IMF trims 2015 GDP growth forecast to 3.2 pct

folarin okunola

September 23, 2015 4:18 PM

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.

A photographer takes pictures through a glass carrying the International Monetary Fund (IMF) logo during a news conference in Bucharest in a file photo. REUTERS/Bogdan Cristel

Madagascar's economy is expected to grow by 3.2 percent in 2015, the International Monetary Fund said, slower than its previous 3.5 percent forecast as falling commodity prices, slowing tourism sector and power cuts hurt output.

In July, Patrick Imam, the IMF's Madagascar country representative, told Reuters the fund had trimmed Madagascar's 2015 gross domestic product growth to 3.5 percent from 5 percent due to poor weather and falling commodity prices and warned output may be even lower due to a strike at state-owned Air Madagascar.

"Sharply falling commodity prices are holding back mining revenues, while private investment remains weak in the context of the poor business climate," the IMF said in a statement late on Tuesday.

"Tourism has been hampered by difficulties at Air Madagascar, while recurring power cuts at JIRAMA, the public utility, continue to constrain economic activity."

READ: Economy to slow in 2015, 2016 on weak oil prices: IMF

IMF said it saw inflation at 7.9 percent at year-end.

In June, Air Madagascar workers went on strike to protest what they said was poor governance and mismanagement of the airline, leading to a 65-70 percent cancellation of flights.

They resumed work a month later after union officials and the carrier signed a deal.

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.

The country is one of the world's poorest, despite its reserves of nickel, cobalt, gold, uranium and other minerals.

The IMF said it has also approved Madagascar to access an equivalent of $47.4 million under its Rapid Credit Facility.

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