2010年-世界发展银行全球_Madagascar_Economic_Update_April_2010___Whats_Going_On__6页_701kb

Summary of the Economic Update for Madagascar (April 12, 2010)

Core Content

The economic update for Madagascar, published by the World Bank on April 12, 2010, highlights the ongoing challenges and uncertainties in the country's economic environment, particularly in the aftermath of a political crisis that has lasted over a year. The report outlines the performance of the private sector, fiscal policy, and financial sector, emphasizing the need for policy consistency and improved communication to restore investor confidence.

Private Sector: Weak Rebound with Sectoral Disparities

• The private sector has shown a slow recovery since mid-2009, but remains significantly below pre-crisis levels.
• Key indicators such as energy consumption, exports, and banking credits to the private sector have resumed, albeit gradually.
• The agricultural sector has been largely unaffected by the crisis, while the food and beverage industry has maintained relatively stable demand due to inelasticity.
• The mining and construction sectors have contributed to exports and activities, respectively.
• However, sectors dependent on external markets, such as textiles and tourism, have suffered substantial losses:
  • Textile exports to the US dropped by over 53% in January 2010.
  • Tourist arrivals fell by more than 50%.
• The Export Processing Zone Industries and affiliates Association reported a 16% employee layoff since the AGOA suspension.
• Construction companies have faced a slowdown due to reduced public funding and private sector reluctance.
• Unemployed workers have increasingly turned to informal trading as a coping mechanism.

Fiscal Policy: Stop-and-Go Approach and Financial Strain

• The Government's fiscal policy has been inconsistent, with public spending frequently exceeding tax revenues.
• In July 2009 and the last quarter of 2009, public outlays were significantly higher than tax revenues, creating a large financing gap.
• The wage bill was generally lower than tax revenues, except in October 2009.
• The surge in public spending was attributed to:
  • Catch-up from low execution rates in previous months.
  • Political pressure to fund public services.
  • The perception of increased fiscal comfort due to the Maputo/Addis Abeba agreement and additional non-tax revenues from rosewood exports.
• The Government faced difficulties in securing financing, leading to the accumulation of arrears.
• In early 2010, fiscal authorities adopted an austerity approach, with a low execution rate of the new budget (11% by end-March).
• The Ministry of Finance began auditing past commitments, reducing arrears from ~US$33 million to ~US$20 million.
• Tax revenues have declined on average by 30% per month since March 2009, with significant drops in domestic and international tax categories.
• The only positive trend was in petroleum import taxes, which increased by 45% due to higher import volumes.

Financial Sector: Volatility and Mixed Signals

• The domestic financial market has shown volatility, with the exchange rate fluctuating significantly.
• The Acriary currency depreciated until mid-February 2010, then appreciated by about 5% against the Euro.
• The US/Acriary exchange rate also fluctuated by ~7% during the same period.
• The volatility is attributed to fiscal policy changes and international currency fluctuations.
• The introduction of an out-of-market fixed rate for petroleum imports on March 18, 2010, raised concerns about official reserves and artificial exchange rate appreciation.
• Domestic interest rates (measured by T-bill yields) increased due to rising Treasury demand and declining creditworthiness.
• The T-bill market exhibited supply and demand instability, with purchases only reaching 60% of tendered amounts.
• Monetary policy remained cautious, with a contraction in reserve money and limited credit activities by commercial banks.
• Non-performing loans increased by 24%, mainly due to distress in agro-industry and textile sectors.
• Inflation remained stable at 7.7% year-on-year in February 2010, driven by food, housing, electricity, and gas price increases.

Looking Forward

• The private sector remains cautious, with most operators in a "wait and see" mode due to political and economic uncertainty.
• The lack of reliable economic and financial information from both public and private sectors exacerbates this uncertainty.
• The report outlines three key recommendations for the Government:
  1. Improve Communication: Timely dissemination of economic information and transparent communication of policy decisions.
  2. Ensure Fiscal Consistency: Align spending with available revenues and external financing to avoid financial strain.
  3. Establish Clear Rules of the Game: Provide legal stability and clarity for investors, particularly in sectors like ICT and agriculture.
• The implementation of these measures does not require large financial resources but demands strong political will.

Conclusion

Madagascar's economic recovery remains fragile and uneven, with the private sector struggling to regain pre-crisis levels. The fiscal policy has been inconsistent, leading to financial strain and uncertainty. The financial sector has experienced volatility, but inflation remains under control. To stabilize the economy, the Government must improve transparency, ensure fiscal discipline, and provide a clear and stable legal framework for businesses.