Confusion reigns as the Central Bank of Madagascar has raised its key interest rate to 12.5%, ostensibly to curb inflation. This move stands in stark contrast to the government’s stated goals of stimulating economic recovery, encouraging investment, and facilitating access to financing as outlined in the General State Program.
The lack of coordination between the Ministry of Economy and Finance and the Central Bank is evident. While the Central Bank holds the authority over interest rates, a lack of consultation has led to conflicting signals. This decision comes at a precarious time, given global economic uncertainties stemming from geopolitical tensions, including the conflicts involving the US-Iran and Russia-Ukraine, which threaten energy prices and freight costs.
Comparing Madagascar to Mauritius—which has maintained its rate at 4.75%—highlights the vast disparity in economic development. With Madagascar’s GDP per capita at only $656, the government’s push for investment is critical. However, the rising cost of credit will inevitably dampen investor enthusiasm, making growth targets harder to reach.
Beyond interest rates, structural issues such as the business climate, energy shortages, corruption, and judicial challenges continue to hinder progress. Furthermore, the private sector is squeezed by new taxes imposed to balance the national budget. Ultimately, this ‘key’ rate hike acts as a significant obstacle to the private sector, which remains the primary engine for growth.
Captured & Published at: 2026-08-17 05:38:56 (Madagascar Local Time EAT)
Original Source: https://www.lexpress.mg/2026/08/maux-directeur.html