Madagascar: A new model for the financial backers?

Right from the onset, while the world still had its focus on the Dakar resolutions, and the international recognition of the new leadership, Marc Ravalomanana had already asked his newly created administration to work out a reform plan which was to allow Madagascar to get through the crisis, and to take off economically.

This reform plan was presented to the Assemblée Nationale in May, 2002. According to the Minister in charge of the Economy, it was a fine-tuned version of this very same plan which they presented to the financial backers during the meeting of the ?Friends of Madagascar?, last week. The same minister also added that ?the quality of the plan was such that the financial backers did not need to ask for either any guaranties, or any special provisions, or stipulations.? Consequently, we are miles away from the ups and downs of Albert Zafy?s ?parallel financing schemes?. However, the backers did not exactly hand over a blank check; they endorsed a concrete and well programmed financial action plan which covers the next four years.

Of the 2.3 billion Euros, 30% were grants, and subsidies with no strings attached, while 60% came in the form of low interest loans (1.5%). Talks are currently well underway regarding the possibility of commuting Madagascar?s national debt, which now amounts to over 6 billion Euros.

The government?s reform plan is a three-pronged attack aimed at resolving poverty, reforming inadequate government control, and rebuilding the nation?s infrastructure. The most important one consists of an urgency plan to aid the nation?s poorest, supply basic goods, reestablish educational and health programs, and increase employment through public works projects. The second one hinges on applying, and enforcing the rules of good government control. The third one is geared toward restarting the private sector, and rebuilding of the nation?s infrastructure.

Immediately, and in the short term, from now until the end of 2002, the reform program will address the following issues:

· Infrastructures: restoration of the nation?s highways, railways, ports, and waterways; housing construction; fight against urban poverty, tent cities, and shantytowns; computerization of post offices… · Health: fight against malnutrition; improve healthcare access for the needy… · Education: Revamp the primary, and secondary education systems; reinforce technical education; establish full Internet access at the universities… · Aid to needy families: support migrant workers, and the victims of the crisis; lower school entry fees… · Agriculture, and farming: support for new producers; fight against locust infestation; restart mechanization of agriculture; improve the quality of farm produce… · Private sectors: provide lines of credit for those enterprises victimized by the crisis; organize enterprise showcases; coordinate promotional marketing programs for Malagasy products; substantially ease the private sector?s fiscal burden; compensate laid-off employees… · Tourism: launch a marketing campaign promoting the island; organize workshops and seminars for restarting the sector; reinforce touristic associations; optimize training programs… · Waterways & Forestry: improve management and development of forestry, and natural resources… · Environment: integrate environmental and sector-based policies… · Macro-economic management: increase fiscal, and tariff revenues; establish a new general tax code; intensify the fight against fraud, and corruption… · Government control: reinforce the nation?s financial control; decentralize; create courts of appeal, administrative, and financial tribunals in the provinces; reestablish the Supreme Court; fight against corruption; revise electoral code…

As he faced the Malagasy Diaspora, in Paris, on Saturday, the Prime Minister confirmed his belief that this was a quality plan, and that, from now on, he will do everything in his power to put it into effect. He also humbly indicated that he was well aware of the heavy responsibility which lies on his shoulders, and those of the members of his administration. The backers asked for regular sector-based updates so that they could follow the reconstruction progress.

Translated by J. F. Razanamiadana