Country Report Madagascar June 2011

Foreign trade and payments: Social indicators worsen despite increased aid

There is deep concern that, despite the extra aid for social spending, social indicators in Madagascar are worsening. However, this probably does not indicate that aid is ineffective, or that programmes are poorly managed. It is more likely that the extra aid cannot compensate for the sheer scale of the economic crisis, particularly for urban households suffering job losses. Indeed, the extra aid money has been critical in preventing the outright collapse of services. For example, with the state increasingly unable to pay salaries and running costs, many health centres are now donor-funded and many teachers' salaries are paid directly by the UN Children's Fund. Similarly, measures to deal with child malnutrition or the aftermath of climatic problems are now funded heavily by external aid. The number of donor-funded social sector projects has doubled, to 102, over the past two years. However, these tend to be smaller than the sort of major projects that would be undertaken in more normal times.

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