alone, the government generated N7.70 trillion versus the quarterly target of N10.22 trillion as a result of persistent oil revenue shortfalls, despite stronger non-oil collections.
The debt burden also crowded out capital spending, as total capital expenditure was N3.10 trillion in the first nine months compared with the N17.58 trillion budgeted for the period, indicating that actual debt-related payments were more than four times capital expenditure.
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