This information is derived from the State Department's Office of Investment Affairs' Investment Climate Statement. Any questions on the ICS can be directed to EB-ICS-DL@state.gov
Last Published: 11/7/2016

Foreign Exchange

Madagascar subscribes to the IMF’s Article VIII statutory framework, which prohibits direct government limitation on foreign exchange use and availability. While some foreign exchange and specific capital controls exist, they are not especially restrictive. There are repatriation requirements for export earnings, which must be sold to the Interbank Currency Market (MID), comprised of the 10 commercial banks resident in Madagascar as well as the Central Bank, within 30 days of payment settlement. Investment Law (2007-036) provides foreign and local investors the freedom to freely transfer abroad without prior authorization, and there are no restrictions on converting or transferring funds associated with a foreign investment. When delays occur in conversion or funds transfer, they are due to temporary shortages of foreign currency on hand.

The exchange rate is market determined and fluctuates daily. The Central Bank reserves the right to intervene in the foreign exchange market to avoid abrupt variations in the exchange rate. Throughout 2014, the Central Bank propped up the published exchange rate, based on the weighted average of transactions in the official market, via near instantaneous round-trip transactions at the end of the day at rates that differed from the daily average up to that point. This led to divergences between the official published rate and the market rate, though the practice was halted in September 2015 at the behest of the IMF. Since the abandonment of this practice, the local currency has stabilized against the dollar.

Remittance Policies

There are no restrictions on converting or transferring funds associated with foreign investment, including remittances of investment capital, earnings, loan repayments, and lease payments.

There are no plans to change remittance policies that have tightened or relaxed access to foreign exchange for investment remittances.

There is no legal parallel market for investors to remit. There is no stock market and the government does not emit dollar-denominated bonds. However, there is also no limitation on the inflow or outflow of funds for remittances of profits, debt service, capital, and returns on intellectual property.

Madagascar uses exchange rate policy to counter underlying currency market pressures and keep commodity prices stable.

Madagascar is not a member of a Financial Action Task Force-style regional body, but has observer status in the Eastern and Southern Africa Anti-Money Laundering Group.

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