MADAGASCAR

RISK RATING
High
Default High Risk Score 6.50
Normal Average 4.89
Weighted Average 4.75
RISK RATING HISTORY
RISK RATING SCALE

Risk Rating Scale

Severe: 8.0 to 10
High: 6.0 to 7.9
Elevated: 4.0 to 5.9
Moderate: 2.0 to 3.9
Low: 0.0 to 1.9
EXCHANGE RATE
Country Outlook

Over 2021, Madagascar will face the combined challenges of addressing worsening food shortages in the south as well as the sustained socio-economic impact of the COVID-19 pandemic. The resultant needs are likely to drive the adoption of a broad economic reform agenda, although growing tensions between the ruling party and opposition will contribute to significant uncertainty regarding political stability. In the coming months, the government and its international partners will likely prioritise formulating a robust economic development agenda in order to aid, recover, and build resilience against potential shocks. Key to this agenda will be kick-starting development in the mining sector, which has largely stalled since the government suspended the issuing of new mining permits in 2011. In addition to various debt relief initiatives, funding support from international financial institutions has provided a buffer while government revenues remain suppressed.

  • President Andry Rajoelina is enjoying greater political capital in his second stint in government. Rajoelina‚Äôs party and his allies now effectively control both chambers of Madagascar‚Äôs national legislature, as well as the government, likely giving him a strong mandate for 2021. However, civil society organisations have increasingly criticised the concentration of power by the ruling party under this arrangement. Rajoelina also faces a backlash over his promotion of a locally produced supposed cure for COVID-19 that is also being exported. Alongside growing socio-economic pressures, any further narrowing of the political space in the coming months will heighten the threat of opposition protests.
  • The economic impact of the lockdowns and corresponding bans on commercial activity have provoked widespread public discontent. Violent confrontations have again increased between security forces and demonstrators in cities, and social organisations have issued calls for Rajoelina‚Äôs resignation. The armed forces have been a key arbiter in Malagasy politics, but coup risks have been reduced since the 2018 elections. President Rajoelina benefits from the loyalty of most of the army, although partisan divisions still exist. The risk of violent destabilisation tactics has also fallen since the 2018 elections. However, continuing socio-economic grievances are likely to drive the risk of civil unrest and industrial action. Besides threats from petty and other crime, wealthy locals and expatriates face increasing kidnap risks in Madagascar’s major cities, including Antananarivo and Toamasina.
  • All main economic sectors have been adversely affected by the pandemic, including mining, agriculture, and tourism. World markets for Malagasy commodity exports are weak, and a slump in consumer demand has hammered the garment manufacturers who account for most of the 150,000 jobs in the export-processing zones. Tourist numbers are likely to remain suppressed over the coming months, extending job losses in the sector. In addition to various debt relief initiatives, funding support from international financial institutions has provided a buffer while government revenues remain suppressed. The risk of debt distress has accordingly risen slightly but remains moderate. Nonetheless, state budgets will remain under significant pressure into 2021, and sustained revenue losses as a result of a second wave and further lockdowns will create additional financing needs.
CUMULATIVE AND DAILY COVID-19 INFECTIONS AND DEATH RATE
INTERNATIONAL MONETARY FUND | DATAMAPPER
Risk Perils
Political Instability
4.5
Expropriation, Nationalisation, Confiscation & Deprivation
4.5
Contract Frustration & Breach
5.5
Taxation
5.5
Bribery & Corruption
6.5
Regulatory Burden
6.0
Strikes, Riots & Civil Commotion
4.2
Security
2.2
Sovereign Default
4.5
Economic Volatiliy
5.5

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