Madagascar's government is targeting 4.8% growth in 2026 under its Finance Act, for a GDP of 100,181 billion ariary. An ambitious target set against 7.1% inflation and persistent energy challenges. The IMF remains more cautious at 3.9%.
Four priorities to transform the economy
Madagascar's 2026 Finance Act organises spending around four key priorities: agriculture (rice self-sufficiency and crop diversification), energy (renewable development), infrastructure (roads, ports, airports) and human development (education, health, water and social protection). This approach aims to address the structural weaknesses identified in the budget document: "low productivity, limited access to finance, and insufficient energy infrastructure."
4.8% growth target, three scenarios
The central scenario targets 4.8% GDP growth, up from 4.2% in 2024. The IMF is more cautious, projecting 3.9% for 2025 with inflation at 8.4%, while the World Bank expects an average of 4.7% over 2025-2027. Two alternative scenarios have been drawn up: intermediate (4.0-4.5%) and pessimistic (below 4% in the event of external shocks). Inflation remains the primary concern, still running at 7.1% at the start of 2026.
Energy: the persistent Achilles' heel
Recurring power cuts remain a major drag on industrial competitiveness. Companies forced to invest in backup generators see their margins squeezed, reducing the taxable base and cutting into state fiscal revenues. The Finance Act allocates funding for renewable energy, but without specific figures or binding timelines — a gap that regional economists have regularly flagged.
Why this matters
Madagascar is targeting one million tourists by 2028 — an ambitious Finance Act is the prerequisite for funding the infrastructure needed. The 4.8% target is achievable, but requires concrete progress on energy and tax collection. The IMF, which conditionally approved $183 million subject to advances on these two fronts, will be watching budget execution closely throughout the year.