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The directory of informations
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Madagascar
From Wikipedia, the free encyclopedia
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Madagascar ·
History ·
Politics ·
Geography ·
Ecology ·
Economy ·
Foreign relations ·
Demographics
Economy of Madagascar
Agriculture, including fishing and forestry, is a mainstay of the economy. Major exports are coffee,
vanilla, sugarcane, cloves, cocoa, rice, cassava (tapioca), beans, bananas, peanuts and livestock products.
Vanilla has historically been of particular importance, and when in 1985 Coca-cola switched to New Coke
which involved less vanilla, Madagascar's economy took a marked downturn, but returned to previous levels
after the return of Coke Classic.
Structural reforms began in the late 1980s, initially under pressure from international financial
institutions, notably the World Bank. An initial privatisation programme (1988-1993) and the development
of an export processing zone (EPZ) regime in the early 1990s were key milestones in this effort. A period
of significant stagnation from 1991-96 was followed by 5 years of solid economic growth and accelerating
foreign investment, driven by a second wave of privatisations[citation needed] and EPZ development.
Although structural reforms advanced, governance remained weak and perceived corruption in Madagascar
was extremely high. During the period of solid growth from 1997 to 2001, poverty levels remained stubbornly
high, especially in rural areas. A six-month political crisis triggered by a dispute over the outcome of the
presidential elections held in December 2001 virtually halted economic activity in much of the country
in the first half of 2002. Real GDP dropped 12.7% for the year 2002, inflows of foreign investment dropped
sharply, and the crisis tarnished Madagascar's budding reputation as an AGOA standout and a promising place
to invest. After the crisis, the economy rebounded with GDP growth of over 10% in 2003. Currency depreciation
and rising inflation in 2004 have hampered economic performance, but growth for the year reached 5.3%, with
inflation reaching around 25% at the end of the year. In 2005 inflation was brought under control by tight
monetary policy of raising the Taux Directeur (central bank rate) to 16% and tightening reserve requirements
for banks. Thus growth was expected to reach around 6.5% in 2005.
Following the 2002 political crisis, the government attempted to set a new course and build confidence,
in coordination with international financial institutions and donors. Madagascar developed a recovery
plan in collaboration with the private sector and donors and presented it at a "Friends of Madagascar"
conference organised by the World Bank in Paris in July 2002. Donor countries demonstrated their
confidence in the new government by pledging $1 billion in assistance over five years. The Malagasy
Government identified road infrastructure as its principle priority and underlined its commitment to
public-private partnership by establishing a joint public-private sector steering committee.
In 2000, Madagascar embarked on the preparation of a Poverty Reduction Strategy Paper (PRSP) under the
Heavily Indebted Poor Countries (HIPC) Initiative. The boards of the IMF and World Bank agreed in
December 2000 that the country had reached the decision point for debt relief under the HIPC Initiative
and defined a set of conditions for Madagascar to reach the completion point. In October 2004, the boards
of the IMF and the World Bank determined that Madagascar had reached the completion point under the
enhanced HIPC Initiative.
The Madagascar-U.S. Business Council was formed in Madagascar in 2002. The U.S.-Madagascar Business
Council was formed in the United States in May 2003, and the two organisations continue to explore
ways to work for the benefit of both groups.
The government of President Ravalomanana is aggressively seeking foreign investment and is tackling
many of the obstacles to such investment, including combating corruption, reforming land-ownership
laws, encouraging study of American and European business techniques, and active pursuit of foreign
investors. President Ravalomanana rose to prominence through his agro-foods TIKO company, and is
known for attempting to apply many of the lessons learned in the world of business to running the
government. Some recent concerns have arisen about the conflict of interest between his policies and
the activities of his firms. Most notable among them the preferential treatment for rice imports
initiated by the government in late 2004 when responding to a production shortfall in the country.
Madagascar's sources of growth are tourism; textile and light manufacturing exports (notably through
the EPZs); agricultural products and mining. Madagascar is the world's leading producer of vanilla
and accounts for about half the world's export market. Tourism targets the niche eco-tourism market,
capitalising on Madagascar's unique biodiversity, unspoiled natural habitats, national parks and
lemur species. Exports from the EPZs, located around Antananarivo and Antsirabe, consist the most
part of garment manufacture, targeting the US market under AGOA and the European markets under the
Everything But Arms (EBA) agreement. Agricultural exports consist of low-volume high-value products
like vanilla, litchies and essential oils. A small but growing part of the economy is based on mining
of ilmenite, with investments emerging in recent years, particularly near Tulear and Fort Dauphin.
Mining corporation Rio Tinto expects to begin operations near Fort Dauphin in 2008, following several
years of infrastructure preparation. The mining project is highly controversial, with Friends of
the Earth and other environmental organizations filing reports to detail their concerns about effects
on the local environment and communities.
Several major projects are underway in the mining and oil and gas sectors that, if successful,
will give a significant boost to the Madagascan economy. In the mining sector, these include the
development of coal at Sakoa and nickel near Tamatave. In oil, Madagascar Oil is developing the
massive onshore heavy oil field at Tsimiroro and ultra heavy oil field at Bemolanga.
Madagascar ·
History ·
Politics ·
Geography ·
Ecology ·
Economy ·
Foreign relations ·
Demographics
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