The International Monetary Fund (IMF) has approved $42.1 million in financial assistance for Madagascar to help meet urgent balance of payments needs, saying the funds should help "catalyze donor support," the fund said on Thursday.
The IMF and international donors broke ties or cut aid to the Indian Ocean island nation after a coup in 2009, but resumed them after a peaceful presidential election in late 2013.
The International Monetary Fund (IMF) logo is seen at the IMF headquarters building during the 2013 Spring Meeting of the International Monetary Fund and World Bank in Washington, April 18, 2013. REUTERS/Yuri Gripas
The country is one of the world's poorest, despite its reserves of nickel, cobalt, gold, uranium and other minerals.
"Madagascar’s economic recovery has been slower than expected as a result of falling world prices for commodity exports, weather-related shocks, and deep-rooted structural problems,"Mitsuhiro Furusawa, the IMF's deputy managing director and acting chair, said in a statement. "Against this background, financing and balance of payments needs have grown."
"The disbursement under the Fund’s Rapid Credit Facility should help catalyze donor support," Furusawa said.
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But the IMF praised the government's handling of the economy in the past six months, saying it had maintained macroeconomic stability and debt sustainability.
A similar disbursement was made last year, the IMF said.
In September, the fund adjusted Madagascar's growth forecast for 2015 from 3.5 to 3.2 percent, mostly due to falling commodity prices and the slowing tourism sector.
Madagascar's economy has been struggling since a 2009 coup which scared off foreign investors and prompted donors to cut aid. A peaceful election in late 2013 saw aid flows resume but the new government has had difficulties introducing economic reforms.
