Archived press release

ECONOMIC DEAL SPELLS DOOM FOR MADAGASCAR FORESTS

10 September 1996

The debt-ridden Indian Ocean island has been starved of international finance because of its failure to agree on a package of IMF and World Bank economic reforms. The opening of the Malagasy economy to foreign investment is intended to increase export earnings so that the impoverished island can raise funds to honour repayments on its heavily rescheduled $4.3 billion dollar international debts which in 1989 accounted for about half the country's foreign exchange earnings.

The conclusion of the IMF and World Bank deal follows a period of internal disagreement in Madagascar over the extent to which the proposed IMF and World Bank structural reforms should, among other things, open the country to foreign companies. TheMalagasy Government, in agreeing to the IMF and World Bank's economic reforms, has not only agreed to a more open economy, but also decided to allow foreigners to buy land [3]. The failure to agree on economic reforms with the IMF and World Bank is widely believed to have delayed the earlier go ahead for RTZ-CRA's mining plans.

According to a local source, Prime Minister Ratsirahonana recently visited Fort Dauphin where the mining project would be and announced that these economic agreements would allow QIT FER to increase its activities.

Sarah Tyack of Friends of the Earth said:

"Whilst RTZ denies that any decision to mine this area has been made, we have no doubt that this economic deal will encourage the plunder of Madagascar's unique biodiversity for the sake of meeting the country's debt repayments .Instead of setting the scene for ecological destruction, the large international funders should cancel Madagascar's debts and encourage the government to seek more sustainable forms of development.'

NOTES TO EDITORS:

[1] Prime Minister Norbert Ratsirahonana signed three preliminary agreements expected to pave the way for a three-year Enhanced Structural Adjustment Facility(ESAF) and debt rescheduling.

[2] RTZ-CRA's wholly owned Canadian subsidiary, QIT Fer et Titane, is developing plans to mine mineral sands deposits on the south eastern coast of Madagascar in a joint venture with the Malagasy Government. The mineral sands deposits contain ilmenite, a major source of titanium dioxide (TiO2) which is used to produce white pigment. An area of about 6,300 hectares including unique coastal littoral forests with many endemic species and traditional fishing villages will be flooded. The project is expected to last about 40 years.

[3] Until the Government made this decision, the law in Madagascar did not allow foreigners the possibility of acquiring real estate or having long term leases on land.

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Archived press release

ECONOMIC DEAL SPELLS DOOM FOR MADAGASCAR FORESTS

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