What is the Currency of Madagascar?
Having had a socialist economy that lasted to the mid-1990s, Madagascar adopted the policies of liberalization and privatization of the World Bank and International Monetary Fund. The strategy has placed the country on a slow but steady growth path from the previous extremely low levels. Agriculture, fishing, and forestry are the mainstay of the economy, accounting for more than 25% of the GDP and sources of employment for over 80% of the population. Although the financial sector remains relatively shallow and unable to catalyze funds for growth, the growth in this sector cannot be underestimated. The financial sector is made up of 11 banks and several financial establishments and micro-finance institutions. Madagascar’s currency has fairly stabilized over the last ten years indicating good tidings ahead.
The official currency of Madagascar is called Ariary. It has the ISO standard code of MGA and is identified by the symbol “Ar.” The currency is subdivided into 5 iraimbilanja and is one of the two non-decimal currencies in circulation in the world today with the other being the Mauritanian ouguiya. The currency’s name was derived from pre-colonial currency, silver dollar. Iraimbilanja literally translates to “one iron weight” named after fifth worth of an ariary old coin. Malagasy Ariary replaced the franc as Madagascar’s official currency on January 1, 2005.
Development of Malagasy Ariary
Malagasy Ariary was first circulated in 1961 to replace the Malagasy franc at an exchange rate of one Ariary for 5 Malagasy francs. Coins and banknotes at the time were issued in both the denominations of franc and ariary. Iraimbilanja was worth a fifth of one ariary and thus equal to the franc. At first, the franc coins and banknotes were more popular compared to the ariary. However, in 1978 more high-value coins were issued in the denomination of ariary alone. In 1993, ariary became even more valuable with the release of 500 and 5,000 ariary banknotes alongside 2,500 and 25,000 franc banknotes. The ariary denominations printed in July 2003 came prominently while the franc denominations were in small prints. Lower denominations of ariary coins were also designed, making ariary more popular compared to the franc. On January 1, 2005, the franc was officially replaced by Malagasy Ariary as the national currency.
In 1965, 1 and 2 franc coins were issued followed by the 5 franc coin which was equivalent to 1 ariary in 1966. 10 and 20 franc coins equivalent to 2 and 4 ariary respectively were released in 1970. By 1978, 10 and 20 ariary coins were in circulation followed by 5 and 50 in 1992. By 2003, most of the 1 and 2 ariary coins did not bear any franc denominations.
The first banknotes were introduced in various franc denominations ranging from 50 to 5,000 in 1961 by the Institut d’Emission Malgache. The actual notes were overprint of the earlier notes that were provided by the Bank of Madagascar and Comoros which issued ariary denominated banknotes. The Central Bank of Malagasy Republic which was established in June 1973 took over the printing and circulation of banknotes leading to the issuance of new notes in 1974 in the same denominations as the earlier ones. 500 and 5000 ariary banknotes were introduced in 1993, with several other denominations including 100, 200, 2000, and 10,000 introduced in 2003-2004.