Madagascar: Ravalomanana government (2002-2006)

Updated March 2007

Ravalomanana was now in control of the executive, and had replaced the provincial governors with special presidential delegates, but both the Senate and the National Assembly were in the hands of AREMA. To overcome this hurdle he scheduled legislative elections for December 2002 and began to effect legislative measures by presidential decree, which was accepted by the High Constitutional Court (Marcus 2004, US State Department 2005). In the legislative elections Ravalomanana's I love Madagascar Party won 102, and his allies another 30, of 160 seats in a 68% poll (Marcus 2004, Cornwell 2003). Local elections were held in November 2003 and TIM party won 66% of the vote placing them in a position to control the Senate. The country was divided into 22 regions to facilitate decentralisation, the heads of which report directly to the president (Marcus 2004, US State Department 2005).

Trials of Ratsiraka's Prime Minister Tantely Andrianarivo, and of Ratsiraka, have led to accusation of witch hunts against Ravalomanana and brought into question both his commitment to reconciliation and the independence of the judiciary from executive interference (In August 2003 Ratsiraka was sentenced in abstentia to 10 years hard labour for embezzlement of state funds and in December Andrianarivo recieved 12 years for abuse of state office). In January 2004 the cabinet was reshuffled to bring leaders of other parties into the cabinet. Much of the support from other parties gained through inclusiveness and reconciliatory gestures was lost as a result of the economic reversals experienced in 2004 (Marcus 2004).

The six month standoff and the associated capital flight, violence, destruction of infrastructure and loss of trade income was devastating for the economy. Real GDP dropped by 12.7% in 2002 and IMF estimates put strike costs at US$14 million a day, claiming that the first ten days of unrest alone had wiped out all the gains made under the Heavily Indebted Poor Countries initiative. However in July 2002 Ravalomanana's Prime Minister, Jacques Sylla, was able to secure pledges from donors of $2.3 billion over four years to assist with economic recovery. As a consequence economic growth for 2003 was over 9% (Cornwell 2003, Marcus 2004, US State Department 2005).

Nevertheless it took two years for the economy to return to pre-conflict levels, while lost export markets, foreign investor confidence and tourism have not yet wholly recovered (Bertelsmann Foundation 2005). Ravalomanana's ambitious reform initiatives included measures to encourage foreign investment, anti-corruption measures, infrastructure development, privatisation of state firms, liberalization of the economy and floating of the exchange rate and currency as well as fiscal and monetary discipline. These measures were coupled with the abolition of sales taxes to alleviate some of the social consequences of the reforms (Columbia Encyclopedia 2005, Marcus 2004, US State Department 2005).

The immediate outcome of the floating of the Malagasy franc was rapid and large depreciation of the currency, a 50 % fall against the euro in 2004. This resulted in a surge in the inflation rate to 15% in 2004, due to price rises in essential imports, with great hardship for Madagascan, especially the poor who have been hardest hit. Economic growth has been robust; 6.3% was posted in 2004 and 6% forecast for 2005 (US State Department 2005, Marcus 2004, OEDC 2004/2005, IRIN 2005). Ravalomanana's economic reforms have won him support from western donors in the form of aid and trade concessions; the European Union alone promised 430 million euros over five years to aid in reform, while the IMF contributed $117.1 million to poverty relief. In October 2004 Madagascar reached the completion point in the initiative for Heavily Indebted Poor Countries and became eligible for an 80% reduction on its debt, $836 million of which is due for 2005 (Marcus 2004, US State Department 2005, IMF 2005).

References

BERTELSMANN FOUNDATION AND THE CENTER FOR APPLIED POLICY RESEARCH 2005 "Madagascar", IN Shaping Change - Strategies of Development and Transformation [www] http://www.bertelsmann-transformation-index.de/79.0.html?L=1 [opens new window] (accessed 23 Oct 2007).

COLUMBIA ENCYCLOPEDIA 2005 "Madagascar", Sixth edition, [www] http://www.bartleby.com/65/ma/Madagasc.html [opens new window] (accessed 23 Oct 2007).

CORNWELL, R 2003 "Madagascar: Stumbling at the first hurdle?" ISS Occasional Paper 68, April [www] http://www.iss.co.za/Pubs/Papers/68/Paper68.html [opens new window] (accessed 23 Oct 2007).

IMF 2005 "Statement by IMF First Deputy Managing Director Anne O. Krueger at the Conclusion of a Visit to Republic of Madagascar", International Monetary Fund, [www] http://www.imf.org/external/np/sec/pr/2005/pr05134.htm [opens new window] (accessed 23 Oct 2007).

IRIN 2005 "World Bank releases $239 million for development projects", July 13 [www] http://www.irinnews.org/report.asp?ReportID=48107&SelectRegion=Southern_Africa& SelectCountry=MADAGASCAR [opens new window] (accessed 23 Oct 2007).

MARCUS, RR 2004 "Political Change in Madagascar: Populist Democracy or Neopatrimonialism by another name?", Institute of Security Studies, Occasional Paper 89, [www] http://www.iss.co.za/pubs/papers/89/Paper89.htm [opens new window] (accessed 23 Oct 2007).

OEDC 2004/2005 "African Economic Outlook 2004/2005: Country Highlights", Organisation for Economic Co-operation and Development, [www] http://www.oecd.org/document/14/0,2340,en_2649_15162846_34861902_1_1_1_1,00.html [opens new window] (accessed 23 Oct 2007).

US STATE DEPARTMENT 2005 "Background Note: Madagascar" [www] http://www.state.gov/r/pa/ei/bgn/5460.htm [opens new window] (accessed 23 Oct 2007).