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Economy of Madagascar

Economy - overview: Madagascar faces problems of chronic malnutrition, underfunded health and education facilities, a roughly 3% annual population growth rate, and severe loss of forest cover, accompanied by erosion. Agriculture, including fishing and forestry, is the mainstay of the economy, accounting for 34% of GDP and contributing more than 70% to export earnings. Industry features textile manufacturing and the processing of agricultural products. Growth in output in 1992-97 averaged less than the growth rate of the population. Growth has been held back by antigovernment strikes and demonstrations, a decline in world coffee demand, and the erratic commitment of the government to Poverty Reduction Strategy Paper (PRSP) under the Heavily Indebted Poor Countries (HIPC) Initiative. The boards of the IMF and of the World Bank concurred in December 2000 that the country is eligible under the HIPC Initiative, and Madagascar has reached the decision point for debt relief. On March 1, 2001, the IMF Board granted the country $103 million for 2001-03 under the Poverty Reduction and Growth Facility (PRGR). Resources freed up from HIPC will be directed toward improving access to health, education, rural roads, water, and direct support to communities. In addition, on March 7, 2001, the Paris Club approved a debt cancellation of $161 million. On February 28, 2001, the African Development Bank (ADB) approved under the HIPC a debt cancellation of $71.46 million and granted in June 2001 an additional credit of $20 million to fight against AIDS and poverty.

Partly as a result of these credits but also as a result of previous reforms, average GDP growth exceeded the population growth rate of 2.8% in 1997 (3.5%), 1998 (3.9%), 1999 (4.7%) and 2000 (4.8%). Madagascar’s appeal to investors stems from its competitive, trainable work force. More than 200 investors, particularly garment manufacturers, have organized under the country’s export processing zone (EPZ) system since it was established in 1989. The absence of quota limits on textile imports to the European market under the Lome Convention has helped stimulate this growth. In addition, there is evidence that Madagascar’s recent eligibility for meat processing, soap, breweries, tanneries, sugar, textiles, glassware, cement, automobile assembly plant, paper, petroleum, tourism

Industrial production growth rate: 5% (1999 est.)

Electricity - production: 750 million kWh (1998)

Electricity - production by source:
fossil fuel: 33.33%
hydro: 66.67%
nuclear: 0%
other: 0% (1998)

Electricity - consumption: 698 million kWh (1998)

Electricity - exports: 0 kWh (1998)

Electricity - imports: 0 kWh (1998)

Agriculture - products: coffee, vanilla, sugarcane, cloves, cocoa, rice, cassava (tapioca), beans, bananas, peanuts; livestock products

Exports: $600 million (f.o.b., 1998 est.)

Exports - commodities: coffee 45%, vanilla 20%, cloves, shellfish, sugar, petroleum products (1995 est.)

Exports - partners: France 40%, United States 9%, Germany 8%, Japan 6%, United Kingdom 6% (1997)

Imports: $881 million (c.i.f., 1998 est.)

Imports - commodities: intermediate manufactures 30%, capital goods 28%, petroleum 15%, consumer goods 14%, food 13% (1995 est.)

Imports - partners: France 39%, Hong Kong 5%, Japan 5%, Mainland China, Singapore (1997)

Debt - external: $4.1 billion (1997 est.)

Economic aid - recipient: $838 million (1997)

Currency: 1 Malagasy franc (FMG) = 100 centimes

Exchange rates: Malagasy francs (FMG) per US$1 - 6,302.9 (October 1999), 5,877.81 (1999), 5,441.4 (1998), 5,090.9 (1997), 4,061.3 (1996), 4,265.6 (1995)

Fiscal year: calendar year

See also : Madagascar