IMF will not replace Madagascar representative

by Reuters
Tuesday, 28 September 2010 07:14 GMT

* IMF froze aid to Madagascar in May 2009

* Political crisis has crippled growth

ANTANANARIVO, Sept 28 (Reuters) - The International Monetary Fund said on Tuesday it would not replace its outgoing Madagascar representative due to the constitutional vacuum on the Indian Ocean island.

IMF country manager Pierre Van den Boogaerde said the Washington-based body's Nairobi office might cover the country, which has been mired in crisis since President Andry Rajoelina seized power in March last year.

"The absence of a replacement is because of the absence of constitutional order. There probably won't be a replacement until the situation returns to normal," Van den Boogaerde said.

An almost 2-year political crisis has stunted Madagascar's growth largely due to the suspension of budgetary assistance by donors which has forced the government to put nearly all public investment projects on ice.

The IMF froze aid to the world's fourth largest island, eyed by foreign firms for its oil, cobalt, nickel gold and uranium deposits, in May 2009 shortly after Rajoelina overthrew former leader Marc Ravalomanana.

Earlier this year, Rajoelina's government, which is not recognised internationally, slashed its forecast for economic growth in 2010 to 0.8 percent, saying government spending would be badly hurt by a suspension of donor aid. [ID:nLDE66L0KJ]

The $8.6 billion economy shrank 0.2 percent in 2009 from 5.0 percent growth a year earlier, IMF data showed, as government spending dried up and private investment slowed sharply.

Madagascar is to hold a referendum on a new constitution in November before legislative and presidential elections next year. (Reporting by Alain Iloniaina; Editing by Richard Lough)

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