Navigating the Challenges: Wages and Reforms in Madagascar's Economy. Part Three - Budget Deficits


Budget deficits  

​Madagascar generates approximately US$1. 5 billion in annual government revenue with GDP around $17 billion.

However, government spending exceeds revenue:

- In 2024, total government expenditure was US$2.67 billion (16.43% of GDP).

- In 2025, the budget deficit was 4.1% of GDP (~US$0.62 billion), and in 2024 it was 3.8% of GDP (~US$0.57 billion). 

- Projected deficits for 2026–2027 remain around 4.0% of GDP annually.  

Conclusion:  

Madagascar’s current revenue is not sufficient to cover its expenses. The country consistently runs a budget deficit of 3.8–4.1% of GDP, relying on external aid, remittances, and borrowing to finance public services. Poor revenue generation (only ~11–12% of GDP) limits fiscal sustainability and constrains spending on education, health, and social protection.

In the Financial Flows scenario (a development projection), government revenue could rise to 18.8% of GDP (~US$7.7 billion by 2043), enabling full coverage of expenses and expanded social investment. 

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