The National Assembly is awaiting its renewal in Madagascar. Meanwhile, the current deputies’ mandate is still in effect: the people’s representatives are set to vote today on the revised finance law marked by budget cuts.
Balancing the state’s expenditures and revenues is the main goal of this budget revision, which will be put to a vote on Monday afternoon. On Friday, during the presentation of the bill to the deputies, the Minister of Economy and Finance, Rindra Hasimbelo Rabarinirinarison, announced that the targets set for the first half of 2024 had not been met. Tax revenues were notably well below expectations.
The state must therefore tighten its belt. Unless amended, the budget of each ministry should be reduced by almost 5%. The minister confirmed the president’s statement from May that investment budgets for ministries had to be cut by almost half to benefit Jirama, the national water and electricity distribution company.
Indeed, the energy sector will see the most significant adjustments. It will absorb 7% of the budget (1,032 billion ariary, or about 215 million euros), with nearly half used to repay Jirama’s debts. This budget is three times higher than that allocated to the Ministry of Water and more than the Health Ministry. It is an enormous budget, and so far, no clear and transparent recovery plan has been made public.
Furthermore, the government has decided to maintain the freeze on fuel prices for the coming months, despite IMF recommendations. This rejection of a “truth in pricing” at the pump further strains the budget since the state must cover the cost of this subsidized fuel. The state’s debt balance to oil companies for 2023 and 2024 now stands at 158 billion ariary, equivalent to 32.8 million euros.
Despite drastic budget cuts, the text presented today, the minister emphasizes, “nevertheless aims to preserve major macroeconomic balances.” In other words, reducing spending without affecting essential public services or causing social unrest. A significant challenge for Malagasy authorities.