Madagascar - Joint World Bank-IMF Debt Sustainability Analysis

Overview & Synopsis

Madagascar is assessed at moderate risk of both external and overall debt distress, unchanged from the assessment of the last Debt Sustainability Analysis (DSA) in June 2024. Under the baseline, no external public and publicly guaranteed (PPG) debt ratios breach their thresholds and only a shock to exports pushes Madagascar’s present value of external-debt-to-export ratio above the threshold. Likewise, the overall risk of debt distress continues to be assessed as moderate, since the overall present value of debt-to- gross domestic product (GDP) ratio breaches its benchmark under a commodity price shock (the latter being the most extreme shock). The granularity assessment shows that the government continues to have some space to absorb shocks. The public-debt-to-GDP ratio is projected to stabilize around 54 percent in the medium term. Following a spike in short-term domestic public borrowing in 2024, the debt-service-to-revenue-and-grants ratio is projected to peak in 2025 and decline thereafter. The assessment assumes continued progress on reforms agreed to under the International Monetary Fund (IMF) extended credit facility (ECF) and resilience and sustainability facility (RSF), as well as the World Bank Equitable and Resilient Growth Development Policy Operation. Risks remain tilted to the downside, with potential delays in JIRAMA’s recovery and domestic revenue mobilization burdening public finances.