IMF predicts 6,3% GDP for Madagascar in 2005

The International Monetary Fund (IMF) expects Madagascar's economy to grow by 6,3% in 2005 after achieving real gross domestic product of five percent in the last two year, a senior IMF official said this week.

IMF's first deputy director Anne Krueger said Madagascar was benefiting from tough economic reforms but warned that current levels of growth were insufficient to meet Madagascar's goals of tackling poverty.

"Everyone recognises Madagascar has performed well economically," Krueger said at the end of a two-day visit to Madagascar. "If it keeps up these policies, it will continue to produce positive results."

The huge Indian Ocean island is one of the world's poorest countries, with three quarters of people living on less than a dollar a day.

Krueger said soaring inflation was a big risk. Madagascar's inflation rate surged to 27% last year, compared to 3,1% in 2003 due high oil prices, a depreciation in Madagascar's currency and a sharp increase in the prices of food because of cyclone damage to crops.

"We note an acceleration in the rate of inflation. Only a stable macroeconomic environment with low inflation will enable Madagascar to achieve the levels of growth it needs," she said.

President Marc Ravalomanana, who swept to power in 2002 after an eight-month sporadically violent standoff over a disputed election, has promised to tackle poverty by reforming the economy and attracting foreign investment.

He has wooed donors and impressed the IMF and World Bank with his tough reforms, culminating in debt forgiveness last October.

"The reforms has permitted the country a reduction in its debts by $836-million from its creditors," she said.

Published: 2005/06/09 Author: Reuters Portfolio: writer

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