Atou Seck, the World Bank representative, has announced a significant delay in the disbursement of budgetary aid amounting to 468 billion ariary to Madagascar. This decision stems from the government's failure to meet critical reform conditions in key sectors such as energy and telecommunications.

A Disheartening Setback for Madagascar

This news marks another setback for Madagascar, following a similar stance taken by the International Monetary Fund (IMF) regarding the country's financial assistance. The World Bank's decision to postpone the disbursement has stirred discussions in various circles, as reported by Africa Intelligence, a source known for its reliable insights. According to their reports, the World Bank was expected to finalize this budgetary support by September 2024 for a December disbursement, but it has now been pushed to the end of the first quarter of 2025.

Conditions for Disbursement

The World Bank's support remains contingent upon the Ministry of Finance, headed by Rindra Hasimbelo Rabarinirinarison, implementing the institution's recommendations. Currently, the international organization assesses that the administration of President Andry Rajoelina has not adequately fulfilled the prerequisites set forth by the board in Washington, particularly regarding access to financial services.

Key Reforms Required

1. Recovery Plan for Jirama: The national water and electricity company, Jirama, has been financially struggling for years. Its recovery plan has yet to receive government approval.
2. Implementation of Optima Pricing: The World Bank has mandated Jirama to reimburse ineligible expenses and to implement the Optima and Optima Business pricing systems for residential and business subscribers.
3. Telecommunications Liberalization: The liberalization of USSD codes, which enable basic financial services access without internet connectivity, has not been addressed by the current administration.

These actions are deemed necessary by the World Bank to ensure tangible improvements in Jirama's operations and overall financial health.

Urgency and Immediate Solutions

In light of the urgent situation, the appointment of Ron Weiss as the new director of Jirama was anticipated to expedite necessary changes. However, persisting power outages and widespread water shortages have prompted Malagasy leaders to seek immediate, albeit temporary, solutions to avert an escalating social crisis in various neighborhoods of the capital.

Proposals such as the installation of extensive solar panels and the activation of the Ambohimanambola thermal power plant by March at the latest have been put forward. While these measures may provide short-term relief, they do not address the underlying issues plaguing Jirama, according to World Bank economists. The institution advocates for a comprehensive recovery plan with clear timelines and deadlines to achieve measurable performance improvements.

Telecommunications and Financial Access

Another critical issue lies in the telecommunications sector. As highlighted by Africa Intelligence, the liberalization of USSD codes has not yet been enacted by President Rajoelina's administration. This reform is essential for allowing even the most remote Malagasy citizens to access basic financial services without needing an internet connection. USSD codes are primarily used on mobile phones for banking services, including balance inquiries and credit top-ups.

The government has belatedly responded to this request, demonstrating a reactive rather than proactive approach. On September 4, 2024, a workshop was held at the headquarters of the Communications Regulatory Authority, ARTEC, to finalize the draft decree on USSD codes. This event aimed to gather input from stakeholders in the telecommunications and financial sectors. However, the implementation of this legal framework will require additional time.

Financial Implications of the Delays

Africa Intelligence has provided a financial overview of these recurring setbacks. The postponement of the 468 billion ariary budgetary support from the World Bank adds to the delays experienced with the IMF, which was supposed to release 103 million dollars as part of an extended credit facility and a resilience and sustainability facility. This payment has now been deferred to February 2025.

The cumulative effect of these financial delays poses significant challenges for Madagascar's economic stability and development. As the government navigates these complex conditions, the urgency for effective reforms and compliance with international financial obligations has never been greater.

In conclusion, the World Bank's decision to freeze financial aid underscores the critical need for Madagascar to prioritize essential reforms in its energy and telecommunications sectors. The path forward requires not only immediate actions to alleviate pressing issues but also a strategic approach to ensure sustainable economic growth.

Eric Ranjalahy

http://www.lexpress.mg/2024/12/aides-financieres-la-banque-mondiale.html