Debt vs GDP / Bonds vs bills

All Data - Madagascar

Year 2012 2013 2014 2015 2016 2017
GDP (billions US$) 9.90 10.56 10.93 - - -
Total Outstanding Amount (Billion US$) 0.50 0.56 - - - -
Bonds - - - - - -
Bills 0.50 0.56 - - - -
Outstanding Amount/GDP (%) 5.06% 5.33% 0.00% - - -

Country Summary

The financial markets in Madagascar are fairly shallow and limited to short-term markets (money, interbank and foreign exchange markets). There are no capital markets and total assets of the financial system represented 31,6% of  GDP in 2013. Projected growth of the financial sector in 2014 is 5,3%. The banking sector is the most prominent sector with 74,4% of the assets of the financial system in 2013. In 2013, there were 7 credit institutions, of which 11 commercial banks, 5 financial institutions and 31 microfinance institutions. The Commission de Surveillance Financière et Bancaire (CSFB) is the Authority in charge of supervising and regulating the financial sector.

Malagasy banking sector is very concentrated: the 4 largest banks hold 86% of the total credit of the sector and 88% of the deposits in 2013.  Most of the activities of commercial banks relate to traditional intermediation banking. The sector is characterized by a surplus of liquidity: the liquidity ratio of assets was at 43,2% in 2013. Provisional profit was Ariary 134,3 billion in 2013 and the solvency ratio was 15%, well above the requirement of 8%; the equity ratio, on the other hand, was 7,9% in 2013.

Alongside the banking sector, there are the pension fund and the insurance industries but these are tiny industries. In 2013, both industries weighed each 2,5% of the country GDP; the pension fund industry represented 7,9% of the assets of the financial sector while the insurance sector weighed 8,1%. In 2013, the insurance industry was composed of 5 insurance companies, 5 brokers and 17 general agents; the Malagasy insurance industry is an important player in mobilizing savings and in allocating funds. The pension fund industry on the other hand is dominated by public pension firms (3 vs 1 private firm)

Capital Markets are almost non-existent and are limited to the local currency debt market. There is no stock exchange. For the year ending December 2013, total amount outstanding of Treasury bills was Ariary 1,132 trillion; net issuance of Treasury bills was Ariary 30,4 billions. The Central Bank of Madagascar (BCM) is the sole issuer of debt securities (which are referred as Bons du Trésor par Adjudication ou BTA) for the purpose of bridging budget deficits gaps.

Madagascar is just coming out of a political crisis which cost him to be banned from regional initiatives such as the Common Market for Eastern and Southern Africa (COMESA) and Southern African Development Community(SADC) and to register negative to null economic growth rates: -3.7% in 2009 and 0.6% in 2010.  Prospects for the future are good however: 2014 forecast is 3% (similar to the growth experienced in 2012) and growth projected for 2015 is 5%, thanks to the resuming of the partnerships with international institutions in 2015.

The economic development of the country is driven by a long-term plan, the National Economic Plan which envision to transform Madagascar into a modern and prosperous nation by achieving an inclusive and a sustainable growth; the medium-term objectives of this plan are formulated in the Politique Générale de l’État (PGE). 

Monetary policy & Public debt

The objective of the Central Bank of Madagascar (BCM) is to ensure price stability; it achieves this by monitoring the inflation level – inflation forecast for 2014 is 7.1 %). The BCM uses indirect instruments to conduct its monetary policy: reserves requirements, the key bank rate and open market operations.

Following the political crisis of 2009, proper fiscal management became a priority for economic growth and to allow economic growth to return. For 2014, public deficit was estimated at 2,7% of GDP, of which half (or Ariary 372.3 billions) was to be financed domestically. In 2015, the deficit is expected to worsen by reaching 3,5% of GDP due to a stagnation in government receipts,

Domestic debt in 2015 is forecasted at Ariary 281,9 billions; of this amount, issuance operations represent Ariary 52,8 billions. The 2015 Law of Finances forecast that the ceiling for the country undebtdeness is Ariary 2,6 billions.

Market Structure

Market Participants


The Central Bank of Madagascar (BCM) is currently the sole issuer of debt securities in Madagascar.

Investor base

Commercial banks form the core of the investor base. Commercial banks are mainly present in the competitive bid process. Non-competitive bids are left to the non-bank sector; as there are fewer players in non-competitive bids; the yields on the securities are becoming lower.

Other intermediaries

Other players include insurance companies as well as foreign investors are similarly active in the trading of treasury bills. If the number of bidders from the banking sector on the other hand increased. 

Instruments issued

Treasury Bills are issued by the Central Bank on behalf of the Malagasy Treasury; these bills (or Bons du Trésor par Adjudication, BTA) are offered in four maturities: 4-, 12-, 24- and 52-weeks. BTA Auctions occur every other Wednesday.

Treasury Notes have maturities of 1-, 2-, and 3-years; these are tradable instruments. The Malagasy Treasury is in charge of issuing these securities. 

The 52-week bill is the most sought instrument, representing 50% of the bids in 2013.

Primary and secondary markets

Primary market

The primary market of treasury bills is operational since May 1997.

Financial institutions and any economic agent who are not banned from refinancing schemes are eligible to become Primary Dealers (PDs). PDs are approved by the Ministry of Finance. To maintain its status, an authorized dealer must bid a minimum amount of A 4 million a year and trade a minimum of A 1 million worth of government securities.

Since 2006, the Malagasy treasury now sets a maximum rate and indicates the total amount to be raised on the day of the auction. Offers made below the maximum rate are all satisfied at their initial bidding rate. The volume of transactions in the secondary market is however dominated by brokers and other non-bank institutions.

Secondary market

Secondary market trading was introduced in November 1997. In 2015, the forecast bid amount is Ariary 1,886 billions.

Markets are open to all investors (individuals and institutional).

Clearing, settlement and custody

Delivery takes place the next Friday following the auction (Note that auctions occurs once every two weeks, on Wednesdays). As the central regulator for capital markets in Madagascar, the BCM is also the clearing and settlement house and the central depository for debt instruments. 

Protection of investors 

Although Madagascar has improved its business climate, it remains one of the countries where conducting business remains challenging: it has ranked 148th out of 189 countries in the 2014 Doing Business

Guide to Buying Bonds

Openness to international investors

The Economic Development Board of Madagascar (EDBM) continues to provide support to foreign investors, despite the temporary suspension of funding by the World Bank. The Malagasy Government encourages public foreign investment by making it as non-bureaucratic as possible; it now takes four business days to register a business and one week to gather the necessary signatures for business start-up.

Furthermore, there are no law or regulation authorizing private firms to adopt articles of incorporation or association that limit or prohibit foreign participation or control.

Procedures for market participation 

Participation rules to the Treasury securities markets are listed in the Malagasy Treasury website; they differ for the Treasury bills market than for the Treasury Notes market.

To participate in the Treasury Notes (Bons du Trésor FIHARY), one must open an account at the Malagasy Treasury. Participation is organized as follows: from the 1st to the 10th of each month, banks can bid up to a maximum of 50%; non-banks can bid the remaining 50%; from the 11th to the 15th: all other investors can participate to the bidding process. The minimum bidding amount is Ariary 1 million; any subsequent bids must be in tranches of Ariary 1 million.

To participate to the Treasury Bills markets (Bons du Trésor par Adjudication or BTA), investors must have an account at a bank. Auctions are open to all. The minimum bidding amount in both methods is A20 million and a minimum of 5% of the bidding amount is required upfront; any subsequent bid must be in tranches of A10 million.


Treasury bills are subject to the IRCM (Impôt sur le revenu des capitaux mobiliers) rate of 23%.

Credit rating

Standard & Poor’s stopped releasing a rating for Madagascar sovereign credit since the country experienced political turmoil, back in 2008.