Madagascar - The economy of the Malagasy Republic : Malagasy Republic - The economy

RESTRICTED c t j Report No. AF-83a This report was prepired for use within the Bank and its affiliated organizations. They do not accept responsibility for its accuracy or completeness. The report may not be published nor moy it be quoted as representing their views. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION THE ECONOMY OF THE MALAGASY REPUBLIC October 8, 1968 Africa Department  CURRENCY EQUIVALENTS AND UNITS Currency Unit Malagasy Franc (FMG) US $1. 00 = FMG 247 French Franc 1.00 = FMG 50.0 US $4. 05 million = FMG 1.0 billion Units Metric  TABLE 0F CONTENTS Page BASIC DATA SUMMARY AND CONCLUSICNS - ii - I. INTRODUCTION A. The Country and Population 1 B. Political Developments 2 C. Relations with France 3 D. Institutional Framework 4 II. STRUCTURE AND RECENT DEVELOMENT OF THE ECONOMY A. Gross Domestic Producct 6 B. Foreign Trade 8 C. Balance of Payments il D. Estimates of Savings and Investment 13 E. Financing of Investment 14 F. Foreign Aid 15 G. Composition of Pablic Investment and First Plan Execution 18 H. Money and Banking 20 I. labor and Enployment 22 III.RECENT DEVELOPMENTS AND PROSPECTS IN THE MAIN SECTORS A. Agriculture and Livestock 25 B. Industry and Mining 28 C. Transport 30 D. Electricity and Water 32 E. Telecommunications 34 F. Education 35  IV. PUBLI, FINANCE A. The Structure of the Badgetary System 37 B. Recent Budgetary Developments (i) Central Government Receipts 37 (ii) Central Government Expenditure 39 (iii) Other Budgets 41 C. Composition of Public Expenditure 42 D. OveralU Results 1961 - 1966 43 E. The 1967 Budget 44 F. The Outlook for Central Government Finances 45 V. DEVELOPMENT PLANS AND PROSPECTS A. Planning Organization 47 B. Sectoral Priorities 47 C. The Program of Major Operations 49 D. The 1968 Investuient Budget 50 B. Financing Public Sector Development 52 F. Macro-Economic Prospects 55 G. The Foreign Aid Pipeline 57 H. External Pablic Debt 58 ANNEX OF EXPORT PROJECTIONS 59 STATISTICAL APPENDIX 61 MAPS 0F MADAGASCAR This report was prepared by a mission consisting of Messrs. Harold Larsen, Reo A. Basoah, Hans Kordik, Christopher R. Wilkinson and L. Uribe (FAO) which visited the Malagasy Republic in February/March 1968.  IIST 0F TEIT TABLES PaR 1. Gross National Product 6 2. Gross Domestic Prodcuct 7 3. Exporte 8 4. Imports 10 5. Smmuary Balance of Payments 12 6. Savings and Investment 13 7. Public Investment 15 8. FAC Coemitments 16 9. FED Comitments 18 10. Planned Pablie Investment 19 11. Government Investment 20 12. Monetary 9urvey 22 13. Employient 23 14. Electrio Power Production 33 15. EIrollments in EdIacation 36 16. Tax Reveime 38 17. Current Expenditure of the Central Government 40 18. Current Surplus of Central Government Budget 40 19. Provincial and Annexed Budgets 41 20. Distribution of Public Expenditure 42 21. Overall Budgetary Deficit 43 22. FYiancing Operation 44 23. Central Goverruent Budget Projections 46 24. The Program of Major Operations 50 25. The 1968 Investment Budget 52 26. Public Investment Projections 53 27. Balance of Payments Projecticns 56 28. Export Projections 59 29. Agricultural Mcport Projections 60   BASIC DATA Area: 590,o0o square kilometers Population: (mid 1966) 6.20 million Rate of growth: 2.1% (rising) Average density: 11 per sq. km. Political statua: Independent since June 1960 Gross Domestic Product (market prices) 1966: FMG 170 billion of which Agriculture 32% Industry 11% Administration 20% Services 37% Rate of growth of GDP (1960-66): 4.5% GNP (factor cost) 1966, per capita: US$ 97. Percent of GDP (market prices) 1962-66 1966 Gross Investment 10% 10% Gross Domestic Savings 7% 5% Current account deficit 10% 9% Factor income payments 7% 4% Government tax receipts 18% 17% Resource dau as % ar Investment 1962-66 1966 Money ard Credit The Malagasy Republic is a member of the Franc Zone, and the Malagasy Franc is freely convertible into the French Franc. Rate of increase End 1967 1962-67 FMG, bi!ion Total Money Supply 34.9 6.2% Time and Savings Deposits - 7.6 17.5% Short-and Medium-term credit to the private sector 36.4 9.0% Rate of change in prices 3.2% 2/ Including postal checking accounts and the savings bank.  Public sector operations 2/(FMG billion) Rate of increase 1966 196o-66 Current receipts 36.4 8.3% Current expenditure / 32.8 7.7% burplus 3.6 Investment 5.8 16.5% External public debt December 31, 1967 (million .$US) Total debt (including undisbursed) 102.7 Annual debt service 1967 3.7 Debt service ratio 2.5:9 Balance of Payments US$ million Rates of change 1966 :1960-66 Exports (f.o.b.) 97.7 4.6% Imports (f.o.b.) - 122.7 5.1% Net services - 9.5 - 3.0% Factor Payments - 30.0 1.0% Current Balance - 64.4 0.7% Commodity concentration of exports: 1967 Average 1960-67 Coffee 32% 30% IMF Position Quota - US$ 19.0 million Drawings - nil Foreign Aid Disbursements ($US million) 1965 1966 1967 (estimated) Grants 46.8 45.4 45.8 of which FAC projects 7.2 7.3 Budget subsidy 7.0 6.9 6.9 Loans 7.4 7.3 4.8 TOTAL 5h.3 52.8 50.6