The government has taken out a $40 million loan from Deutsche Bank. The credit will be used to pay off the debts of Air Madagascar.
Willing to do anything to save Air Madagascar, the Malagasy government has contracted a loan from Deutsche Bank. The Council of Ministers announced this to the press yesterday. The credit will be used to expunge the liabilities of the Malagasy airline. "The contracted amount is 40 million Dollars. To obtain this loan, we received a financial guarantee of $ 30 million from the African Development Bank Group (ADB) and the African Development Fund (ADF)”, said Vonintsalama Andriambololona, Minister of Budget and Finance yesterday by telephone.
Yesterday, under this ministry, the cabinet confirmed the adoption of a bill for the ratification of a credit agreement between the Republic of Madagascar and Deutsche Bank AG for a loan to support the restructuring of Air Madagascar, with the bank’s London office acting as arranger and TMF-Global Services (UK) Limited acting as the agent. The contract awaits the approval of Parliament.
Making heavy losses, Air Madagascar has collapsed with debts of not less than 88 million Dollars, according to the information in the 2017 Supplementary Budget. The government has pledged to clear these liabilities as part of its strategic partnership agreement with Air Austral. The government is using both internal and external borrowing to clear the airline’s debts.
Currently, debts of more than 100 billion Ariary are almost resolved, according to a recent statement from Air Madagascar. "For example, the company was able to pay off 50 billion Ariary with treasury bills. Added to this are 45 billion Ariary from the National Social Security Fund (CNaPS) and an 11 million Euros loan, about 18 billion Ariary, from BGFI bank", said François Marchal, the airline’s deputy finance manager, at a press conference last week.
This is not the first time that the state has had to do this. It is the second time in the space of one year that Madagascar has taken a loan from Deutsche Bank. Due to the weakness of its own resources, the state had signed a credit agreement for more than 51 million Dollars to pay its suppliers and to repay treasury bills.