AfDB Approves $68 M Support Package for Madagascar’s Economic Reform Programme

The new funding brings the total value of the two-phase programme to $136 million, making it one of the African Development Bank’s largest budget support operations in Madagascar.

The African Development Bank Group (AfDB) has approved a $68 million financing package for Madagascar to support the second phase of the country's Financial Management and Economic Resilience Support Programme, aimed at strengthening public finances, boosting investment, and improving economic resilience.

The financing package includes:

• A $27.2 million concessional loan from the African Development Fund

• A $40.8 million concessional loan from the Transition Support Facility

The new funding brings the total value of the two-phase programme to $136 million, making it one of the African Development Bank's largest budget support operations in Madagascar.

Building on First-Phase Reform Successes

According to the AfDB, the first phase of the programme delivered significant reforms that benefited both households and businesses across Madagascar.

Key achievements included:

• The rollout of a modern nationwide tax administration system

• The implementation of a national anti-corruption strategy extending through to 2030

The Bank said these reforms helped strengthen transparency, accountability, and state revenue collection while improving the country's institutional framework.

The second phase of the programme is intended to deepen these reforms further by focusing on public financial management improvements and measures to increase private sector competitiveness.

Expanding Fiscal Space and Encouraging Investment

AfDB officials said the reforms are designed to help Madagascar widen its fiscal space, strengthen governance, and attract larger-scale domestic and foreign investment.

"Madagascar has demonstrated the political will and institutional capacity to implement meaningful reforms under difficult circumstances," said Adam Amoumoun, the African Development Bank's Country Manager for Madagascar.

"This programme consolidates those gains and opens the door to a more resilient, inclusive, and transparent economy—one that works for all Malagasy people," he added.

The programme also supports reforms aimed at improving the country's energy sector and increasing access to electricity, particularly in rural communities.

Focus on Sustainable Energy and Rural Electrification

One major component of the programme is support for the establishment of:

• An independent electricity regulator

• A new National Fund for Sustainable Energy

The initiative includes direct financing for off-grid energy systems and rural electrification projects, targeting regions where poverty levels remain especially high.

According to the Bank, nearly 80% of Madagascar's poor population lives in rural areas with limited or unreliable access to electricity and infrastructure.

The reforms are expected to improve energy access, support local economic development, and encourage investment in renewable energy projects.

New Public-Private Partnership Framework

The programme also supports the implementation of a modernised public-private partnership (PPP) law designed to improve investor confidence and facilitate private sector participation in infrastructure and clean energy development.

AfDB said the updated legal framework is intended to provide greater certainty for investors considering long-term projects in Madagascar.

The reforms are expected to help mobilise capital for infrastructure projects at a larger scale while reducing barriers to investment.

Tax Revenue Growth Targeted

Under the programme, Madagascar aims to significantly improve domestic revenue collection.

Tax revenues are projected to increase from 10.5% of Gross Domestic Product (GDP) to 12% of GDP by the end of 2026.

Officials say improved revenue mobilisation will help strengthen the country's fiscal sustainability and create additional capacity for public investment and social services.

Continued International Support for Reforms

The financing comes as Madagascar's new government, formed in March 2026, has reaffirmed its commitment to economic reform and engagement with international development partners.

The African Development Bank said its latest approval complements broader international efforts to support Madagascar's economic recovery, governance reforms, and long-term development goals.