Just last week, August 17, 2009, Professor Andrianomanana Grandpa has just died at the age of 64 years following a severe illness. Being part of his former students, it was with great sadness I have read cettez bad news for the first time Tuesday, August 18 while surfing the site Wanadoo Madagascar. That's life, everyone will leave sooner or later, we were just ahead. You can not rewrite history told, but Pepe's Party and his works and teaching remain without forgetting the past several generations of fruit under his direction or single students.
To honor this great Andrianomanana Professor Pepe, a recognized expert in the cash economy in Madagascar but also in Africa, in the very closed circle of the IMF and World Bank, it is with pleasure that I give you my humble Reflections on exchange rate policy in Madagascar since the adjustment period. It's just a tribute to a young economist (me), who had the opportunity and privilege to do his master's thesis (THE FINANCIAL SECTOR AND THE SECTOR REEL IN THE ECONOMY OF MADAGASCAR THE EVE OF THE XXI CENTURY) with this pair out what economist Grandpa (as we always called). Obviously, the thoughts that emerge from this paper do not bind those Pr ECCE is an alternative kind of field of monetary economics in which Professor Pepe shone through the rigor of its analysis. In sum, Dr. Pepe hand, his works, his writings and his thoughts will still guide Malagasy many economists, politicians in the decades to come. . One thing is sure, the cafeteria Motel of Anosy (where he went regularly every day chatting with her friends and especially to review the progress of its students in their memories or their theses) has lost someone one that marked the place, but it is the University of Antananarivo, in particular the Department of Economics who lost his pillar. Let's hope that young persons (not to mention the competence of other teachers still alive) whose Mamy Ravelomanana , young teachers (not that I know and PRIVACY), and obviously SHADOW (that of tafatafa ) Will be at the height of the void that Grandpa left us and that Madagascar can happen to implement a responsible monetary policy and sovereign-a fight he always carried hard and rigeur.ALORS GO IN PEACE SIR PEPE PROFESSOR, THINK ON YOU TO ENJOY
TO YOU ALL AND GOOD CRITICAL
POLICY CHANGE OF MADAGASCAR UNDER STRUCTURAL ADJUSTMENT: THE SCHEME OF CONSECUTIVE YEARS DEVALUATION 1980 TO FLOATING FREE AFTER 1994
Introduction
For centuries and today, the monetary sphere is a fundamental branch of the economy. Recurrent financial crises emerging in the 1990s and subsequent years but also the financial vulnerability of LDCs shows how the monetary regime in developing countries is the core of their financial systems. This finding highlights the issue of monetary sovereignty of developing countries in a historical perspective but also recent. The International Monetary System (IMS) today as the post-war is marked by a strong dominance of the U.S. dollar. The hegemony of the dollar is evident despite the malfunction has crossed the U.S. economy. The United States with its currency remain the heart of the SMI, while the other side, there's periphery consists mainly of developing countries (emerging economies, and LDC) and other industrialized countries. The exchange rate regime in developing countries is becoming more disparate in world strongly financialised [Allegret Jean, 2005]. dollarization (and euroization) of DCs (Colliac [2006] Sorocco [2005], Mind [2005], Salama [1988]), the currency board arrangements (Ponsot [ 2004] Duburq [2006]), the franc zone regime in Africa (Sandreto [1994], Benoit Claveranne [2005], Celestin Monga and Jean Claude Tcatchouang [1996], Michel Lelart [2003, 2007], Hakim Ben Hammouda [2001]) are the tangible evidence that substantiates the fact that developing countries are doomed in advance to live in a sort of "bid money" despite their willingness to implement monetary policy and financial responsibility. The growing imbalance financial reporting and global monetary regularly leads to a kind of asymmetric monetary SMI reflecting the progressive loss or total monetary sovereignty of developing countries. In this situation, to face the challenge of developing and ensuing reforms, many developing countries have tried to establish a responsible fiscal policy deemed capable of dealing with underdevelopment of their financial sectors. While in some countries like the major emerging Asian Today (Singapore, China, Thailand, Indonesia, Malaysia) or a few countries in Latin America (Brazil, Argentina, Mexico) the result was almost the appointment, in many countries consists mainly of LDCs, stagnation and poverty are still the two evils that corrode. Fouls sufficient resources and address their funding needs to address the international debt crisis 1980s, Many developing countries have been obliged to implement the adjustment policies (SAPs) imposed by the Bretton Woods Institutions (BWI). This policy has automatic guardianship in these countries with financial BWI conditionalities that follow. How can a country such as Madagascar has been able to manage its monetary policy during the structural adjustment period, which dates from the early 1980s? To specific study will be devoted specifically to the exchange rate policy in Madagascar. In another way what was the effectiveness of exchange rate policy of Madagascar during the adjustment period ? Elements of answers to this question leads us to see in turn below: i) a brief review of the relationship between BWI and DCs in the monetary ii) the period of fixed exchange before 1994 characterized by a devaluation successive iii) the period of floating exchange rate after 1994 marked by a depreciation of the currency cascade Malagasy iv) some ideas for a policy change responsible
Development
I-Brief of the relationship between DCs and BWI on monetary
The Structural Adjustment Policy (SAP) of the 1980s has put many developing countries under guardianship Financial Institutions Bretton Woods Institutions (BWI) with conditionalities that follow. The SSP is a broad field, but here the analysis is mainly focused in particular monetary policy changes. How far then
cooperation with BWI question the monetary sovereignty of developing countries undergoing adjustment? Cooperation agreements with the Bretton Woods Institutions (BWI) they affect significantly the sovereignty and monetary management of adjusting countries? Those are the two central issues that need to be asked here.
We know the center Relations BWI conditionalities that are consistent negotiations with Member States in need of funding. If in the general framework, the IMF is required to enforce macroeconomic balance through a sharp framing of criteria to be met, the World Bank is traditionally held to finance development in all its dimensions with mixed results we already know . Besides fiscal discipline, liberalization measures and other criteria in the ten commandments of the Washington Consensus, the monetary tightening that is among the criteria stars Structural Adjustment Policy (PAS). The IMF in particular makes this test a strict dogma. Referring to Article IV of the IMF, Michel Lelart [2007, p.73] summarizes in a synthetic way the constraints on developing countries as part of the PAS: "Each country will endeavor to direct its policy ... economic, it must not only direct but try to do so, each country will seek to promote stability ... it should not promote it but only seek to do so, finally, each country will avoid handling rates ... exchange, it is not forbidden him to manipulate the exchange rate, he need only avoid to do. "In Africa, as in emerging countries, the IMF has always been present in the framing of monetary policy. Financial Programming (including money) of adjusting countries must have the endorsement of the IMF if the subsequent release of funds and related programs would be suspended. Still, in many countries, the IMF does not hesitate to interfere directly in their monetary management. The IMF Article IV states that a country may choose to define and stabilize its currency against the SDR to another currency to a basket of currencies or float more or less freely. It only takes that its policy is consistent with the objectives of the Fund. The only limitation is the strict prohibition of any reference to gold. Once the choice is made, a country should stick to and implement the system chosen. [Ibid, p.72]. The status of the IMF then gives some leeway to member countries in the monetary or exchange rate regime. But it must simultaneously exercise firm surveillance over exchange rate policies of member states, which justifies its regular intervention in the choice of exchange rate regimes in developing countries. One of the provisions of Article IV adopted by the directors April 29, 1979 states: "Every member shall refrain manipulating exchange rates ... to prevent the actual adjustment in its balance of payments or to gain an unfair competitive advantage over other members. "[Ibid, p.76]. This point shows how cooperation with the IMF calls into question the monetary sovereignty of the countries undergoing adjustment. Despite the freedom of choice of monetary and exchange rate regime that gives them status IV, another section of it contradicts what is depriving developing countries of the monetary adjustment that is needed at some point. It thus measures imposed by successive devaluations of the 1980s and 1990s but also those of recent years in African countries, Latin America, the change of regime change just at the request of the IMF, changes in equity in emerging markets.
II-The period of fixed exchange: the successive devaluations of 1980 to 1994
Before entering the heart of the matter, a small detour on the Central Bank of Madagascar (BCM) is the capital.
On the site of the BCM it says that "after the release of Madagascar franc zone, the Central Bank was created June 12, 1973 by Ordinance No. 73/025 defining its constitution. She took over from the Institut d'Emission Malgache. The repeal of this law and its replacement by Law No. 94-004 of June 10, 1994 dedicated the Independence of the BCM in monetary policy ... Thus, in 1994 she was a pivotal year for the BCM, as it marks the beginning of the abandonment of direct intervention instruments and increased use of instruments for indirect monetary policy. "
Generally, "the BCM has overall responsibility for ensuring the internal and external stability of the currency. As such, it develops and implements monetary policy. This mission is subject to two constraints: a.
general economic policy of Government, including development, evidenced by the Finance Act, has been the subject of consultation with the Central Bank;
b. Central Bank must be careful to maintain an appropriate level of the national reserve currency. "
Theoretically, the mission, independence and transparency enshrined in the texts of the BCM should contribute to the credibility that can be provided by markets for the adequacy of monetary policy. Yet in practice, policymakers BCM bend to the whims of political power and do not act responsibly.
The Governor of the BCM is the central character monetary policy. The Director General shall deputize for the Governor in his mission. Given the mission of the BCM, the criteria for selecting directors and censors deserve more rigorously. If there are indeed professionals, some are more dependent on the regime of personalities that people recognized for their expertise in monetary and financial matters. Ditto for all appointments to the BCM. The credibility of the BCM requires that it should not suffer interference conflicts of interest in appointments to avoid suspicions of insider trading.
Policy template is a part of the monetary policy of the BCM. Indeed, it considers that defending the purchasing power parity is paramount for the stability of domestic prices. The nominal exchange rate of the MGA is a major factor.
During the 1980s, exchange rate policy implemented by the Malagasy authorities is "a fixed exchange rate regime" as the central currency French Franc (FF). This choice is justified by the fact that from the viewpoint of the authority monetary policy (largely under the control of public power), Madagascar is a country that does not have sufficient foreign exchange resources to cope with fluctuations commodity prices. The fixed exchange rate regime vis-à-vis the French Franc (the first economic partner) is a guarantee of economic stability for the local authority until 1994.
is known, the fixed exchange rate means that the Constitution reserves to ensure the value of the currency has become a requirement in economic policy. As for monetary policy to meet this requirement of foreign exchange reserves, the rule of Tinbergen [1952] well-known economists is undermined. Under this rule, economic policy becomes more effective when the number of goals to reach the number of instruments used. If monetary policy must address, in addition to control inflation, for example, the incorporation of reserves, it will become less effective. In Madagascar, the choice of fixed exchange rate regime is largely influenced by this assumption and the various constraints on the Malagasy economy has regularly led the monetary authority to take measures devaluations.
Spurred IMF, the monetary authority has opted to Madagascar several measures of successive devaluations of the FMG (Malagasy currency) to boost the price competitiveness of the Malagasy economy. It should be remembered that the relationship between price competitiveness and exchange rate basis, inter alia, the theory of purchasing power parity developed by Gustav Cassel [1918] there are more than 80 years ago.
This policy (devaluation) is directed to compensate farmers for income losses in case of collapse of commodity prices by increasing the price competitiveness of exported products. But the reality has been quite another. Far from ensuring a stable income of exporters (agriculture and other sectors exporters), the various measures of devaluation worsened the economic situation even Madagascar. By the fact that Madagascar is a country that does not dominate and can not influence the international market, the price competitiveness of Malagasy products via the devaluation was not an appointment.
In addition, Interbank Currency Market (MID) does not exist yet. This makes the expected effects of the devaluation through the announcement effect has almost disappeared.
Between 1986-1992, the prices of key commodities (coffee, cocoa, vanilla) fell in proportions between 60% and 80%. In a context marked by a significant decline in the prices of raw materials (cocoa, coffee), whereas in many African countries-comparable countries in the CFA franc zone, uprooting was the rule, Madagascar, overproduction has further strengthened the meltdown export earnings.
Between 1986-1992, the Malagasy franc was devalued by 540%. But contrary to the arguments of the IMF, the competitiveness of the Malagasy economy was not found at all. The picture is therefore very disappointing to see mixed donors (especially the IMF) because the depreciation of the currency of Madagascar, Despite its size, remained insufficient to stem the decline in production and perpetuate the culture of coffee and vanilla among others.
devaluation, this mechanism result of "group think technocrat", applied to the Third World and particularly in Madagascar:
- technically unfounded: an application poorly satisfied (paid too expensive) or dissatisfied
d. A currency does not in any way responsible for the Malagasy government and therefore can not impact the parity of the currency.
Moreover, the parities of the MGA is a matter of national sovereignty and should be determined solely on the basis of the criteria and basic parameters of the Malagasy economy.
- and economically absurd: what country in which 80% of export earnings were based on raw materials and manufactured goods whose prices are set by the market, would have any interest to devalue?
It is clear that contradictions abound. Thus, in discussions on the WTO, the North accused the South of social dumping, while at the same time donors (IMF) imposed upon them the "competitive devaluation".
And finally, more simply, if the devaluation was a panacea, why the first world economy that has yet
all the symptoms for so doing does not it:
- a record trade deficit, which reflects a clear and total lack of competitiveness,
- a record "global" in terms of budget deficit,
- and thus the most indebted country on the planet.
Yet instead of devaluing, she simply asked, unsuccessfully, to its main trading partner, source of the deficit (China), to revalue its currency.
us Returning to our sheep, the Malagasy economy, instead of developing in a virtuous circle of growth, finds himself locked in a spiral depression and a "vicious circle" which narrows at its center. A devaluation generates a substantial drain on imported inflation and instantly the purchasing power of households and maintains interest rates at very high levels. Declining sales resulting Enterprises, coupled with the prohibitive costs of funding prevent any initiative to create Enterprise and therefore jobs, and destroy existing ones since SMEs are vulnerable to reduced staff redundant, or to deposit their balance sheets, causing a further contraction of demand.
The cumulative effects of these phenomena cause a fall in tax revenue for the state that donors require time to reduce lifestyle. Causing a further reduction in demand and then comes a further devaluation that will only repeat the sequence of stressing all this decline, breaking up the productive apparatus.
And the cycle of poverty and to reproduce indefinitely, with its procession of insecurity and widespread corruption, which for 99% of the population is finally an essential and vital for survival from day to day.
Despite the overvaluation of the real effective exchange rate observed between 1970 and 2003 [Michael STUD, 2008], the nominal exchange rate remains largely characterized by measurements of devaluations in cascades. Goujon [2008] Note well: "Accompanying the trade liberalization In 1987, a sharp devaluation
Leads to a real depreciation sustainable. Economic difficulties and the political crisis of 1991
prompt the authorities to maintain a constant exchange rate
(still vis-à-vis the currency basket) and adopt tight restrictions on foreign exchange in 1992-93 .
One thing is sure, each devaluation, job insecurity increases mechanically and thousands of people, including workers, are actually sentenced to death. Not because they do not work but simply because their incomes do allow them well, overnight, eat enough, let alone to heal sickness. Experts from the IMF and World Bank put this impoverishment due to mechanical devaluation and its corollary (the dramatic reduction in life expectancy) on account of poverty, which itself is due to the leaders and dictators, corrupt and incompetent. What logic of reasoning!
Because on the one hand, the weakness of exports to explain the chronic deficit in the trade balance and on the other hand, the dependence of the state for international financial assistance in the form of debt external and internal debt securities issued by large state, successive devaluations were not beneficial to the Malagasy economy but have instead contributed to the widespread impoverishment of the population. Devaluations have not developed as far as export needs in highly taxed business inputs are generally imported.
In short, Madagascar, the application was totally atrophied by successive devaluations designed to artificially maintain commodity prices in local currency and to sustain production at all costs. They have completely shattered the relationship between wages and cost of living in the rest of the economy, however foreign to the 'coffee and vanilla "and also the majority, and that virtually the entire population, including employees , lives in the most precarious. The middle class has
disappeared for ages and has long been a salary is not enough to just cover the food needs primary.
measures successive devaluations meant that the FMG has lost 540% of its value from 1986 to 1992. It is within this context that the measures of uncertainty began to take over in the circles of decisions and negotiations in Mecca between Madagascar and the BWI in particular the IMF.
That's when the experts have devised the system of "floating" of Malagasy currency, which marks the beginning of the endless sliding of MGs, and since 1994 the rumor was preparing public opinion parity of 1,000 to FMG 1FF.
III-The period of free floating after 1994
To his supporters, the floating regime has the great advantage of introducing flexibility in the conduct of economic policy. After consultation with the IMF under the program SHADOW, the monetary authority with the approval of the Malagasy public power has gradually liberalized its monetary policy. After a system of managed exchange where the exchange rate is fixed by official authorities, the country has opted for a floating exchange rate regime by the Convention instead of May 4, 1994 between the Central Bank Madagascar and the Malagasy primary banks. As noted in the BCM website: "In terms of foreign exchange regulations, policy guidance towards a market economy, following the acceptance by Madagascar obligations of Article VIII of the IMF reform involved the legal and regulatory provisions which are defined by Act No. 2006-008 of 02/08/2006 on the Code of Changes. Thus
, May 6, 1994, the interbank foreign exchange market (MID) with the exchange rate is determined by the interaction of supply and demand of currencies has been created. From there, the course of the Malagasy Franc compared to foreign currency is freely determined by the market. It can vary within each day based on evolution. Only the Central Bank and commercial banks approved and acceded to the Convention participating in the interbank market. Commercial banks can perform operations corresponding to either cover orders received from their customers, or position papers for their own account within the limits set by the authorities. The Central Bank operates in this market is to cover the orders of its own customers, either as part of operations Management of foreign exchange reserves of the country. As noted by Professor Andrianomana Pepe [2000]: "The MID is an oligopoly market par excellence" because there are only a few speakers incorporated Canadian banks mainly primary and the Central Bank of Madagascar (BCM).
other measures to strengthen the decree on the MID in 1995 and subsequent years. The text of 1995 on the regulation of foreign currency accounts has inspired liberal economic actors, from 1996, to retain, their will, their export earnings in foreign currency accounts. "Similarly, the liberalization of foreign exchange has been strengthened the same year by the liberalization of current transactions with abroad (payment transactions for goods and services, transfer of wages and dividends, income from movable and immovable, ...). " These measures have restored confidence and greatly reduces the difference between the official exchange rate and black market prices. In 2004, a legally binding on the free transferability of financial transactions was passed, claiming the fight against money laundering and corruption. In response, the parallel market exchange has invigorated and the gap between the official and black market prices increased it shows a lack of market confidence.
But it was still very far from the softness in commodity prices, the leaders of that time already warned that it would probably not enough. More importantly, they allow them to achieve the desired level of parity whatever level, in a very limited period of time. What is more natural because they say the market will determine the course of the FMG become Ariary. But the event which follows will go up quite the contrary because the Malagasy currency will plummet to a substantial without making a economic competitiveness in the economy.
Thus under the guise of "technical" and "market law" that parity l.Ariary (the Malagasy currency) shall be determined by "supply and demand" on the MID, the IMF and World Bank had improperly imposed the devaluation to artificially support the prices of raw materials,
registering as one very noticeable improvement in the success of the rank of the Big Island in the ranking of the poorest countries in the world. What nonsense!
Since the Malagasy currency (the MGA) is a non-convertible currency The monetary authority has no obligation Madagascar, or any other kind of consideration to be ultimately the purpose of satisfying a request by one third (Investors, private individuals, importers, etc..) Exchange local currency against foreign currency.
This is not the case of countries with convertible currencies that would otherwise not be able to meet such an obligation related to convertibility, would undergo its currency devaluation technique. That is why Brazil and Argentina, whose currencies are not convertible, have been in 1994, practically overnight, align their currencies to the U.S. Dollar.
Therefore, a depreciation of the Malagasy currency following a so called "law of supply and demand" appears on the MID a wrong road.
And besides what "supply and demand" does one speak in Madagascar, if not daily transactions that verge on the ridiculous by their volumes and amounts: a few million times and number of transactions is counted with the fingers of one hand for the most active currency (the Euro) or no transaction for the first global currency (USD).
We want to convince the Malagasy because some importers, one day the good God has done, have struggled to find a currency and had to pay the most expensive, the parity of the MGA shall be affected causing the rest of the country's economy into a bottomless pit.
Or it argues worn the inflation differential with the international financial market, but it is the devaluation causes inflation.
The following table illustrated by the graph shows how the floating exchange rate regime implemented in 1994 prompted the Malagasy currency in an exceptional rate of depreciation.
Table: Nominal exchange rate of the MGA compared to the Euro and U.S. Dollars (1996-2008)
1996 1997 2000 2002 2004 2005 2008
EURO 1150 1251.4 1273.8 1437.2 2488 2504
U.S. $ 810 1020.2 1357.4 1318 4 1277.8 2003 1708
Source: Author from Central Bank of Madagascar (Reports and newsletters annually).
Chart:
Source: Author from Central Bank of Madagascar (Report and annual newsletter)
The depreciation of the Malagasy is obvious since the in place of floating in 1994. Due to a statistical problem, reliable analysis has been made here between 1996 and 2008. And the Euro was worth in 1150 MGA 1997, MGA passes in 2002 and 1273 when the political crisis of 2002 and stood at 2504 MGA in 2008. In the space of a decade, the MGA has depreciated so the order of 1354% compared to the Euro. The courses of MGA versus the U.S. dollar follows the same trend. So that one dollar was worth 810 Ariary in 1996, 2002, the course was set to 1318 and 1708 MGA by MGA in 2008. From 1996 to 2008, the currency lost then in the order of 1177, 39% of its value.
Dix-on, the numbers speak for themselves in the light of these figures, the floating regime in place since 1994 has not brought stability to the Malagasy economy. In light of the prevailing economic theory largely conveyed by BWI, the chronic depreciation of the currency of Madagascar (the MGA) would ensure the competitiveness of Malagasy economy through price competitiveness of exported products. But instead, the further depreciation of the Ariary fed inflation through higher prices for imported products. In any event, the floating regime could not put the Big Island on the same wavelength as comparable countries such as Mauritius, South Africa, Botswana and some countries of southern Africa.
It is crucial to note that outside the national parameters, the price performance of the MGA is also largely influenced by the Euro / Dollar at international level. The Central Bank of Madagascar in its newsletter 2008 notes well this trend. It says so in the bulletin of the BCM [2008]: "At the end of September 2008 and compared to the end December 2007
it was recorded an appreciation of 8.5 per cent vis-à-vis the euro and 7.4 per cent vis-à-vis the U.S. dollar, an appreciation of 8.5 percent the composite index. However, compared to June 2008 and subsequent to the dollar at the global level, the national currency has appreciated 4.7 percent against the euro, but depreciated sharply from 4.4 percent against the U.S. dollar. The composite index
indicates a slight appreciation of 1.2 percent of MGA. The first three quarters of 2008 were marked by the continued appreciation of real effective exchange rate (REER), thus eroding the external competitiveness of the national currency
. This is a trend already observed since the second quarter of 2006. At the end of September 2008, the REER appreciated by 13.6 per cent at end December 2007 and 17.0 per cent year on year. This real appreciation is primarily due to nominal appreciation of the MGA (rising NEER) and the relatively higher domestic inflation (6.7% compared to December 2007) that trading partners Madagascar (2.4%).
Since Madagascar is a country heavily dependent on exports extrovert, foreign aid and tourism, the floating regime does not appear the best solution in the conduct of its foreign exchange policy. The narrowness of the Interbank Currency Market (MID) and volume of transactions processed on this market are such that the resulting balance of supply and demand in the currency does not really reflect the economic reality of the country. We must remember that MID in Madagascar is a kind of oligopoly market which operates the Central Bank of Madagascar (BCM), some Chartered banks and institutions [Andrianomanana Pepe, 2000]. Every bit of information or a small slip policy (such as zero-rating measure of fishing expedition of 2004), the collapse of the currency entry through the suspension of aid and funding from donors, the large variation in export earnings, fluctuations in the volume relating to FDI, the movement of tooth Co. tourism, political stability are all parameters that determine and influence the stability or change exchange rate in Madagascar.
Conclusion From 1980 onwards it is in a fixed exchange rate regime or a floating exchange rate regime, the Malagasy currency has continued to depreciate (as opposed to devaluation) versus key currencies (FF, Euro, U.S. $). Without wishing to be unfounded judgments imposed on the CMB, this observation leads us to say that the Central Bank of Madagascar (BCM) has failed in one of its key missions: monetary stability. But it was not solely responsible for this disaster .
Despite the apparent independence of the BCM stipulated by its statute, the political authority which was followed regularly interfere in the conduct of monetary policy and exchange rate policy. The grip BWI especially the IMF under the various successive programs (SAF, ESAF, PRGF) is also a major block of the establishment of a policy of responsible change in Madagascar. For many reasons, the return to a fixed exchange rate regime is widely recommended because at the current pace of things, with the economic consequences of the current political crisis (January 2008), the Malagasy currency risk still sinking and to depreciate sharply vis- two currencies vis-pin (the Euro and the Dollar). But like many developing countries, in terms of exchange rates, the important is what is the government's priority. So far, neither the fixed exchange rate nor the floating exchange have not yet tendered their fruit, the expected results of Madagascar. While the exchange rate policy is only part of monetary policy of a country rich or not (Emerging and LDC). But it is still the fundamental core of it and significantly affects the economic performance of countries in question and on living conditions of the population. One may wonder as well, how and when the monetary authority, the local political power, the BWI will they find a system exchange best suited to Madagascar off the vicious circle of poverty, which obviously must pass by the stability of its currency? The future will tell us more!
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