ANTANANARIVO: Madagascar will not achieve the 5 percent growth the International Monetary Fund has projected for it this year unless it introduces reforms to boost tax revenue and improve the business climate, an IMF official told Reuters.
The Fund said earlier this week that the economy of the Indian Ocean island showed early signs of recovery. Growth was estimated at 3 percent in 2014, with the potential to rise to 5 percent in the current year.
But weak tax revenue, coupled with fuel subsidies and an under-funded civil service pension fund, are putting pressure on Madagascar's budget and constraining its spending on health, education and anti-poverty programs, the IMF said.
Without reforms, growth would be lower, its representative in Madagascar, Patrick Imam, told Reuters. "We are waiting for courageous decisions from this government." Madagascar's economy was battered after a 2009 coup that drove away donors and investors. A peaceful 2013 election has brought back some aid, but it is still struggling to impose stable government and economic reforms.
The country is one of the world's poorest, despite its reserves of nickel, cobalt, gold, uranium and other minerals. Imam said it had among the lowest tax burdens of any African country, and subsidies for state companies like Air Madagascar and JIRAMA, a water and electricity supply company, were depleting the Treasury. Reforming the judiciary and improving the business climate were critical to boosting growth, the IMF official said.
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