Citizens budget

9OFA 2019

1January 2019

The year 2019 will be marked by the taking office of the new President of the Republic of Madagascar, but also the holding of the legislative and the communal elections. The political, economic and social challenges of these events are very important to the effectiveness of the public budget compared to the development process and the fight against poverty. Indeed, the state budget is a strategic instrument for implementing strategies and policies in this regards.

For this post-election year, priorities transcribed in the 2019 budget are moving forward towards actions to improve the lives of the population, whether in the areas of large infrastructure, good governance, strengthening of security goods and people, and the improvement of access to basic social services ...

During the review of the Finance Act project 2019 by the National Assembly and the Senate, some amendments have been the subject of disagreement between the two chambers, it did not lead to a consensus during the budgetary session. Thus, unusually for this fiscal year 2019, the Finance act was legislated by Order for that the State can have Finance act at the beginning of the year 2019, in order to manage the budget which is determined.

The Citizens’ budget relating to the Order on the Finance act 2019 intends to inform the population on the key tax measures as well as the public expenditure guidelines, but also the macroeconomic and budgetary framework which was developed the budget.

This is to ensure transparency in the process of preparation of the budget, but also every citizen feel concerned and responsible for the issues related to the budget.

Our thanks go to all departments, person resources, the UNICEF Madagascar for their collaboration and all support of far or close for publication of this document.

Citizens Budget

The Citizens Budget is a simplified document of Initial (IFA) or Amended Finance Act (AFA).

It is part of a transparent approach, an essential element of good governance.

yOUR FREE TAkE-hOME COPy - PlEASE FEEl FREE TO DUPlICATE AND COPy

BUDGET RESSOURCES 2019

9

ENGLISH VERSION

So that citiziens know where their tax money goes

printed by

CITIZENS BUDGET RELATED TO ORDER OF FINANCE ACT 2019

1,580.6 billion Ariary

2,590.0 billion Ariary

102,2 billion Ariary

CUSTOMS

NON-TAX REVENUES

GRANTS

PROJECT LOANS

2,954.6 billion Ariary

7,488.5 billion Ariary

INTERNAL TAXES

TOTAL REVENUEAND DONATIONS

1,533.2 billion Ariary

© DGB

Citizens budget

90FA 2019

2January 2019

PUBLIC EXPENDITURE 2019

DiSTRiBUTiOn Of miniSTERial ExpEnDiTURES ExpEnDiTURE By BROaD hEaDinG

Industry developmentand the private sector

Public worksand infrastructure

Others

Energyand hydrocarbon

Water,sanitation,hygiene

Public health

National defense,public security,gendarmerie

Agriculture and livestock

National Education

AFA2018

OFA2019

% Budget2019

384.9 570.5

107.6 141.4

140.8

11.5 12.0

144.1

637.1 723.5

408.4 507.9

1,099.5 1,192.7 15.0%

6.4%

9.1%

7.2%

1.8%

1.8%

0.2%

11.1%

47.5%

723.6

3,506.8 3,782.3

882.2

billion Ariary

Interest on the debt 416.7 billion Ariary

Personal spending2,617.2 billion Ariary

Operating expenses1,803.0 billion Ariary

Investment spending 3,781.3 billion Ariary

(Integrating allowances for MEN, METFP and theDepartment of Justice agents, as well as therecruitment of 8,000 FRAM)

- Goods and services : 452.0 billion Ariary- Transfer and subsidy : 1,141.0 billion Ariary(255.0 billion Ariary of grant for the JIRAMA)

REVEnUE By SOURCE (billion ariary)Internal Taxes

ExCERpTS fROm ThE nEw Tax mEaSURES Change of the threshold of liability to IR, ST and VAT;

Modification of the minimum of perception to the IR for transport of persons and goods;

Exemption from VAT on importation and local sales of corn, wheat and soybean seeds;

Change to the base, tariff and rate of Excise duty on tobacco, on the telephone and the mobile networks;

Customs

ExCERpTS fROm CUSTOmS Tax mEaSURES More dissuasive penalties for offenses relating to the keeping and

disclosure of regular and authentic documents like accounting, financial and commercial which are based the posteriori control;

Establishment of an additional duty at a rate ranging from 3% to 200% for the import operation of goods when intended for consumption in Madagasikara;

Support to local industries by creating sub-positions for the manufacture of dairy products with application of Customs Duty to 10%;

Promoting mobile telephony sector by the application of Customs duty rate of 5% (instead of 10%) on some capital goods and 20% (instead of 10%) for some consumer goods.

18.3

2.0 Others

9.8

509.3

1,241.7

33.0

48.58.7

51.3

549.7

700.2 IRIncome Tax

IRSATax on wagesand related income

ISSynthetic Tax

IPVICapital GainsTax Real estate

IRCMTax on incomefrom movable capital

STAMPS

INSURANCES

DERegistration Fees

DAExcise Duty

TVAValue Added Tax

1,338.4

0.5

247.1

494.3

552.2DDCustoms Duty

TVAPPValue-added tax on petroleum products

TPPTaxes on oil products

Others

TVAValue Added Tax

Citizens budget

9OFA 2019

3January 2019

pUBliC inVESTmEnT pROjECTS By SECTORS

AFA 2018

33.7%

66.2%

OFA 20197.0%

13.8%

11.8%

33.6%

ADMINISTRATIVE

INVESTMENTEXTERNAL

INVESTMENTINTERNAL

INVESTMENTEXTERNAL

INVESTMENTINTERNAL

PRODUCTIVE

SOCIAL

INFRASTRUCTURE

ADMINISTRATIVE

PRODUCTIVE

SOCIAL

INFRASTRUCTURE

13.0%

3.8%

8.4%

8.5%

4.7%

13.6%

12.4%

35.9%

13.0%

3.1%

8.6%

8.7%

33.4%

66.6%

SECTOR

(1,949.9 billion Ariary) (2,518.3 billion Ariary)

(1,262.9 billion Ariary)(992.6 billion Ariary)

ORiEnTaTiOn Of ExpEnDiTURES

Social inclusion and protection Support for vulnerable groups (women, mothers and children, disabled person...)

Improving household incomes

Progressive integration of young people into the national production system

Combating against violence and sex tourism

Health and education

•Improving the quality of education and health services

Continuation of digital education

Rehabilitation of social infrastructure

Justice, fight against corruption and good governance

Operationalization of the constitutional bodies: High Council of the Defense, Democracy and Rule-of-law (HCDDED), High Court of Justice (HCJ);

Suppor t to anti- cor r uption bodies: the CSI (Committee for the Promotion of Integrity), the SAMIFIN (Sampandraharaha Malagasy Iadiana amin’ny Famotsiambola) and the BIANCO ( Independent Anti-Corruption Office);

The further development of four (4) poles anti-corruption.

© DGB

© DGB

© DGB

Citizens budget

90FA 2019

4January 2019

Investment promotion

Creation of a favorable business climate (improvement of legal frameworks...)

Promoting private sector development

Efforts in energy investment

Agriculture

Distribution of agricultural inputs to farmers

Continuation of the land security project (land registration effort, etc.)

Decentralization and Local Finance

Support to Decentralized Territorial Collectivities (CTDs) in the management of local resources

Increase of transfers to CTDs

Application of the Participative Budget principles

Environment, tourism and mining

Establishment of good forest governance

Strengthening of the projects to fight against climate change

Protection of fisheries resources

Facilitation of hotel and tourism investments

Integration of small-scale miners into the formal sector

Infrastructures

Asphalting work on the RN5A (Ambilobe- Vohemar),

Rehabilitation work on the RNS5 (Mananara Nord - Maroantsetra),

Rehabilitation work on the RN3B (Amboriomambara),

Rebuilding work on the Mangoro, Antsapazana and Antsirinala bridges...

Citizens budget

9OFA 2019

5January 2019

ThE BUDGET fOCUSES On ThE SOCial aSpECT

This year 2019, the social sector will benefit nearly 41.2% (9.5 points increase) of the Budget from internal resources. In terms of the Public Investment Programme, 20.9% of the total budget is allocated to the social sector.These funds will be allocated, among other things, to: the multiplication of the social coverage rate,

the fight against hunger and malnutrition,

Strengthening the synergy of the social protection actions to protect vulnerable people (early childhood, women, etc.),

the development of the National Policy for Women’s empowerment,

the operationalization of accompaniment schemes and support for victims of gender-based violence

Support for income-generating activities.

Citizens budget

90FA 2019

6January 2019

KEy DEBT fiGURES

External debtThe amount of debt to be repaid for 2019 stands at 374.7 billion Ariary, of which 244.7 billion Ariary in principal (amount borrowed and not repaid yet) and 130.0 billion Ariary in interest charges (corresponds to the fixed borrowing rate).

Internal debt The amount to be repaid stands at 286.7 billion Ariary.

Growth sectors

Did youknow ?

In this order finance act (OFA 2019), the maximum amount of external borrowing that can be contracted b y t h e C e n t r a l Government is at 4,111 billion Ariary. The ceiling of domestic debt stands at 3,500 billion Ariar y .

The “Agriculture” branch increases at 15.9% this year ( against 9.2% in 2018) due to the good climatic condition during the fourth quarter in 2017, the pursuit of the development of infrastructure projects and seed dissemination;

In 2019, an objective of forest and environment revenues is expected to 6,000 million Ariary, the most of which will be generated by tourist visits in the protected area.

External debt

Internal debt

OLF2019

LFR2018

58.7% 56.6% 43.3% 41.2%

pRimaRy sECToR

G 2.5%

SECOnDaRy sECToR

G 7.5%

TERTiaRy sECToR

G 5.8%

Citizens budget

9OFA 2019

7January 2019

Economic and financial indicators Prev. 2018 OFA 2019 2020 2021

Nominal GDP (Billion Ariary ) 40,409.0 45,570.0 51,134.0 56,864.0

Growth rate (%) 5.2 5.2 5.3 5.1

Inflation at the end of period (%) 7.5 7.2 6.6 5.8

Public expenditure ratio (% of GDP) 12.0 12.2 12.8 13.2

Ratio of public expenditures (% of GDP) 17.7 18.7 19.3 20.6

Public deficit (% of GDP) 3.3 3.5 3.5 2.9

Exchange rate ( % of GDP) : - Ariary/DTS (end of period ) 4,840.0 5,052.0 5,487.0 5,267.0

Exchange rate ( % of GDP) : - Ariary /DTS( end of period ) 3,316.0 3,444.0 3,576.0 3,709.0

Investment rate ( % of GDP)

Public investment ( % of GDP )

Private investment ( % of GDP )

20.0

6.8

13.2

21.6

8.3

13.3

22.2

9.9

12.3

22.7

11.0

11.6

Trade balance ( % of GDP) -5.6 -5.7 -6.1 -6.3

maKinG pROCESS Of ThE Ofa 2019January 23, 2018Communication in Council Regarding the Preparation Process of Budget for 2019

January - February 2018Development of the Macroeconomic Framework

February to June 2018Development of the

MTEF 2019-2021

April 17, 2018Meeting with

"Civil Society Organizations"

May 5, 2018Meeting with the

"Regions representatives"

June 29, 2018Sending of the

Preparation Circular

July 31, 2018Approval of the

Letter of Framing

July 25, 26, 2018Pre-budget conference

August 10, 2018Notification of

envelopes

August 10 to September 21, 2018Entering the Draft Budget

August 2018Socio-economic

analysis of PIP projects September 7, 2018Meeting with "Civil Society Organizations"

September 21, 2018 Restitution of the files containing their project of distribution of financial allocations Reporting of information from financial departments

September 21 to October 10, 2018Consolidation of the information from the technical ministries and the financial departments – Projects (PIP) approval

October 1 to 10, 2018Preparation of the draft of Finance Act

October 4 to 5, 2018Budget Conference- Pleading sessionin budgetary matters

October 10 to 14, 2018Finalization of the Projectof Finance Act

October 15, 2018Restitution ofMTEF framed

October 23 and 24, 2018Adoption of the draft of Finance Act during the Government and Ministerial council

October 25 to 28, 2018Printing the

Draft of Finance Act

October 29, 2018The introduction of the

draft of Finance Act in the National Assembly

October 29, 2018Publication of the

draft of Finance Act

2nd sessionReview and Adoption of the

Draft of Finance Act by ParliamentEnd of yearInactment ofthe Finance Act

End of yearMaterialization of the Finance Act

End of yearImplementation of the Budget 2019

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Citizens budget

90FA 2019

8January 2019

annEx

List of ministerial departments by sector

AdmInIstrAtIvEPR Presidency of the Republic

SENATE

AN National Assembly

HCC high Constitutional Court

Primature

MFPRATSMinistry of the Civil Service and Administrative reform, labor, Employment and Social laws

FFM Filankevitry ny Fampihavanana Malagasy

CENI Independent National Electoral Commission

MAE Ministry of the Foreign Affairs

MDN Ministry of National Defense

SEMDNG Secretary of State at the Ministry of National Defense in charge of the National Gendarmerie

MID Ministry of Interior and Decentralization

MSP Ministry of Public Security

MJ Ministry of Justice

MFB Ministry of Finance and the Budget

MCC Ministry of Trade and Consumer Affairs

MCRI Ministry of Communication and Relations with the Institutions

MEP Ministry of Economy and Planning

MJS Ministry of youth and Sports

PrOductIvE

MIDSP Ministry of Industry and Private Sector Development

MT Ministry of Tourism

MAE Ministry of Agriculture and livestock

MEEF Ministry of Environment, Ecology and Forests

MRHP Ministry of Fisheries Resources and Fisheries

MMP Ministry of Mines and Petroleum

MEH Ministry of Energy and hydrocarbons

sOcIAlMinSanP Ministry of Public health

MPPSPF Ministry of Population Affairs, Social Protection and the Advancement of Women

MEN Ministry of National Education

MeSupres Ministry of higher Education and Scientific Research

MCPASP Ministry of Culture, Promotion of Crafts and Safeguarding heritage

MEAH Ministry of Water, Sanitation and hygiene

METFP Ministry of Technical Education and Vocational Training

InFrAstructurEMTPI Ministry of Public Works and Infrastructure

MATSF Ministry of Spatial Planning and land Services

MTM Ministry of Transport and Meteorology

MPTDN Ministry of Posts, Telecommunications and Digital Development

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