Madagascar's case has been removed from the IMF Board's agenda once again, this time over the government's fuel price cap initiative. The decision postpones a $183 million budget aid disbursement.

The International Monetary Fund's Board of Directors was scheduled to examine the 3rd and 4th review reports of the Extended Credit Facility (ECF) and Resilience and Sustainability Trust (RST) on July 17. The reviews took place in April and were expected to unlock a new tranche of financing. However, Madagascar's file was withdrawn from the agenda without further explanation.

The postponement stems from Madagascar's decision to cap fuel prices under an energy emergency declaration. State authorities argue this measure is necessary to cushion the impact of rising international oil prices caused by Middle East tensions. On July 17—the same day as the Washington meeting—the Council of Ministers declared a new energy emergency period.

The IMF had already flagged concerns during its April mission debriefing, emphasizing the importance of maintaining an automatic fuel price adjustment mechanism to limit budget impact and free resources for Madagascar's development needs.

The automatic adjustment mechanism ties pump prices to international oil market fluctuations and exchange rates, aiming to achieve price truth and eliminate state subsidies. This mechanism has consistently been the main sticking point between the government and Bretton Woods institutions. In December 2024, both the IMF and World Bank delayed disbursements over disagreements on this issue.

Previous administrations eventually convinced both institutions by implementing an automatic adjustment mechanism with a 200 ariary limit on price increases and decreases. Beyond socio-economic concerns, fuel price liberalization carries significant political weight. Major price hikes risk triggering social unrest that could quickly escalate into political opposition. The energy crisis that led to the previous administration's downfall remains fresh in public memory.

However, the government cannot afford to lose the $183 million, already factored into the supplementary budget law. The Ministry of Economy and Finance remains optimistic. "Public treasury is sustainable. All indicators are green," a ministry source stated, despite the IMF delay. The source added that the institution is not opposed to the state initiative but simply requested additional information on how the government plans to finance this policy. "We are working on it, and the IMF Board should examine Madagascar's case in the coming weeks," the source indicated.