Announcement of Second Meeting of Madagascar Consultative Group on November 29, 1984

FOR IMMEDIATE RELEASE World Bank 1818 H Street, N.W ., Washington , D.C. 20433 , U.S.A.• Telephone : (202) 477-1234 November 29, 1984 Contact: Pamela Brennan (202) 477-3293 SECOND MEETING OF MADAGASCAR CONSULTATIVE GROUP The European Office of the World Bank made the following announcement today: Twenty countries and institutions committed to the economic and social development of Madagascar met in Paris November 28 and 29, 1984. The second meeting of the Consultative Group for Madagascar was held under the chairmanship of Mr. Michael Wiehen, Director, Eastern and Southern African Region, World Bank. The Consultative Group reviewed Madagascar's economic situation and prospects on the basis of reports presented by the Government, the World Bank and the IMF. It was noted that after declines in real GDP in 1981 and 1982, GDP increased in 1983 by one percent accompanied by a small increase in manufacturing output and a marked decline in the rate of inflation. These trends towards improvement have continued in 1984, as the Government has begun to address a number of its structural problems in agriculture and industry. The outlook for Madagascar's exports also appears more promising in the next few years and Madaga~car's observance of the performance criteria of the 1984 Stand-by Agreement with the IMF was welcomed. The Malagasy delegation emphasized however the importance of seeking a long term solution for the debt service burden. The Government presented to the meeting its public investment program for 1984-87. The program shows a clear shift in investment priority to the productive sectors and to the rehabilitation of infrastructure, with a concentration of resources on improving efficiency. The immediate goal is a growth rate of 3%. Investment required over the four-year period would be equivalent to about one billion dollars, of which part has already been obtained for projects in progress or about to start. Participants indicated readiness to continue financial support for the development of Madagascar. The meeting also reviewed the need for balance of payments support in 1985, in view of Madagascar's objective of reaching a growth rate of 3%. The participants noted Madagascar's need for additional, quick disbursing assistance in 1985. A number of positive indications of program and commodity support were given to that effect by participating countries and institutions.  -2- The pa rt icipants focussed in particular on government policy in the industrial se c to r. The Malagasy delegation drew the attention of participant s t o the new emphasis on efficiency and management in the public sector , and the mobilization of the private sector to participate more actively in the e conomy. This is being reinforced by measures including a reduction of price controls, simplification of administrative procedures for industri a l exports, and a new investment code to encourage both domestic and forei gn private i nvestment. Eefore adj our ning the participants concluded that the next meeting of the Consultative Group should take place in approximately fifteen months. It woul d r evi ew progress in the financing of the public investment program, as wel l as implementation of the new sector policies which the Government had a nnounced. In the interim, the Government stated, it would seek to institu te incr eased coordination of bilateral and multilateral assistance at the nati onal l evel. Representatives were present at the meeting from Egypt, France, Germany (F.R.), Italy, Japan, the Kuwait Fund, Spain, Switzer land, the United Kingdom, the United States, the African Development Bank , the Commission of European Connnuni ties, the European Inves t ment Bank , t he International Finance Corporation and the International Mo netary Fund as well as the World Bank. Canada, Norway, and the Organization fo r Economic Cooperation add Development were represented as observers . The de l egation of the Democractic Republic of Madagascar was headed by t he M inister of Finance and Economy, His Excellency Pascal Rakotomavo, and in cluded the M inister of Industry, Energy and Mines, His Excellency Tantely Andrianari vo, the Governor of the Central Bank of Madagascar, M r. Ri chard Randr i amaholy, the Director General of Planning, Mr. Jean Robiari vony and o ther senior government officials.