The ariary is the official currency of the Republic of Madagascar, an island nation located off the southeast coast of Africa. The ariary is one of the last two currencies in the world that have not been decimalised. It is subdivided into 5 iraimbilanja, while a 2 iraimbilanja-denominated coin also circulates called the venty sy kirobo. In addition, coin denominations over 1 ariary each have a specific name. The ariary was introduced in 1961 after Madagascar won its independence from France in 1960, and it is currently issued by the Banque Centrale de Madagascar.
The first modern currency to be used in Madagascar was the French franc, but it was replaced on par by the Malagasy franc in 1925. The Malagasy franc was then replaced in 1944 by the CFA franc for use in both Madagascar and Comoros. In 1961, one year after Madagascar was declared independent from France, the ariary was introduced. However, the CFA franc remained the official currency until 1963, followed by the reintroduced Malagasy franc. The Malagasy franc was pegged to the French franc and 5 francs equalled 1 ariary. The peg to the French franc was dropped in 1982, and the ariary replaced the franc as the official currency in 2005, still at a rate of 5 francs: 1 ariary.
The Banque Centrale de Madagascar became Madagascar’s central bank in 1973, taking over the duties of the Institut d’Emission Malgache. The primary functions of the bank include issuing currency, managing foreign reserves, overseeing the banking system and acting as a banker to the government. The bank consists of a central headquarters and 14 local agencies in charge of providing monetary policy information in each area.
The former socialist economy of Madagascar was privatised in the 1990s, and the country now largely follows recommendations set forth by the World Bank and the International Monetary Fund (IMF). Since privatisation, Madagascar has experienced slow but steady economic growth with the exception of a 2002 political and economic crisis. The primary industries of Madagascar are textiles, manufacturing and tourism. In addition, the country is the world’s leading exporter of vanilla. In recent years, confidence has grown under the support of the U.S-Madagascar Business Council, which has eliminated tariffs on textiles exported to the United States. Major obstacles blocking economic growth are poverty and the use of freshly cut wood as the primary fuel for heat and energy.