Question

Write a summary overview of the Economy in Madagascar

Answer 1

Economic freedom ranking for Madagascar is 60.5, making its economy the 99th freest in the 2020 Ranking. The overall score rose by 3.9 points due to higher scores for judicial performance and property rights. Madagascar ranks eighth among 47 countries in the Sub-Saharan Africa region, and its overall performance is well above the regional average and approximately equal to the world average.

The Government aims to sustain economic growth through a structural reform agenda aimed at improving investment efficiency and raising the fiscal risks of its state-owned power and water utilities. The government would need to improve the rule of law, make the labor market more stable and preserve political stability to raise investor confidence to achieve those goals.

The highest federal and corporate tax rates for people are 20 per cent. Many taxes include taxes on value added, and taxes on capital gains. The gross tax burden is equal to 11.5 per cent of gross domestic income. During the past three years, government spending has stood at 16.8 percent of the country's revenue (GDP), and budget deficits averaged 2.0 percent of GDP. Public debt is 39.7 per cent of GDP.

Weak regulatory governance has a negative effect on the business climate, though building permits and credit access have improved. A modern program that automatically assigns judges to cases and allows them to manage cases remotely has strengthened contract enforcement. Agriculture, fisheries and forestry make up about 80 per cent of the population. The government plans to increased the fuel and energy subsidy expenses.

The combined value of goods and services exports and imports amounts to 74.7 per cent of GDP. The average tariff rate applied is 5.7 per cent, and there are 11 nontariff initiatives in place. The inefficiency and lack of transparency of the investment scheme threatens opportunities for rapid growth in new investment. The relatively high funding cost is a barrier to private-sector entrepreneurial growth, especially for small and medium-sized enterprises.