The International Monetary Fund (IMF) has greenlighted the immediate disbursement of 31.9 million U.S. dollars to Madagascar to cover the island nation's external and fiscal financing needs.

The approval comes after the lender confirmed it had completed the second review of the country's economic program under the Extended Credit Facility

This now brings the total disbursements under the arrangement to 159.7 million U.S. dollars

While 2021 growth was revised up to 4.3 percent, 2022 growth is projected to stall at 4.2 percent and annual average inflation is projected to accelerate to 9.8 percent, fueled by the surge in international oil and food prices.

The IMF said lower growth and higher commodity prices will weigh on the budget, widening the fiscal deficit.

"Madagascar's performance under the Fund-supported program has been broadly satisfactory despite delays in structural reforms and a challenging external environment. Continuation of prudent policies and a more proactive stance to support structural performance are needed to maintain macroeconomic stability, boost investment, and help achieve more sustainable and inclusive growth," said the IMF Deputy Managing Director and Acting Chairperson of the Executive Board, Antoinette Sayeh.

"The authorities are encouraged to continue their efforts to improve budget transparency and strengthen accountability, including through more effective enforcement of the anti-corruption legal framework."