Instruction No. 003-DOM/25 of April 28, 2025 on the Policy Rate and Interest Rate Corridor System of Banky Foiben'i Madagasikara

BANKY FOIBEN'I MADAGASIKARA

DIRECTION
DES OPERATIONS MONETAIRES

INSTRUCTION N° 003-DOM/25 relative au taux directeur de Banky Foiben'i Madagasikara et du système de corridor de taux d'intérêt

The First Vice-Governor of Banky Foiben'i Madagasikara,

Having regard to Law No. 2016-004 of July 29, 2016, supplemented by Law No. 2016-057 of February 2, 2017, establishing the Statutes of the Central Bank of Madagascar,

Having regard to Law No. 2020-011 of September 1, 2020 on banking law,

Having regard to Decree No. 2022-632 of May 4, 2022 appointing the two (2) Vice-Governors of Banky Foiben'i Madagasikara,

DECIDES

Article 1: Definition

The interest rates of monetary policy are the short-term interest rates set by BFM to implement its monetary policy with the aim of steering the overnight interbank market interest rate represented by the TAHA rate (Taha miAntoka ny Herin'ny Ariary). They consist of:

• The policy rate, which is set within the interest rate corridor,
• The marginal lending facility rate, which serves as the upper bound of the interest rate corridor,
• The deposit facility rate, which constitutes the lower bound of the interest rate corridor.

Article 2: The policy rate

The policy rate is the operational target of BFM for the overnight interbank market rate, TAHA, which constitutes the operational target of its monetary policy. Its level is determined during the ordinary meetings of the Monetary Committee.

During the implementation of monetary policy, it constitutes the floor rate for counterparties' submissions for injection operations and the ceiling rate for counterparties' submissions for withdrawal operations for variable rate tenders.

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Article 3: The interest rate corridor

An interest rate corridor for monetary operations is delimited by the rates of permanent facilities, which consist of the deposit facility rate (FDD) as the floor rate and the marginal lending facility rate (FPM) as the ceiling rate. Its objective is to limit fluctuations in short-term interest rates.

Article 4: The type of interest rate corridor

In the implementation of the monetary policy operational framework, BFM uses a symmetric corridor to steer short-term interest rates. It is defined by the policy rate as the central point of the corridor and the permanent facility rates equidistant from it.

Article 5: The width of the corridor

The width of the interest rate corridor is set at 2.0 percentage points.

Article 6: The level of the policy rate and permanent facility rates

The policy rate and the permanent facility rates of BFM are set as follows:

• Policy rate: 10.50%
• Deposit facility rate: 9.50%
• Marginal lending facility rate: 11.50%

Article 7: Publication

From the date of entry into force of this instruction, only the policy rate will be communicated, replacing the permanent facility rates.

Article 8:

Instruction No. 007-DOM/19 of October 25, 2019 on the interest rate corridor system is repealed in all its provisions.

Article 9:

This instruction enters into force on May 7, 2025.

Antananarivo, April 28, 2025

THE GOVERNOR ad interim
NIAINA RABEARIVONY

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