May 6, 2014 / 9:51 PM / 4 years ago

Madagascar reaches $47 million loan deal with IMF

WASHINGTON, May 6 (Reuters) - Madagascar would be able to access up to $47.4 million under a loan program from the International Monetary Fund to help the Indian Ocean island boost economic growth and reduce poverty, the IMF said on Tuesday.

The loan agreement, which must still be approved by the IMF’s board in June, comes under the Rapid Credit Facility, a quick-disbursing fund for poor countries recovering from natural disasters or conflict.

Madagascar, famed for its wildlife and eyed by foreign companies for its minerals, has struggled to lure back tourists and court oil and mining giants since a coup in 2009, which also prompted international donors to cut off ties. Its economy slumped and poverty deepened.

The IMF resumed its relationship with Madagascar earlier this year, following peaceful elections.

Madagascar’s cash-starved government has cut back on infrastructure and social spending in recent years, with about 90 percent of the population now living on less than $2 a day, the IMF said.

“Madagascar has urgent balance of payments and budgetary needs that, if not addressed, could result in further economic disruption,” George Tsibouris, the head of the IMF mission, said in a statement after visiting the country.

“It will be crucial to pursue policies that address pressing social and development needs while maintaining macroeconomic and financial stability.”

The IMF said Madagascar agreed to improve the collection of taxes and customs revenue, increase funding for social programs and public investment, start clearing domestic arrears, and eventually address the issue of fuel subsidies. (Reporting by Anna Yukhananov; Editing by Mohammad Zargham)

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