World Bank Approves US$55 Million to Improve Public Finance Management in Madagascar

December 10, 2015

WASHINGTON, December 10, 2015 – The World Bank’s Board of Executive Directors approved a US$55 million International Development Association (IDA)* credit for a Resilience Development Policy Operation for Madagascar to support efforts by the Ministry of Finance and Budget in improving the efficiency of public finance management.

The Resilience Development Policy Operation aims to strengthen reporting and increase the availability of information relevant to assessing the effectiveness of public finance; and improve payroll management and uphold the single Treasury account principle.

Madagascar improved its economic performance in 2014, as the economy emerged from the challenges that prevailed during the political crisis, and growth increased to 3.3 percent (up from 2.3 percent in 2013). However, the impacts of the prolonged political crisis on the social and economic sectors are visible and are adding severe constraints to putting the country back on track for sustainable development. The political context in Madagascar remains challenging, delaying urgently needed reforms. Many of them relate to fiscal policies, on both revenue and expenditure fronts, as a prerequisite for financing public investments and social spending necessary for fighting poverty and pursuing sustainable development.

While the financial needs are high because all the challenges faced by the Malagasy people, global constraints and the level of governance in the country put limits on the available external aid.  “We have a strong will to meet the challenges to strengthen the performance of the tax and customs administrations and to improve efficiency in the use of public funds” said Minister of Finance and Budget Gervais Rakotoarimanana. “Our goal is to optimize the allocation of resources to sectors that have tangible impact on the population such as education, health, and infrastructure.”

The proposed operation supports measures towards reducing inefficient expenditure and improving transparency of public finance. These actions cover the elimination of ineligible persons from the payroll roster of high office holders and the disclosure of relevant information that are key to increasing fiscal space. Such information includes financial and technical accounts of state-owned companies (JIRAMA and Air Madagascar) receiving transfers from the State, enterprises benefiting from the Free Zone regime, audited final accounts of the State budget, and timely data related to budget execution.

“The Madagascar Systematic Country Diagnostic (SCD) presented to the World Bank Board in August 2015 emphasized the importance of enlarging the fiscal space as a prerequisite, so that the government has the means to make public investments and implement policies such as the national strategies on social protection and on universal health coverage” explained World Bank Country Manager in Madagascar Coralie Gevers.

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