Madagascar Fifth Poverty Reduction Strategy Credit

closed

The Fifth Poverty Reduction Support Credit (PRSC) for the Republic of Madagascar is the second of a series of three PRSCs to be disbursed as single tranche operations. It is consistent with the Bank's Country Assistance Strategy (CAS) discussed at the Board of Executive Directors on April 3, 2007, to support the implementation of the Government's poverty reduction strategy as laid out in the Madagascar Action Plan (MAP). The objective of the MAP is to promote rapid and sustainable development over the next five years in line with the Government's national vision document (Madagascar Naturally) and the United Nation (UN) Millennium Development Goals (MDGs). To attain this objective, the MAP presents eight key commitments: (i) responsible governance; (ii) connected infrastructure; (iii) educational transformation; (iv) rural development and a green revolution; (v) health, family planning and the fight against HIV/AIDS; (vi) high growth economy; (vii) cherish the environment; and (viii) national solidarity. The PRSC program for this series focuses explicitly on improving governance, budget management and service delivery, and includes specific policy actions in these areas. The implementation of this operation continues to be exposed to risks, many of which were already identified in previous PRSC operations and in the CAS. The main risks include: (i) vulnerability to external shocks, particularly cyclones and changes in global commodity prices, such as oil and rice; (ii) political risk which poses a continued threat in Madagascar given its history of instability; (iii) maintaining a stable macroeconomic environment, which is critical to the successful implementation of the PRSC and is a core area of focus of the MAP; (iv) the implementation of reforms in public finance and in key sectors (energy) poses challenges and risks which could negatively impact service delivery; and (v) capacity constraints present significant risks to effective implementation of reforms.