|
Madagascar Balance of Payments and Debt
The deterioration of the Malagasy economy that peaked
in the
1980s is clearly demonstrated by the evolution of balance
of
payments problems and a growing debt burden (see
table 2,
Appendix). In 1980 Madagascar experienced a trade deficit
of
US$328 million and a service deficit of US$286 million,
the
combination of which contributed to a record current
account
deficit of US$568 million for the year. After nearly a
decade of
implementing the structural adjustment demands of the IMF
and the
World Bank, the Ratsiraka regime reduced the current
account
deficit to US$128 million in 1989. Among the economic
trends
contributing to this were a sharp reduction in imports and
significant increases in bilateral and multilateral
foreign
assistance. Progress in reducing the current account
deficit was
reversed at the beginning of the 1990s, however, because
of
disruptions caused by the transition to democracy.
A rising debt burden constitutes the most notable
indicator
of Madagascar's fiscal dilemmas. Whereas as late as 1978
Madagascar had only accumulated US$293.5 million in debt,
massive
borrowing on the international market during a three-year
span
led in 1981 to the quadrupling of this figure to US$1.37
billion.
By the end of the decade, this figure had nearly tripled
to
US$3.94 billion. Even worse, Madagascar's external debt
exceeded
annual GNP after 1986, reaching its height in 1988 when
external
debt as a percentage of GNP exceeded 160 percent.
The downfall of the Ratsiraka regime and the turbulence
associated with the subsequent period of democratic
transition
exacerbated the debt crisis and presented the Zafy regime
with
one of its greatest economic challenges. As of November
1993,
Madagascar's external debt was estimated to exceed US$4
billion,
with an outstanding initial debt of US$295 million and
rescheduled debt of US$625 million being owed to
Paris Club (see Glossary)
members. Whereas the outstanding initial debt
was owed
primarily to France (US$138 million) and Japan (US$126
million),
several countries were owed the majority of outstanding
rescheduled debt, including France (US$182 million), Italy
(US$96
million), Japan (US$84 million), Spain (US$76 million),
and
Germany (US$55 million). Approximately US$77 million was
also
owed to commercial banks in the
London Club (see Glossary),
including the Arab Intercontinental Bank (US$31 million),
Chase
Manhattan Bank of Paris (US$9.5 million), Banque Nationale
de
Paris (US$7.5 million), and Banque Nationale d'Algérie
(US$7.2
million).
Data as of August 1994
|
