The first half of 2026 ended with «very low» disbursement rates for Madagascar's public investment projects, according to the Prime Minister's own words. At mid-year, tax revenues were still down 10% compared to Q1 2025, although the second quarter showed a partial recovery with a 6% improvement.
Persistent Structural Obstacles
Four factors explain the slow budget execution: administrative red tape, prolonged delays in compensating populations displaced by construction projects, the impact of cyclones Fitia and Gezani on the economy, and rising global oil prices that inflate the energy import bill.
Roads are the crux of the problem: their deteriorated condition is estimated to cost nearly 2% of GDP annually — a figure the government cites to justify the urgency of infrastructure works. Priority sectors remain road and energy infrastructure, industrial development, and maintenance of existing networks.
Second-Half Corrective Measures
To make up for lost time, the Malagasy government has launched a H2 correction plan: downward revision of overall budget forecasts, removal of tax exemptions on rice and second-hand clothing — two of the main import items — and a slowdown on bulk imports to defend foreign exchange reserves.
These adjustments come against a backdrop of tense IMF negotiations: Antananarivo has refused to liberalise fuel prices, a precondition set by the Fund to release $183 million. Political rigidity that complicates the rebalancing of public finances.
Why It Matters
Madagascar targets 6% growth in 2026 according to African Development Bank projections. But achieving that goal requires public investments — especially in roads — to actually be disbursed. Every GDP point lost to impassable roads represents roughly $500 million in uncreated value. For the island's partners and investors, the government's ability to accelerate execution in H2 will be the key signal of whether budget management can match the stated ambitions.
Source: AllAfrica, 2424.mg — Madagascar Budget 2026. AI-assisted — reviewed and verified.