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# [MADAGASCAR] 2026 revised budget: growth trimmed to 3.8%, inflation remains the main challenge
- URL: https://businessoi.media/en/madagascar-budget-rectificatif-2026-la-croissance-ramenee-a-3-8-linflation-reste-le-principal-defi-en/
- Published: 2026-10-15T08:51:38.000Z
- Updated: 2026-10-15T08:51:38.000Z
- Description: Madagascar's 2026 Revised Finance Law cuts growth to 3.8% from the initial 4.8% target, under pressure from structural inflation and a central bank rate held at 12%.
- Author: Emmanuel TAOCHY
- Tags: Madagascar, Économie, Finances publiques, Flash de mi-journée, #en

**Madagascar officially revised its 2026 growth forecast downward, from 4.8% to 3.8%, in its Revised Finance Law (LFR). A one-point drop that reveals the structural pressures the Malagasy economy continues to struggle with.**

## From 4.8% to 3.8%: a constrained budget adjustment

The Initial Finance Law (LFI) for 2026 was based on a **4.8%** growth forecast, considered ambitious but achievable at the start of the year. Some projections, including those of Economy Minister Ramiarison in January 2026, had even targeted **6%**. But economic reality imposed a severe revision: the Revised Finance Law 2026 now sets growth at **3.8%**, a gap of more than two percentage points from the original target.

According to analyses published by economic outlet CapMad, two main factors explain this shortfall: **persistent inflation** continuing to erode household purchasing power, and sluggish domestic consumption limiting the expected economic dynamism.

## The Central Bank holds the line at 12%

Facing inflationary pressures, the Central Bank of Madagascar (BCM) maintained its key interest rate at **12%** in its latest monetary policy decision — a high level reflecting the priority placed on price stability over credit-driven stimulus. This BCM stance mechanically limits access to financing for businesses and households, weighing on consumption and private investment.

## Budget priorities maintained

Despite the downward revision, the revised 2026 budget refocuses spending on structural sectors: **energy, water and employment**. A clear political message: even during an economic slowdown, the government intends to stay the course on high social-impact investments, in line with the Plan Émergence Madagascar objectives.

## Why it matters

Madagascar remains one of the region's most fragile economies, with a per capita GDP among the lowest in Africa. A growth rate of 3.8% is insufficient to significantly reduce poverty and generate the employment needed by a rapidly growing population. This downward revision also signals to foreign investors that, despite the island's considerable assets — minerals, tourism, agriculture — macroeconomic conditions remain a risk factor to monitor. Sources: CapMad, AllAfrica, Financial Afrik.