May 22, 2013 / 3:49 PM / in 5 years

Political uncertainty could slow Madagascar's economy- minister

ANTANANARIVO, May 22 (Reuters) - Madagascar’s economic growth could be hit by uncertainty surrounding elections scheduled for the second half of the year, the country’s finance minister said.

Hery Rajaonarimampianina told Reuters that the economy is currently growing in line with forecasts for a 2.8 percent expansion in 2013, while inflation was expected to average about 9 percent this year, up from 7 or 8 percent now.

Madagascar has yet to fully recover from a crisis in 2009 when President Andry Rajoelina seized power. The turmoil that followed scared away foreign investors and hurt the vital tourism industry, slowing growth sharply.

Rajoelina has now created fresh concerns by putting his name forward this month to run for the presidency in July after earlier agreeing not to under pressure from regional powers.

“Political visibility or political stability is important for the economy,” the minister said, adding the economy was not immune from the “vicissitudes” of politics related to elections that could hit performance in the second half.

“It could be that there is a slowdown” if elections did not pass off smoothly, he said. “This could have a fiscal impact on revenue and expenditure,” he added.

If there is no clear winner in the July vote, a second round will be held in September alongside a parliamentary poll.

The president said he would stand after the wife of former President Marc Ravalomanana, who went into self-imposed exile after Rajoelina ousted him, put her name forward for the poll. Rajoelina said it was a ploy to bring the ex-leader back.

The African Union has said it would not recognise Rajoelina as Madagascar’s president if he won, which prompted France and the European Union to say they were suspending funding of the election, Madagascar’s election commission (CENIT) said.

The commission said those moves could disrupt vote plans.

The World Bank said last year it expected growth of 2.6 percent in 2013 and 4.3 percent next year, adding growth in 2014 is expected to pick up once the $5.5 billion Ambatovy nickel mine goes into production.

Canada’s Sherritt International Corp and its partners received permission in September to begin output at what will be one of the world’s biggest nickel mines.

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