Madagascar’s Push for Better Public Finance Data Could Boost Growth and Investment

An IMF review finds that Madagascar has made major progress in fiscal transparency through new public finance reforms, but large data gaps mean much of the public sector—including local governments and state entities—remains outside official statistics. Expanding fiscal coverage, improving debt reporting, and strengthening data-sharing mechanisms could enhance governance, attract investment, and improve the effectiveness of development spending.

Madagascar has made important progress in strengthening fiscal transparency, but major gaps in public finance data continue to limit the government's ability to fully understand and manage public resources, according to a recent technical assistance mission by the International Monetary Fund (IMF) and AFRITAC South. Conducted in partnership with the Ministry of Economy and Finance (MEF), the National Institute of Statistics (INSTAT), the Central Bank of Madagascar (BFM), and the National Social Security Fund (CNaPS), the review highlights both the opportunities and risks facing one of Africa's most ambitious fiscal modernization efforts.

A key milestone was the adoption of a new Public Finance Statistics (PFS) decree in December 2025, which aligns Madagascar's reporting framework with international standards set out in the Government Finance Statistics Manual 2014 (GFSM 2014). The reform is expected to improve transparency, strengthen fiscal planning, and provide a clearer picture of government finances for policymakers, investors, and development partners.

Large Parts of the Public Sector Still Outside Official Statistics

One of the report's most significant findings is that current fiscal statistics largely cover only the Central Budgetary Administration, leaving a substantial share of public-sector activity outside official reporting.

Madagascar's public sector is extensive, comprising around 180 national public establishments, the CNaPS social security fund, 24 regional governments, 1,695 municipalities, 23 majority state-owned enterprises, and 28 additional companies in which the state holds minority stakes. Many of these institutions are either partially covered or completely excluded from fiscal statistics.

This creates a major policy challenge. While government transfers to these entities are recorded, their own revenues, expenditures, debts, and assets often remain invisible in national accounts. As a result, authorities may underestimate fiscal risks, while investors and lenders may lack a complete understanding of the country's public-sector obligations.

The IMF has therefore urged authorities to collect 2024 financial data from all administrative public establishments, local governments, and the ten largest non-market public enterprises by June 2026 as part of a broader effort to expand statistical coverage.

Data Gaps Threaten Better Governance and Development Planning

The report identifies poor data availability as the biggest obstacle to reform. Many public institutions do not submit financial statements regularly, while others provide information in formats that are difficult to process. Missing accounting details and inconsistent classifications further slow progress.

Local governments present a particularly important challenge. Of Madagascar's 1,695 municipalities, only 112 are managed through Treasury systems, while data from the remaining 1,583 municipalities are largely unavailable. However, authorities have already collected information from around 30 major municipalities and expect data from another 90. Together with information from all 24 regions, these entities account for most local-government economic activity.

For development partners supporting decentralization, infrastructure, education, health, and social programs, better local government statistics could significantly improve project monitoring and oversight of spending. More accurate fiscal information would also help the government direct resources toward areas of greatest need and measure development outcomes more effectively.

The report also reveals that foreign grants remain a major component of public finances. In 2024, grants from international organizations and foreign governments reached 1.788 trillion ariary, representing about 16% of total central-government revenue. Yet due to limited expenditure data, these grants are largely assumed to finance investment projects. The IMF warns that this may overstate public investment while understating operational spending, potentially distorting policy decisions and development assessments.

Why Fiscal Transparency Matters for Investors and Businesses

The findings carry important implications for private-sector stakeholders. Reliable fiscal statistics are a critical factor in assessing sovereign risk, public-sector stability, and the long-term investment climate.

The report notes that Madagascar already publishes public debt data through international reporting systems, but coverage remains incomplete. Current reporting focuses mainly on loans and debt securities, excluding some liabilities such as cash and deposit obligations. Expanding debt reporting would provide a more accurate picture of public-sector liabilities and improve confidence among investors, lenders, and credit-rating agencies.

The IMF also found that inconsistencies in accounting records make it difficult to consolidate government accounts. Transfers recorded by the central government often do not match amounts reported by receiving institutions. Such discrepancies can obscure the true fiscal position of the government and complicate efforts to assess debt sustainability and public spending efficiency.

For businesses considering investments in infrastructure, energy, manufacturing, or public-private partnerships, stronger fiscal reporting would reduce uncertainty and provide clearer signals about government finances and spending priorities.

A Reform Roadmap with Regional Significance

To accelerate progress, the IMF has recommended the creation of a Public Finance Statistics Committee by September 2026. The proposed body would bring together the Ministry of Economy and Finance, the Ministry of Decentralization, INSTAT, the Central Bank, and other key institutions responsible for producing and supplying fiscal data. The committee would formalize data-sharing arrangements and improve coordination across government.

The broader reform roadmap extends through 2028 and includes expanding statistical coverage to local governments and public institutions, adopting GFSM 2014 standards across treasury operations, developing a government balance sheet, strengthening debt statistics, and producing fully consolidated public-sector accounts.

If implemented successfully, these reforms could transform Madagascar's fiscal governance framework. For policymakers, they would provide stronger tools for budget planning and debt management. For development partners, they would improve transparency, accountability, and aid effectiveness. For private-sector stakeholders, they would enhance confidence in the country's economic management and support a more predictable investment environment.

The report ultimately presents Madagascar as a country at a critical turning point. The legal foundations for fiscal transparency are now in place, but sustained political commitment, stronger institutional coordination, and improved data collection will determine whether these reforms translate into better governance, stronger development outcomes, and greater economic confidence in the years ahead.