Off The Wire
UPDATE 1-Madagascar budget predicts economic rebound in 2018
(Adds IMF representative comments)
By Lovasoa Rabary
ANTANANARIVO, Nov 30 (Reuters) - Madagascar passed a budget predicting economic growth will rebound to 5.1 percent in 2018, after a slight contraction this year due to a hurricane and as inadequate rainfall hit agriculture.
The budget of 11,595 billion ariary ($3.9 billion) was adopted unanimously by senators, and the IMF said its targets were achievable.
"This rate is higher than the population growth rate and should help us fight poverty more effectively," Finance Minister Vonintsalama Andriambololona said after Senate vote late on Wednesday.
The World Bank says Madagascar, which relies primarily on agriculture and tourism, is among the poorest countries in Africa. GDP per capita is just $420 and half of its children suffer from chronic malnutrition.
The government wants to hold down inflation to single digits, and forecast an average inflation rate of 7.8 percent in 2018, down from an expected 8.1 percent this year.
"In view of the inflationary pressures observed since 2017, the policy pursued in 2018 will continue to focus on the establishment of a stable and productive macroeconomic environment," the budget document said.
Madagascar had forecast growth of 4.5 percent in 2017 but the Enawo hurricane and insufficient rainfall hurt agriculture badly. Tourism was hit by an outbreak of plague in the cities.
The IMF's representative in Madagascar, Patrick Imam, said the 2018 economic growth forecast was realistic, based on a rebound in agriculture and increased public and private investment.
"We also assume continued momentum in tourism, manufacturing and mining, driven by the rebound in global growth. But negative shocks, whether it is another cyclone or drought for instance, could potentially derail this growth rebound," Imam told Reuters on Thursday.
The government hopes to increase tax revenues to 4,811 billion ariary, up 17.6 percent from this year.
Non-tax revenue is expected to be 90,1 billion ariary, and donations from external partners are forecast at 1,210 billion ariary. The deficit will be financed by external loans of 1,245.6 billion ariary.
"In light of these good performances, with ongoing reform momentum and the significant new revenue enhancement measures that will be implemented starting next year, such as the increases in fuel and diesel taxes, we are confident that the targets set in the 2018 finance law will be met," Imam said.
(Writing by Katharine Houreld; Editing by George Obulutsa and Susan Fenton)