The proposed 2027 budget for Madagascar, currently under review by parliament, outlines significant shifts in government priorities. The Ministry of Economy and Finance is set to receive 4,503 billion ariary, a nearly 70% increase from the initial 2026 budget. This substantial hike may cover debt or transfers, although no detailed explanation has been made public.
In contrast, several ministries will see their budgets reduced. The presidency will lose nearly half of its funding, from 316 billion to 162 billion ariary. The Prime Minister's office will also face a 28% cut, while the Senate's budget will decrease by around 35%. The Ministry of Industrialization and Private Sector Development will experience the most significant reduction, with its budget slashed from 102 billion to 37 billion ariary, a decrease of nearly two-thirds.
The budget also reveals a significant increase in funding for the electoral commission, which will triple to 199 billion ariary, up from 61 billion in the initial 2026 budget. This substantial increase is likely linked to the planned referendum and presidential election in 2027. The Ministry of Transport will also see a 230% increase in funding, to 134 billion ariary.
Several tax increases are proposed in the budget, which will affect households directly. The customs duty on imported smartphones, biscuits, drinks, beers, and soap will rise from 20% to 30%. The minimum income tax, IRSA, will increase from 3,000 to 5,000 ariary per month, impacting low-income earners. A salaried worker earning the minimum wage of 315,000 ariary will pay 24,000 ariary more per year.
The government expects to generate around 609 billion ariary from these new measures, which is less than 3% of the total projected expenditure of 20,826 billion ariary. The proposed tax increases are likely to have a greater impact on household budgets than on the overall balance of the budget.
The education sector will see a modest increase in funding, with a 4.4% rise to 2,418 billion ariary, which is less than the projected 7.1% inflation rate for 2027. However, compared to the revised 2026 budget, education will receive an additional 300 billion ariary, which the government attributes to the recruitment of around 9,000 teachers.
The proposed budget has sparked concerns about the impact on the private sector, particularly given the government's plans to stimulate growth and job creation. The budget aims to achieve 7.3% growth and create 40,593 jobs over 2027-2028, but the reduction in funding for the Ministry of Industrialization and Private Sector Development has raised questions about the government's strategy.
Key points
- The proposed 2027 budget prioritizes finance, transport, and elections, with significant increases in funding.
- The private sector and presidency face significant cuts in funding.
- Tax increases are proposed, which will affect households directly, including rises in customs duties and income tax.
