WASHINGTON, November 22, 2016 - The World Bank’s Board of Executive Directors approved today a $65 million grant for the Public Finance Sustainability and Investment Development Policy Financing (DPF) operation that will support a series of reforms that the Government of Madagascar is undertaking to strengthen its fiscal framework and the investment climate.
This operation supports the objectives of the Government of Madagascar’s National Development Plan which aims to promote development through inclusive and sustainable growth. The Plan recognizes the need to achieve short-term priority actions and structural reforms in response to the country’s fragility and persistent poverty.
This funding will, therefore, help to create the fiscal space needed for some of the reforms being pursued by the government particularly in implementing its social sector development programs such as health, nutrition and education. Service delivery and private investment will also receive much needed boost through programs targeted at enhancing the environment for investment and growth. Reforms in public financial management, the electricity sub-sector; internal revenue structures including customs, the commercial justice system and banking will also be supported.
“Years of political uncertainty and weak governance have adversely affected Madagascar’s fiscal and economic management framework. Tax revenue collection is improving gradually, but at 10 percent of gross domestic product in 2015, it remains one of the lowest in the world,” said Coralie Gevers, World Bank Country Manager for Madagascar and Comoros. “This program will support the Government’s commitment to enhance the fiscal space and foster a sustainable environment for growth in order to increase service delivery, social spending and public investment.”
This DPF is the first of a two-year programmatic operation. The second year will aim to strengthen and deepen reforms in fiscal management and the investment climate, as part of continued efforts to support the government’s efforts to accelerate Madagascar’s recovery. A complementary DPF series will also be prepared next year aimed at promoting Inclusive and Resilient Growth.
DPF operations provide un-earmarked financial support directly to the government’s treasury upon completion of a package of policy and institutional reforms that are designed and undertaken by the government. They aim to achieve sustainable reduction in poverty through promoting growth and enhancing the well-being of poor people.