Madagascar is experiencing political instability at the very moment the country is engaged in its most ambitious economic reform programme in a decade, backed by the IMF and the Asian Infrastructure Investment Bank (AIIB). For investors and international partners, the central question is one of institutional continuity.
Structural reforms under strain
In 2026, Madagascar enjoyed unprecedented multilateral support: $155 million disbursed by the IMF under the 3rd and 4th combined ECF-RSF reviews, $353 million targeted by the AIIB for infrastructure, and an SDG investment opportunity map published jointly by EDBM and the Ministry of Economy. This favourable momentum assumed political stability and executive continuity.
The political crisis now unfolding — analysed by Agence Ecofin and Jeune Afrique — challenges this equation. A government transition mid-IMF cycle always weakens adjustment programmes: new authorities must reaffirm commitments, restart technical dialogue with Bretton Woods institutions and convince private investors that reforms will continue.
A 2026 budget revised amid headwinds
The new government leadership has tabled a revised budget law (PLFR 2026) that «reworks its approach in the face of international tensions», according to Madagascar Tribune. This budget revision reflects a double constraint: on one hand, external pressures — imported inflation, commodity prices, funding volatility; on the other, the need to maintain the structural reform trajectory agreed with donors.
The dual challenge posed by the ongoing constitutional transition — flagged by several analysts — is to simultaneously preserve macroeconomic credibility with international financial institutions and maintain private investor confidence, which is highly sensitive to any signals of policy discontinuity.
Why it matters
Madagascar remains one of the sub-region's highest-potential markets: natural resources, agriculture, tourism and an emerging digital economy. But political risk has historically been the primary barrier to unlocking this potential. Every institutional crisis delays disbursements, chills investors and raises the country risk premium. For economic decision-makers across the Indian Ocean and East Africa, tracking Madagascar's trajectory over the coming weeks is essential: the signals sent by new authorities on reform continuity will be decisive for the regional business climate.
Sources: Agence Ecofin, Jeune Afrique, Madagascar Tribune, LGDI Madagascar — 2026.