{{Madagascar needs to reform its fuel subsidy programme which does not help its poorest people, a senior International Monetary Fund official said as the lender considers more funding for the Indian Ocean island.}}
Famed for its wildlife and eyed by foreign companies for its minerals, Madagascar has struggled to lure back tourists and attract oil and mining giants since a coup in 2009.
The coup also prompted international donors to cut ties, leaving the economy to stagnate and poverty to deepen.
The IMF resumed its relationship with Madagascar earlier this year after peaceful elections in December, and in mid June approved a $47.1 million emergency loan to help the country meet urgent balance of payment needs.
IMF’s Deputy Managing Director Min Zhu said told Reuters in an interview late on Monday during a visit to the country that the government’s fuel subsidy programme – which costs 1.5 percent of gross domestic product (GDP) – was not reaching the vulnerable.
“Studies show the poorest people do not benefit from the major part of the subsidy. The big chunk of the money goes to the middle and upper class,” he said.
“The government needs to prepare a targeted programme to help the poorest because if there is an oil price increase the poor will suffer.”
Without giving a specific forecast, Zhu said in a separate statement that Madagascar’s economic growth was expected to rise further in 2015 compared with a 3 percent forecast for this year, helped mostly by the mining sector.
reuters
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