## EXECUTIVE SUMMARY (1comea2020002)

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---

### Context and background
- Discussions took place in Moroni during December 11–20, 2019.
- Recent adverse shocks: political uncertainty (constitutional referendum mid-2018; elections early 2019) and Cyclone Kenneth (April 2019); Fund emergency financial support followed the cyclone.
- Authorities’ strategy: transform Comoros into a dynamic emerging market over the next decade by strengthening human capital, infrastructure, governance, and reducing corruption; they seek aid and foreign direct investment.
- Structural advantages:
  - Large remittances inflows: 15 percent of GDP.
  - Low violence and crime.

### Fragility diagnostics
- Two interlocking vicious circles:
  - Institutional fragility:
    - Political instability with tensions between the three islands; tensions re-intensified after 2018 constitutional reform allowing President Assoumani to be reelected in 2019.
    - Weak governance and institutions: weaknesses in rule of law, regulatory framework, fiscal governance, anti-corruption and AML/CFT measures; weak judicial system undermines contract enforcement.
    - Weak policy implementation capacity linked to civil service hiring and promotion practices insufficiently focused on merit.
  - Economic fragility:
    - Severe constraints on domestic resources: weak fiscal revenue, high public wage bill, drains from weakly supervised SOEs constraining public investment and social spending.
    - Pronounced vulnerability to shocks: heavy dependence on volatile aid; credit constraints creating liquidity shortfalls and arrears; high vulnerability to natural disasters (Cyclone Kenneth, April 2019).

### Recent economic developments (selected findings)
- Growth slowed from 3.6 percent in 2018 to 1.9 percent in 2019.
- Inflation: uptick to 3.3 percent in 2019 due to temporary supply constraints from the cyclone.
- Fiscal and SOE developments:
  - 2018: revenue driven by unsustainably large contributions from SOEs while tax revenue from other sources declined.
  - 2019: contributions from SOEs fell sharply; non-SOE tax revenue fell further; authorities took up credit from a domestic commercial bank to remain current on wages.
  - Domestically financed investment fell to very low levels; plan to clear external debt arrears was not executed.
  - Foreign-financed investment rose substantially due to telecom sector investment based on a loan from China.
- External accounts and reserves:
  - Gross foreign reserves fell to 6.6 months of imports (slightly below adequate levels estimated at 6.8 months of imports).
- Banking sector:
  - Gross NPLs at 24 percent of loans.
  - Credit growth to the economy remained weak; banks' appetite for lending very limited.
- Donor commitments:
  - France announced project aid of 13.8 percent of GDP over several years.
  - World Bank: project-oriented IDA allocation of 6.8 percent of GDP plus an additional allocation of 3.8 percent of GDP to help address cyclone impacts.

### Outlook and key projections (excerpt from Text Table 1)
- Real GDP (percent change): 2019: 1.9; 2020: 4.4; 2021: 3.5; 2022: 3.6; 2023: 3.7; 2024: 3.8; 2025: 3.8.
- Consumer price index (annual average): 2019: 3.3; 2020: 1.4; 2021: 2.1; 2022: 2.0; 2023: 2.0; 2024: 2.0; 2025: 2.0.
- Real GDP per capita (percent change): 2019: -0.8; 2020: 1.7; 2021: 0.8; 2022: 0.9; 2023: 1.0; 2024: 1.2; 2025: 1.3.
- Gross international reserves (end of period, in millions of U.S. dollars): 2019: 196.4; 2020: 197.7; 2021: 201.3; 2022: 208.2; 2023: 217.0; 2024: 227.6; 2025: 238.2.
- Gross international reserves (in months of imports): 2019: 6.6; 2020: 5.9; 2021: 5.8; 2022: 5.8; 2023: 5.7; 2024: 5.7; 2025: 5.7.
- Total revenue and grants (percent of GDP): 2019: 16.1; 2020: 17.5; 2021: 16.7; 2022: 16.7; 2023: 16.7; 2024: 16.4; 2025: 16.3.
- Tax revenue (percent of GDP): 2019: 7.0; 2020: 7.8; 2021: 7.9; 2022: 7.9; 2023: 8.0; 2024: 8.1; 2025: 8.2.
- Grants (percent of GDP): 2019: 7.5; 2020: 8.5; 2021: 7.4; 2022: 7.3; 2023: 7.2; 2024: 6.8; 2025: 6.6.
- Overall balance (cash basis, percent of GDP): 2019: -2.2; 2020: -2.2; 2021: -2.5; 2022: -2.4; 2023: -2.4; 2024: -2.4; 2025: -2.3.
- Public sector debt (percent of GDP): 2019: 25.3; 2020: 28.4; 2021: 30.7; 2022: 31.4; 2023: 32.1; 2024: 32.7; 2025: 33.2.

### Risks (selected)
- Near-term risks:
  - Growth decline from political unrest and inter-island tensions, weaker global growth, coronavirus outbreak effects (decline of remittances inflows and export demand), or natural disasters including climate change.
  - Fiscal stress due to weak fiscal revenue and limited access to credit; high dependence on volatile aid inflows.
  - Financial sector stress: poor asset quality and continuing troubles of SNPSF.
- Medium to longer-term risks:
  - Risk of external debt distress: assessed as "moderate" but buffers shrinking.
  - External position risks: foreign exchange coverage slightly less than adequate and projected to decline; dependence on volatile foreign aid and narrow export base.

### Policy discussions, active policy scenario, and implementation capacity
- Authorities broadly agreed with staff advice and expressed interest in closer Fund engagement (SMP) and a potential future ECF arrangement.
- Active policy scenario — key policy elements:
  - Institutional reforms: strengthen governance, reduce corruption vulnerabilities, enhance civil service implementation capacity, strengthen rule of law.
  - Economic reforms:
    - Raise fiscal revenue by 0.3 percent per year through tax and customs policy and administrative measures, following a larger increase in 2020 aided by a bounce-back from cyclone impacts.
    - Enhance public financial management (PFM).
    - Strengthen SOE oversight.
    - Strengthen the financial sector to enable greater credit provision and limit risks.
    - Implement a targeted growth strategy.
    - Enhance resilience via prudent fiscal and monetary policies and strengthened disaster resilience.
  - Expected outcomes under the active policy scenario:
    - Higher investment spending would boost export earnings from tourism and agriculture; growth would rise to around 4½ percent per year.
    - Foreign exchange reserves would rise to adequate levels, supported by higher and more fully used aid commitments.
    - Debt risks would recede thanks to lower fiscal deficits and stronger oversight of SOEs and the financial sector.
- Implementation capacity constraints and sequencing:
  - Highest priority: strengthen the civil service (hire and promote on merit, enhance training).
  - Next: strengthen the judicial system to ensure contract enforcement.
  - Third: enhance fiscal revenue with opportunities for quick wins.

### Key mission and statutory details
- IMF staff team: Mr. H. Weisfeld (head), Mr. M. Benlamine, Mr. O. Melhado, Ms. R. Randall (all AFR), Mr. I. Ahamada (local economist), Mr. T. Bayle (MCM), and Mr. Y. De Santis (FAD). Mr. J. Diaz-Sanchez (World Bank) accompanied the team, and Mr. M. Sidi Bouna (OED) participated in final days.
- Meetings included President Assoumani, Minister of Finance and Budget Chayhane, Central Bank Governor Imani, and other senior officials, private sector, and development partners.

*Source: EXECUTIVE SUMMARY, 1comea2020002 - EXECUTIVE SUMMARY*

---

### Governance, Civil Service, Rule of Law, Anti‑corruption, and AML/CFT

### Macro-critical governance weaknesses — findings
- Weak judicial system: cases linger and judgments frequently not enforced, undermining private sector activity.
- Regulatory framework issues: unclear import/export processes and state monopoly on trade in certain products.
- Fiscal management shortcomings: weak PFM, weak spending controls, lack of transparency in budget execution.
- Anti-corruption and AML/CFT measures weak and have hurt correspondent banking relationships.
- Civil service practices involve patronage in hiring and promotion, causing skills mismatch, high turnover, and weak morale and accountability.

### Strengthening civil service — findings and recommendations
- Findings:
  - Fund capacity building focused on revenue administration, PFM, financial sector oversight, and statistical capacity.
  - Policy implementation improved only limitedly; fiscal revenue remains very low and PFM weak partly because civil service follows up little on CD recommendations.
  - Patronage in hiring/promotion contributes to skills mismatch and weak accountability.
- Authorities’ initial steps:
  - Addressed absenteeism, removed “ghost workers,” and recovered wages paid to them.
  - Considering entrance exam across civil service (already in place at the central bank); considering a school of administration and enhanced performance management.
- Recommendations:
  - Broaden and deepen civil service reforms: adopt entrance exams, create school of administration, strengthen performance management.
  - Prioritize continuous, hands-on CD delivery; with improved civil service management, accelerate implementation of CD recommendations.

### Enhancing the rule of law — findings and recommendations
- Findings:
  - Weak judicial system undermines property rights protection and contract enforcement.
- Recommendations:
  - Request neutral outside analysis of judicial system challenges and reform options; enhance funding; improve quality and independence of the judiciary.
  - Reinforce court staffing cost-effectively by complementing professional judges with lay judges drawn from business areas.
  - Strengthen arbitration: train arbitrators/mediators, fund the arbitration court, and make it independent.

### Anti-corruption and AML/CFT — findings and recommendations
- Findings:
  - Anti-corruption and AML/CFT measures remain weak (SIP on Governance).
- Recommendations:
  - Strengthen asset declaration regime for high-level officials, including requiring publication of declarations and re-operationalizing the anti-corruption commission or creating a similar empowered body.
- Authorities’ views:
  - Authorities acknowledge the need to strengthen asset declarations but disagree with requiring publication.

*Source: 1comea2020002 — UNION OF THE COMOROS, INTERNATIONAL MONETARY FUND.*

---

### Fiscal Policy, Revenue Mobilization, PFM, and SOEs

### Raising fiscal revenue — findings and recommendations
- Findings:
  - Fiscal revenue is very low; numerous tax exemptions and weak tax administration constrain domestic revenue at around 2 percent of GDP.
  - Customs generate most revenue: 6.3 percent of GDP.
- Tax and customs policy recommendations:
  - Broaden the tax base by removing exemptions and stopping new exemptions; simplify taxes and promote tax equity.
  - Improve domestic tax administration before introducing a VAT.
- Domestic tax administration recommendations:
  - Implement TA recommendations: (i) strengthen taxpayer registry and large taxpayers’ unit and expand coverage to the entire country; (ii) strengthen identification and collection from large companies; (iii) recover issued and unpaid taxes.
- Customs administration recommendations:
  - Transfer management of oil taxes to customs from the oil-importing public utility (SCH) — planned for early 2020 — and strengthen operational and value controls.
- Revenue projections:
  - Baseline scenario assumes an increase in revenue in 2020 relative to 2019 of 0.4 percent of GDP, mainly due to bounce-back to pre-cyclone levels.
  - Active policy scenario assumes authorities will raise revenue by an additional 0.4 percent of GDP and continue doing so in subsequent years.
- Immediate issue:
  - Coexistence of two TIN systems: staff recommends using only SIGIT TINs and ending use of any other TINs.

### Strengthening public financial management — findings and recommendations
- Findings:
  - PFM lacks credibility and transparency; overly-ambitious budgeting through 2018 created large deviations between forecasts and outturns.
  - Transparency issues: lack of reporting to parliament/public on budget execution; some government accounts outside TSA; frequent use of exceptional payment procedures; weak oversight of SOEs.
- Progress and recommendations:
  - Prepare inventory of government bank accounts and close those outside TSA.
  - Ensure all revenue and expenditure transactions pass through the TSA and sub-accounts under treasurers’ control.
  - Audit domestic arrears, prepare strategy for clearing verified arrears, avoid accumulation of new arrears or payment of unverified arrears.
  - Regularly report to parliament and the public on budget execution in line with CD recommendations.
  - Strengthen investment execution: better appraise, prioritize, and select investment projects; improve use of donor aid commitments.
- External arrears:
  - External arrears reached US$5.7 million (0.5 percent of 2019 GDP) at end-November 2019: 0.2 percent of GDP to France, Kuwait, India, and Saudi Arabia and 0.3 percent of GDP to Arab Bank for Economic Development in Africa.
  - Authorities aim to clear all external arrears by end-2020; discussions ongoing with BADEA.

### Rethinking SOEs and improving control — findings and recommendations
- Findings:
  - Key SOEs: Comoros Telecom, SCH (oil importer), SONELEC (electricity). SOEs contributed 31 percent to 2018 fiscal revenue.
  - Comoros Telecom and SCH contributions fell by half in 2019:
    - Comoros Telecom lost 40 percent of the mobile market to a competitor with much smaller staff.
    - SONELEC tariffs cover about one third of cost; constrained subsidies leave chronic financial stress.
- Recommendations:
  - Refrain from creating new SOEs unless clear market-failure rationale exists; consider privatization cautiously.
  - Define monitorable goals, conclude performance contracts; review SOE staffing and salary levels.
  - Require annual balance sheets and profit & loss statements and more frequent reporting to government; avoid cross-arrears.
  - Over medium term, after creating systems to support the poor, raise prices of SOE-provided goods to cost recovery while implementing complementary measures to protect the poor.
- Authorities’ views:
  - Authorities concur and will consider opening SOE capital to private partners, have concluded some performance contracts, and are open to gradual cost-recovery pricing after expanding mechanisms benefiting the poor.

---

### Financial Sector, SNPSF, and Supervision

### Financial sector findings
- Structure:
  - Twelve financial institutions including four banks and four micro-finance deposit-taking institutions; two institutions hold 45 percent of system assets and deposits.
- Banking sector constraints:
  - Weak judicial system inhibiting enforcement of claims even with collateral.
  - Weak underwriting and risk management; recurring government arrears to banks and suppliers.
- Asset quality:
  - Gross NPLs stood at 24 percent of loans at end-October 2019, with provisioning coverage close to 60 percent.
- Solvency stress tests:
  - Beyond already-insolvent SNPSF, severe but plausible shocks would leave several medium-to-large institutions undercapitalized.
  - Capital adequacy may be weaker than tests indicate due to inability to realize collateral and credit concentration.
- Financial safety net:
  - Supervisory early intervention weak; resolution, deposit insurance, and central bank liquidity assistance frameworks remain to be created.

### Recommendations for financial sector and SNPSF
- Improve judicial system to allow banks to move against delinquent borrowers and realize pledged collateral.
- Reduce government arrears to banks and suppliers through fiscal reforms.
- Accelerate transition to risk-based supervision; create bank resolution and liquidity assistance frameworks (a law on bank resolution is under preparation).
- Deeply restructure SNPSF to stop fiscal drains and limit financial sector risk:
  - Options: strengthen performance under a revised business model and/or transfer good assets and deposits to an existing or new (bridge) institution and liquidate the rest.
  - First step: split postal and banking operations into two independent entities.
  - Commission an audit by a reputable firm of SNPSF’s assets and liabilities, then assess sustainability and restructure or resolve.
- Authorities’ views:
  - Central Bank will promote access and reinforce financial stability, strengthen forward-looking risk-based supervision, address credit risk via provisioning and write-off policies.
  - Authorities plan to establish a resolution regime, remove impediments to recovery of doubtful loans, resolve stalled court cases to recover loans, split SNPSF activities, and commission an audit before restructuring or resolution.

---

### Investment, Social Spending, Human Capital, and Disaster Resilience

### Investing in physical capital
- Public investment spending currently amounts to only 5 percent of GDP, substantially below SSA average.
- Growth would benefit from relaxing infrastructure constraints in tourism and agriculture; enhancing electricity provision may have high returns.
- Authorities agreed on importance of raising sustainably financed investment spending.

### Investing in human capital and social spending
- Human capital remains low and weighs on growth potential (Annex I findings).
- Poverty:
  - Using U.S.$3.2/day line, 38 percent of population are poor.
  - Using U.S.$1.9/day line, 18 percent are extremely poor; depth of extreme poverty 6 percent.
- SDG and human capital indicators:
  - Overall SDG index value: 53 in Comoros versus 54 in SSA and 68 in middle-income countries.
  - Only 37 percent of 15–19-year-olds are able to read.
  - Infant mortality: 57 per 1,000 births.
  - Childhood stunting: 31 percent.
  - World Bank Human Capital Index: 0.41 in Comoros.
- Social spending:
  - Public spending on education: 4.2 percent of GDP (spending concentrated in teachers’ salaries).
  - Public spending on health: 1.0–1.4 percent of GDP (concentrated in salaries; limited infrastructure).
- Recommendations:
  - Raise volume and efficiency of health and education spending while preserving debt sustainability.
  - Prioritize high-impact items: teacher training, school materials, primary healthcare improvements, vaccination co‑financing, medicines, and maintaining facilities.
  - Expand transfers to the poor in near term given limited depth of extreme poverty and low cost of additional transfers.
  - Prioritize primary care over building one large hospital while resources are limited.

### Lowering vulnerability to shocks — fiscal and disaster resilience
- Fiscal anchor and cash buffer:
  - Staff recommends building a cash buffer by setting aside ¼ percent of GDP per year to build a cash deposit at the central bank for shocks, starting in 2021.
  - Fiscal anchor: overall fiscal cash deficit should not exceed an average 1.9 percent of GDP (moderately lower than baseline projected 2.3 percent of GDP); consolidation achieved mainly by raising revenue and containing non-priority spending.
  - This orientation would preserve debt distress rating at "moderate" and boost ability to absorb shocks from “limited space” to “some space”.
  - Enables authorities to take on credit up to U.S.$50 million per year over 2020–29 on concessional terms (grant element of at least 35 percent).
- Monetary policy:
  - Inflation well-anchored by cooperation with France and peg of Comorian Franc to the Euro; recommend staying the course.
- Disaster resilience:
  - World Bank estimates sea level rise could displace 10 percent of the country’s population from current coastal locations by 2050.
  - Staff recommended a natural disaster resilience strategy with three pillars:
    - (i) enhancing structural resilience (infrastructure investments);
    - (ii) building financial resilience (fiscal buffers);
    - (iii) boosting post-disaster resilience (contingency planning and investments).
  - Implementation status: WB and UNDP supporting pillars; donor support for integrated risk management.

---

### Debt Sustainability, DSA Findings, and Policy Adjustment Scenario

### DSA — key facts and recent borrowing
- Nominal total external PPG debt, 2018: 224.1 (Millions of U.S. dollars).
  - Multilateral creditors: 30.3 (IMF: 11.0; IDA: 19.3).
  - Bilateral creditors: 145.0 (Saudi Arabia: 44.9; India: 38.9; China: 30.9; Kuwait: 25.9; France: 3.4; Mauritius: 0.9; Others: 48.8).
- Excludes $2.72mn of hospital debt owed to France under negotiation.
- TDB loan for El-Maarouf hospital: US$10 million disbursed in 2019; remaining assumed disbursed equally in 2020 and 2021 in DSA. Terms: 7.5 percent floating interest rate, 10 years maturity, no grace period; fees raise effective interest rate by 0.5 percentage point.
- Projections include concessional financing of US$ 82 million from a Chinese bank between 2019 and 2021 and non-concessional financing of Euro 25 million from the TDB between 2019 and 2021.
- DSA assumes all contracted-but-undisbursed loans fully disbursed as planned.

### Key DSA results and ratings
- External debt distress rating: “moderate.”
- Under baseline macro assumptions, debt and debt service indicators remain below thresholds but show upward long-run trends.
- Vulnerabilities identified by stress tests: natural disasters, shocks to exports (most extreme for PV external debt-to-exports and debt service-to-exports), and depreciation (most extreme for debt service-to-revenue).
- PV of external debt-to-exports projected to reach 161 percent in 2029 (exceeding 140 percent threshold where space is assessed as limited).
- Natural disaster scenario: size of shock fixed at 10 percent of GDP.
- External arrears:
  - External arrears reached US$5.7 million (0.5 percent of 2019 GDP) at end-November 2019: US$2.5 million (0.2 percent of GDP) to France, Kuwait, India, and Saudi Arabia; 0.3 percent of GDP to Arab Bank for Economic Development in Africa.
  - Baseline and policy scenario assume clearance of all external arrears by end-2020 per authorities’ July 2019 LOI.

### Policy adjustment scenario — outcomes and implications
- Policy adjustment scenario raises capacity to absorb shocks from “limited” to “some” space.
- Critical actions:
  - Faster progress on domestic resource mobilization.
  - Proceed cautiously on new concessional debt.
  - Tightly limit new non-concessional debt.
- Selected policy-scenario indicators (differences versus baseline):
  - Policy scenario real GDP: 2023: 3.6; 2024: 3.9; 2025: 4.2 (baseline: 3.5; 3.6; 3.7).
  - Policy scenario current account (percent of GDP): 2022: -4.5; 2023: -4.4; 2024: -3.9; 2025: -2.4 (baseline: -5.5; -4.9; -4.4; -3.5).
  - Policy scenario gross international reserves (millions of U.S. dollars): 2022: 198.8; 2023: 203.7; 2024: 214.4; 2025: 231.1 (baseline: 197.7; 201.3; 208.2; 217.0).
  - Policy scenario public sector debt (percent of GDP): 2022: 26.1; 2023: 28.2; 2024: 28.8; 2025: 29.2 (baseline: 27.1; 29.3; 30.0; 30.7).
- Policy scenario effects:
  - Fiscal deficit moderately lower: 1.9 percent of GDP (policy) vs. 2.3 percent of GDP (baseline).
  - Long-term growth of exports increased to 4.8 percent of GDP (policy) vs. 3.8 percent (baseline).
  - Current account deficit lower in long term: 1.8 percent of GDP (policy) vs. 3 percent (baseline).
  - Capacity to absorb shocks improves from “limited” to “some” space.

---

### External Sector, Reserve Adequacy, and External Stability Assessment

### External sector recent developments
- Cyclone Kenneth (April 2019) expected to adversely affect current account over next few years; projected current account deficit averaging 4.3 percent of GDP over 2020–25.
- Foreign aid volatility: additional promised aid after cyclone has not materialized so far; public transfers dropped in 2019 and expected to stabilize at 1.4 percent of GDP over 2020–23.
- Narrow export base: three products constitute >80 percent of goods exports over 2010–19:
  - cloves: 58 percent;
  - vanilla: 12 percent;
  - ylang-ylang: 11 percent.
- Trade deficit financed principally by remittances.

### External position assessment and reserve adequacy
- Comoros assessed as “credit constrained.”
- EBA-lite CA model results (end-2019):
  - Model-based CA deficit norm: -5.3–-5.4 percent of GDP; CA Gap with observed CA: 0.8–1 percentage points.
  - Policy gap: 1.3 percentage points of GDP, mainly because public health spending (1.0–1.4 percent of GDP) is below desirable 2–3.2 percent.
- IREER approach: REER misalignment 2.3–2.6 percent.
- IMF reserve adequacy optimal level (small state classification): 6.8 months of imports.
- Actual reserves at end-2019: 6.6 months of imports (slightly below optimal); projected to stabilize at 5.7 months from 2023 on.

### Structural competitiveness and data constraints
- Business environment:
  - Doing Business 2020 ranking: 160/190.
  - Major weaknesses: enforcing contracts (179th), resolving insolvency (168th), paying taxes (168th), starting a business (158th), protecting minority investors (162th).
- Human development:
  - HDI 2017: rank 165/189; low human development category.
  - World Bank human capital index and other indicators show limited human capital near SSA averages.
- Data gaps:
  - No international investment position data preventing EBA light external sustainability analysis; increases uncertainty.

---

### Social Spending, Human Capital, and Social Protection (Annex I)

### Poverty and social indicators
- Poverty trends:
  - Poverty declined by 10 percentage points during 2004–13.
  - Using U.S.$3.2/day poverty line: 38 percent of population poor.
  - Using U.S.$1.9/day poverty line: 18 percent extremely poor; depth of extreme poverty 6 percent.
  - Risk of poverty higher among non‑remittance recipients and rural population.
- SDG and human capital:
  - Overall SDG index value: 53 (Comoros) vs. 54 (SSA) and 68 (middle-income countries).
  - Only 37 percent of 15–19‑year‑olds able to read.
  - Infant mortality: 57 per 1,000 births.
  - Childhood stunting: 31 percent.
  - World Bank Human Capital Index: 0.41 (Comoros) vs. 0.40 (SSA) and 0.48 (LMICs).

### Social assistance and recommendations
- Government social assistance very limited; cash-for-work program reaches about 5,000 families.
- World Bank and UNICEF operate two transfer programs partially filling gaps.
- Recommendations:
  - Raise volume and efficiency of health and education spending while preserving debt sustainability.
  - Focus resources on high-impact, efficient items (teacher training, school materials, primary health care, vaccination, medicines).
  - Expand transfers to the poor in near term given limited depth of extreme poverty and low cost of additional transfers.

---

### Capacity Development, Data, and Technical Assistance

### Capacity development priorities and delivery
- Top CD priorities:
  - Revenue administration (tax and customs).
  - Public financial management (budget preparation and execution).
  - Financial supervision and regulation (risk-based supervision, IFRS/NPL accounting, crisis management).
  - Contingency planning for financial sector stress.
- CD delivery preferences by authorities:
  - Hands-on, on-site training focused on implementing existing regulations and recommendations; resident advisor in Customs considered useful.
- Recent technical assistance (selection): missions listed across MCM, STA, FAD, AFS from Jan-16 through Dec-19 covering risk-based supervision, TSA, national accounts, tax administration, PFM, SOE surveillance, and more.

### Data quality issues
- Fiscal statistics (TOFE) compilation suffers comprehensiveness and accuracy issues; source data scattered and not from Union/Islands’ general ledgers.
- No IIP data compiled; external debt statistics not reported to QEDS.
- Monetary statistics: central bank compiles SRFs; major shortcoming is absence of data on large Euro cash in circulation.
- Participation: Comoros in eGDDS since Feb 2013; limited reporting to STA for CPI, national accounts, and fiscal data.

---

### COVID‑19 Supplement (as of March 16, 2020) — transmission channels and recommended responses
- As of supplement, Comoros had not reported a domestic COVID-19 outbreak; quarantined students from China and banned travelers from China and some heavily affected countries.
- Authorities sought US$2.2 million (0.2 percent of GDP) for health system preparedness; France and Saudi Arabia indicated support.
- Likely transmission channels and impacts:
  - Lower growth in Europe → lower remittances (gross remittances 17.3 percent of GDP in 2019).
  - Lower international travel → reduced tourism exports (6.1 percent of GDP).
  - Decline in commodity prices → cheaper imports; uncertain effects on export goods.
  - Potential halt in China‑financed projects (e.g., telecom).
- Health priorities:
  - Frontload essential health expenditure; follow WHO guidelines (case identification, isolation, contact tracing, testing, infection control).
- Economic policy recommendations:
  - Fiscal: cushion adverse effects in 2020, then return to medium-term paths from 2021; expand healthcare resources; consider targeted temporary support for impacted households; seek partner grant/concessional financing given moderate debt distress risk.
  - Monetary/exchange rate: peg limits adjustment; reserves slightly lower than adequate allow temporary drawdown.
  - Financial sector: consider targeted, time-bound extension of loan maturities for borrowers in hard-hit sectors; monitor loan performance.
- External support:
  - Continue to reach out to donors and IFIs; drawing on IMF and World Bank financing tools could help catalyze broader financing.

---

### Staff appraisal — priorities and sequencing
- Key priorities given limited implementation capacity:
  - Strengthen the civil service: hire and promote on merit, enhance training, set realistic expectations and accountability.
  - Strengthen the judicial system: enhance funding, cost-effective staffing (lay judges), strengthen arbitration, refrain from political interference.
  - Enhance fiscal revenue: quick wins include broadening tax base to include larger share of known companies and pursuing delinquent taxpayers; eliminate unproductive fiscal spending (example: postal bank).
- Fund role:
  - Provide sustained policy advice and capacity building in collaboration with the World Bank and other partners.

*Source: 1comea2020002 — Staff Report for the 2019 Article IV Consultation (Informational Annex, March 2, 2020) and EXECUTIVE SUMMARY.*

### EXECUTIVE SUMMARY

### EXECUTIVE SUMMARY

### Context
- Economic developments over the past two years have been challenging due mainly to adverse impacts of political uncertainty (constitutional referendum in mid-2018 and elections in early 2019) and Cyclone Kenneth (April 2019), notwithstanding the provision of Fund emergency financial support following the cyclone.  
- Discussions took place in Moroni during December 11–20, 2019.

### Background and fragility diagnostics
- The authorities have had several policy successes: strengthened electricity provision; opened the telecommunications sector; reduced customs exemptions; created a Treasury Single Account (TSA); and started computerizing management of wage and customs data.
- Two structural advantages:
  - Large remittances inflows (15 percent of GDP).
  - Violence and crime are low.
- The authorities’ strategy: transform Comoros into a dynamic emerging market over the next decade by strengthening human capital, infrastructure, governance, and reducing corruption; they have sought aid and foreign direct investment.
- Fragility arises from two interlocking vicious circles:
  - Institutional fragility:
    - Political instability with tensions between the three islands; tensions re-intensified following a 2018 constitutional reform that allowed President Assoumani to be reelected in 2019.
    - Weak governance and institutions: weaknesses in rule of law, regulatory framework, fiscal governance, and anti-corruption and AML/CFT measures; weak judicial system undermines contract enforcement.
    - Weak policy implementation capacity due in part to civil service hiring and promotion practices insufficiently focused on merit.
  - Economic fragility:
    - Severe constraints on domestic resources: weak fiscal revenue, a high public wage bill, and drains from weakly supervised SOEs constrain public investment and social spending.
    - Pronounced vulnerability to shocks: budget depends heavily on volatile aid; credit constraints create recurring liquidity shortfalls and arrears; high vulnerability to natural disasters (Cyclone Kenneth, April 2019).

### Recent economic developments (selected findings)
- Growth slowed from 3.6 percent in 2018 to 1.9 percent in 2019.
- Inflation: uptick to 3.3 percent in 2019, reflecting temporary supply constraints from the cyclone.
- Fiscal challenges intensified amid difficulties at SOEs and in tax revenue mobilization:
  - 2018: revenue driven by unsustainably large contributions from SOEs while tax revenue from other sources declined.
  - 2019: contributions from SOEs fell sharply; non-SOE tax revenue fell further; liquidity was tight and authorities took up credit from a domestic commercial bank to remain current on wages.
  - Domestically financed investment fell to very low levels; plan to clear external debt arrears was not executed.
  - Foreign-financed investment rose substantially due to telecom sector investment based on a loan from China.
- External accounts and reserves:
  - Gross foreign reserves fell to 6.6 months of imports (slightly below adequate levels estimated at 6.8 months of imports).
- Banking sector:
  - Gross NPLs at 24 percent of loans.
  - Credit growth to the economy remained weak; banks' appetite for lending very limited.
- Donor commitments:
  - France announced project aid of 13.8 percent of GDP over several years.
  - World Bank: project-oriented IDA allocation of 6.8 percent of GDP plus an additional allocation of 3.8 percent of GDP to help address cyclone impacts.

### Outlook and risks
- Baseline growth projection: rebound in 2020; medium and longer-term growth at 3½–4 percent.
- Selected baseline numerical projections (excerpt from Text Table 1):
  - Real GDP (percent change):
    - 2019: 1.9
    - 2020: 4.4
    - 2021: 3.5
    - 2022: 3.6
    - 2023: 3.7
    - 2024: 3.8
    - 2025: 3.8
  - Consumer price index (annual average):
    - 2019: 3.3
    - 2020: 1.4
    - 2021: 2.1
    - 2022: 2.0
    - 2023: 2.0
    - 2024: 2.0
    - 2025: 2.0
  - Real GDP per capita (percent change):
    - 2019: -0.8
    - 2020: 1.7
    - 2021: 0.8
    - 2022: 0.9
    - 2023: 1.0
    - 2024: 1.2
    - 2025: 1.3
  - Gross international reserves (end of period, in millions of U.S. dollars):
    - 2019: 196.4
    - 2020: 197.7
    - 2021: 201.3
    - 2022: 208.2
    - 2023: 217.0
    - 2024: 227.6
    - 2025: 238.2
  - Gross international reserves (in months of imports):
    - 2019: 6.6
    - 2020: 5.9
    - 2021: 5.8
    - 2022: 5.8
    - 2023: 5.7
    - 2024: 5.7
    - 2025: 5.7
  - Total revenue and grants (percent of GDP):
    - 2019: 16.1
    - 2020: 17.5
    - 2021: 16.7
    - 2022: 16.7
    - 2023: 16.7
    - 2024: 16.4
    - 2025: 16.3
  - Tax revenue (percent of GDP):
    - 2019: 7.0
    - 2020: 7.8
    - 2021: 7.9
    - 2022: 7.9
    - 2023: 8.0
    - 2024: 8.1
    - 2025: 8.2
  - Grants (percent of GDP):
    - 2019: 7.5
    - 2020: 8.5
    - 2021: 7.4
    - 2022: 7.3
    - 2023: 7.2
    - 2024: 6.8
    - 2025: 6.6
  - Overall balance (cash basis, percent of GDP):
    - 2019: -2.2
    - 2020: -2.2
    - 2021: -2.5
    - 2022: -2.4
    - 2023: -2.4
    - 2024: -2.4
    - 2025: -2.3
  - Public sector debt (percent of GDP):
    - 2019: 25.3
    - 2020: 28.4
    - 2021: 30.7
    - 2022: 31.4
    - 2023: 32.1
    - 2024: 32.7
    - 2025: 33.2
- Downside risks (Annex III highlights):
  - Near-term risks:
    - Risk of a growth decline due to political unrest and inter-island tensions, weaker global growth, disruptions caused by coronavirus outbreak resulting in a decline of remittances inflows and export demand, or natural disasters including those furthered by climate change.
    - Risk of fiscal stress due to weak fiscal revenue and limited access to credit; high dependence on volatile aid inflows.
    - Risk of financial sector stress: poor asset quality and continuing troubles of SNPSF.
  - Medium to longer-term risks:
    - Risk of external debt distress: assessed as "moderate" but buffers are shrinking (Annex IV on DSA).
    - Risks to the external position: short-term external position assessed as broadly consistent with fundamentals, but foreign exchange coverage has fallen to slightly less than adequate levels and is projected to gradually decline; longer-term risks substantial given dependence on volatile foreign aid and a narrow export base.

### Policy discussions and scenarios
- Authorities broadly agreed with staff advice on a medium-term strategy to overcome fragility, boost inclusive growth, and contain risks; authorities expressed interest in closer Fund engagement through a Staff-Monitored Program (SMP) and a potential future ECF arrangement.
- Active policy scenario: strengthened policies that tackle both vicious circles of fragility could lift Comoros out of fragility, spur inclusive growth, and limit risks. Key components:
  - Address institutional fragility: strengthen governance, reduce vulnerabilities to corruption, enhance civil service implementation capacity, and strengthen the rule of law.
  - Address economic fragility:
    - Raise fiscal revenue by 0.3 percent per year through tax and customs policy and administrative measures, following a larger increase in 2020 helped by a bounce-back from cyclone impacts.
    - Enhance public financial management (PFM).
    - Strengthen SOE oversight.
    - Strengthen the financial sector to enable greater provision of credit and limit risks.
    - Implement a targeted growth strategy.
    - Enhance resilience via prudent fiscal and monetary policies and strengthened disaster resilience.
  - Expected outcomes under the active policy scenario:
    - Higher investment spending would boost export earnings from tourism and agriculture; growth would rise to around 4½ percent per year.
    - Foreign exchange reserves would rise to adequate levels, supported by higher and more fully used aid commitments.
    - Debt risks would recede thanks to lower fiscal deficits and stronger oversight of SOEs and the financial sector.
- Implementation capacity constraints:
  - Strengthening the civil service is the highest priority; success will enable better performance across government activities and should start immediately.
  - Strengthening the judicial system to ensure contract enforcement is next and should start immediately.
  - Enhancing fiscal revenue is the third key priority and offers opportunities for quick wins.

### Key statutory and mission details
- IMF staff team included Mr. H. Weisfeld (head), Mr. M. Benlamine, Mr. O. Melhado, Ms. R. Randall (all AFR), Mr. I. Ahamada (local economist), Mr. T. Bayle (MCM), and Mr. Y. De Santis (FAD). Mr. J. Diaz-Sanchez (World Bank) accompanied the team, and Mr. M. Sidi Bouna (OED) participated in the final days of the mission.
- The team met with President Assoumani and held discussions with Minister of Finance and Budget Chayhane, Central Bank Governor Imani, Secretary General of the Ministry of Finance and Budget Ahamada, Permanent Secretary of the Economic and Financial Reform Unit Oubeidi and other senior government officials, as well as representatives of the private sector and development partners.

*Source: EXECUTIVE SUMMARY, 1comea2020002 - EXECUTIVE SUMMARY*

### 14.      Governance in Comoros has remained weak, creating elevated vulnerability to

### 14. Governance in Comoros has remained weak, creating elevated vulnerability to corruption

### Macro-critical governance weaknesses — findings
- The rule of law, particularly enforcement of contracts, suffers from a weak judicial system: cases linger in the courts and judgments are frequently not enforced, undermining private sector activity.
- The regulatory framework has issues, including unclear import and export processes and state monopoly on trade in certain products, creating drag on private sector activity.
- Fiscal management suffers from weak PFM, including weak spending controls and lack of transparency in budget execution.
- Anti-corruption efforts and AML/CFT measures are weak and have hurt correspondent banking relationships.
- The civil service has hiring and promotion decisions based in part on considerations other than merit, leading to skills mismatch, high turnover, and weak morale and accountability.

### Strengthening civil service — findings and policy recommendations
- Findings:
  - Fund capacity building has focused on revenue administration, PFM, financial sector oversight, and statistical capacity.
  - Policy implementation has improved only to a limited extent; fiscal revenue remains very low and PFM weak, partly because the civil service follows up only little on Capacity Development (CD) recommendations.
  - Hiring and promotion often reflect patronage, contributing to skills mismatch, high turnover, weak morale and weak accountability.
- Authorities’ initial steps:
  - Addressed absenteeism and removed “ghost workers” and recovered wages paid to them.
  - Considering strengthening hiring via an entrance exam across the civil service (already in place at the central bank).
  - Considering creating a school of administration and enhancing performance management.
- Recommendations:
  - Broaden and deepen civil service reforms: adopt entrance exams, enhance training (school of administration), and strengthen performance management.
  - Prioritize continuous, hands-on CD delivery; with improved civil service management, accelerate implementation of CD recommendations.

### Enhancing the rule of law — findings and recommendations
- Findings:
  - Weak judicial system undermines property rights protection and contract enforcement, constraining investment and growth.
- Recommendations:
  - Request from a neutral outside party an analysis of judicial system challenges and reform options; enhance funding; improve quality and independence of the judiciary.
  - Reinforce court staffing in a low-cost manner by complementing professional judges with lay judges drawn from business areas (banking, commerce); a project exists but is stalled at the Ministry of Justice.
  - Strengthen arbitration options by training arbitrators and mediators, funding the arbitration court, and making it independent.

### Anti-corruption and AML/CFT — findings and recommendations
- Findings:
  - Anti-corruption and anti-money laundering measures remain weak (SIP on Governance).
- Recommendations:
  - Strengthen the asset declaration regime for high-level officials, including requiring publication of declarations and re-operationalizing the anti-corruption commission or creating a similar body with powers to promote investigations of acts of corruption.
- Authorities’ views:
  - Authorities acknowledge the need to strengthen asset declarations but disagree with requiring publication of the declarations.

### Addressing economic fragility — raising fiscal revenue (findings and recommendations)
- Findings:
  - Fiscal revenue is very low; numerous tax exemptions and weak tax administration constrain domestic revenue at around 2 percent of GDP.
  - Customs generate most revenue: 6.3 percent of GDP.
- Recommendations — tax and customs policy:
  - Broaden the tax base by removing exemptions and stopping new exemptions; simplify taxes and promote tax equity.
  - Improve domestic tax administration before introducing a VAT.
- Recommendations — domestic tax administration:
  - Implement TA recommendations: (i) strengthen taxpayer registry and large taxpayers’ unit and expand coverage to the entire country; (ii) strengthen identification and collection from large companies; (iii) recover issued and unpaid taxes.
- Recommendations — customs administration:
  - Transfer management of oil taxes to customs from the oil-importing public utility (SCH) — planned for early 2020 — and strengthen operational and value controls.
- Revenue projections:
  - Baseline scenario assumes an increase in revenue in 2020 relative to 2019 of 0.4 percent of GDP, mainly due to bounce-back to pre-cyclone levels.
  - Active policy scenario assumes the authorities will raise revenue by an additional 0.4 percent of GDP and continue doing so in subsequent years.
- Immediate issue:
  - Taxpayer identification procedures suffer from coexistence of two TIN systems: the regular TIN generated by SIGIT and a TIN generated by a private company providing operational services in direct taxation; staff recommends using only SIGIT TINs and ending use of any other TINs.
- Authorities’ views:
  - Authorities acknowledge room for strengthening revenue mobilization and intend to accelerate implementation of CD recommendations.

### Strengthening public financial management — findings and recommendations
- Findings:
  - PFM lacks credibility and transparency. Overly-ambitious budgeting through 2018 created large deviations between budget forecasts and realized revenue/spending.
  - Transparency issues: (i) lack of reporting to parliament and the public about budget execution; (ii) some government accounts outside the TSA; (iii) frequent use of exceptional payment procedures; weak oversight of SOEs reduces PFM transparency.
- Progress and recommendations:
  - Budget credibility has improved: the 2020 budget revenue forecast is broadly in line with staff projections under the policy scenario (higher by 0.4 percent of GDP). Budgeted spending is very close to staff’s projections (higher/lower by x percent of GDP). Staff recommends adopting a supplementary budget should outturns deviate substantially.
  - Make spending more transparent:
    - Prepare an inventory of government bank accounts in the central bank and commercial banks and close those outside the TSA.
    - Ensure all revenue and expenditure transactions pass through the TSA and sub-accounts under treasurers’ control.
    - Audit domestic arrears, prepare a strategy for clearing verified arrears, avoid accumulation of new arrears or payment of unverified arrears.
    - Regularly report to parliament and the public on budget execution, based on progress in public accounting in line with CD recommendations.
  - Strengthen investment execution: improve use of donor aid commitments, better appraise, prioritize, and select investment projects.
  - External arrears:
    - External arrears reached US$5.7 million (0.5 percent of 2019 GDP) at end-November 2019: 0.2 percent of GDP to France, Kuwait, India, and Saudi Arabia and 0.3 percent of GDP to Arab Bank for Economic Development in Africa.
    - Authorities are discussing rescheduling with the Arab Bank for Economic Development in Africa and aim to clear all external arrears by end-2020.
- Authorities’ views:
  - Authorities concur with recommendations: return to budget realism, strengthen TSA implementation, commission audit of domestic arrears (subject to financing), avoid new arrears including cross-arrears with SOEs, align taxation of SOEs with private firms, and make progress on fiscal accounting.

### Rethinking SOEs and improving control — findings and recommendations
- Findings:
  - SOEs are important: key SOEs include Comoros Telecom, the oil importer (SCH), and electricity provider (SONELEC). SOEs contributed 31 percent to 2018 fiscal revenue.
  - Comoros Telecom and the oil importer saw their contributions to fiscal revenue fall by half in 2019:
    - Comoros Telecom lost 40 percent of the mobile market to a competitor with much smaller staff.
    - The fuel importer faced fixed fuel prices since 2016 and constrained subsidies.
  - SONELEC tariffs cover about one third of cost; constrained subsidies leave the company in chronic financial stress.
- Recommendations:
  - Refrain from creating new SOEs unless clear market-failure rationale exists; consider privatization cautiously under weak governance.
  - Define monitorable goals and conclude performance contracts; review SOE staffing and salary levels.
  - Require annual balance sheets and profit & loss statements and more frequent reporting to government; avoid cross-arrears.
  - Over the medium term, after creating systems to support the poor, raise prices of SOE-provided goods to cost recovery while implementing complementary measures to protect the poor and explain the reforms.
- Authorities’ views:
  - Authorities concur and will consider opening SOE capital to private partners, have concluded some performance contracts, and are open to gradual cost-recovery pricing after expanding mechanisms benefiting the poor.

### Addressing financial sector challenges — findings and policy recommendations
- Findings:
  - Financial sector is underdeveloped (SIP on Solvency Stress Tests): twelve financial institutions, including four banks and four micro-finance deposit-taking institutions; concentration pronounced (two institutions hold 45 percent of system assets and deposits).
  - Banking sector constraints:
    - Weak judicial system inhibits enforcement of claims even with pledged collateral.
    - Weak underwriting and risk management.
    - Recurring government arrears to banks and suppliers.
  - Asset quality: gross NPLs stood at 24 percent of loans at end-October 2019, with provisioning coverage close to 60 percent.
  - Solvency stress tests: beyond already-insolvent SNPSF, severe but plausible shocks would leave several medium-to-large institutions undercapitalized. Capital adequacy may be weaker than tests indicate due to inability to realize collateral and credit concentration.
  - Near-term fiscal risks from bank recapitalization are likely limited because the banking sector is small and recapitalization calls would first go to parent companies.
  - Financial safety net underdeveloped: supervisory early intervention weak; resolution, deposit insurance, and central bank liquidity assistance frameworks remain to be created.
- Recommendations:
  - Improve the judicial system to allow banks to move against delinquent borrowers and realize pledged collateral.
  - Lower incidence of government arrears to banks and suppliers through fiscal reforms.
  - Accelerate transition to risk-based supervision and create bank resolution and liquidity assistance frameworks; a law on bank resolution is under preparation.
  - Deeply restructure SNPSF to stop fiscal drains and limit financial sector risk:
    - Options include strengthening performance under a revised business model and/or transferring good assets and deposits to an existing or new (bridge) institution and liquidating the rest.
    - First step: split postal and banking operations into two independent entities.
    - Commission an audit by a reputable firm of SNPSF’s assets and liabilities, then assess sustainability and restructure or resolve.
- Authorities’ views:
  - Central Bank will promote access and reinforce financial stability, strengthen forward-looking risk-based supervision, and address credit risk via provisioning and write-off policies.
  - Authorities plan to establish a resolution regime, remove impediments to recovery of doubtful loans, resolve stalled court cases to recover loans, and resolve SNPSF by splitting postal and banking activities and commissioning an audit before restructuring or resolution.

*Source: 1comea2020002 — UNION OF THE COMOROS, INTERNATIONAL MONETARY FUND.*

### 41.      To enhance inclusive growth, the authorities will need to raise investment in physical

### To enhance inclusive growth, the authorities will need to raise investment in physical and human capital while preserving debt sustainability.

### Investing in physical capital
- Growth would benefit from relaxing infrastructure constraints in promising sectors such as tourism and agriculture.
- Public investment spending currently amounts to only 5 percent of GDP, substantially below SSA average.
- The authorities should consider which public investment projects will likely have the highest rates of return.
- Further enhancing electricity provision may be an investment with high returns.
- Some of the projects under consideration would benefit from further study of desirable size and risks and returns.
- Authorities’ Views: The authorities agreed with the importance of raising sustainably financed investment spending.

### Investing in human capital
- Human capital remains low, holding back growth (Annex I on Social Spending and Social Outcomes).
- The authorities should raise social spending and enhance its efficiency.
- Authorities’ Views: The authorities agreed with the importance of raising sustainably financed investment spending.

### Lowering vulnerability to shocks — Implementing prudent fiscal policy
- Fiscal deficits have remained moderate and debt limited in recent years, possibly including because the government is partially credit constrained.
- Comoros does not issue tradable government debt.
- Domestic credit is constrained by a zone-franc limit on credit from the central bank and the small commercial domestic banking sector.
- The WB’s non-concessional borrowing policy limits the taking up of non-concessional debt.
- Credit constraints and a frequent lack of cash buffers curtail the government’s ability to accommodate shocks, contributing to recurring arrears and economic volatility.
- Staff recommendation: build a cash buffer by setting aside ¼ percent of GDP per year to build a cash deposit at the central bank for use in case of shocks.
  - Benefits of the cash buffer need to be weighed against other pressing spending needs.
  - The need for such a buffer would recede when credit constraints ease.
  - Staff suggests starting to build the cash buffer in 2021 to allow for a full rebuilding from the cyclone in 2020.
  - If hit by a substantial shock in the meantime, the authorities may use limited domestic bank credit judiciously and/or delay spending in a manner that minimizes impacts on growth potential and hardships for the poor.
- Staff recommends adopting a fiscal anchor that balances investment needs with preserving debt sustainability:
  - Calibrate fiscal policy such that it (i) preserves the debt distress rating at "moderate” and (ii) boosts the ability to absorb shocks to “some space” (from presently “limited space”).
  - Under this orientation, the debt burden would still rise somewhat from current levels, but by less than in the baseline.
  - It would enable the authorities to take on credit of up to U.S.$50 million per year over 2020–29 on concessional terms (grant element of at least 35 percent).
- To implement this anchor, fiscal policy should contain the fiscal deficit and support growth (as in the “active policy” scenario).
  - Concretely, the overall fiscal cash deficit should not exceed an average 1.9 percent of GDP, moderately lower than the baseline’s projected deficit of 2.3 percent of GDP.
  - The implicit fiscal consolidation relative to the baseline scenario should be achieved mainly by raising revenue and containing non-priority spending.
- Authorities’ Views: The authorities largely agreed with staff’s suggestions, including building a cash buffer. They voiced hesitation regarding staff’s proposed debt anchor and questioned whether it left sufficient space for investment.

### Implementing prudent monetary policy
- Inflation remains well-anchored by the cooperation agreement with France and the peg of the Comorian Franc to the Euro, although challenges to monetary policy effectiveness persist (structural excess liquidity).
- The conduct of monetary policy does not at present generate major risks; the mission recommended staying the course.
- Authorities’ Views: The authorities agreed with staff’s suggestions.

### Building resilience to natural disasters
- Comoros is exposed and vulnerable to natural disasters; risk will likely grow as climate change progresses. Flooding and cyclones are likely to become more frequent.
- The World Bank estimates that sea level rise could displace 10 percent of the country’s population from their current coastal location by 2050.
- Comoros also faces risks from volcanic activity.
- Staff recommended developing a natural disaster resilience strategy comprising three pillars:
  - (i) enhancing structural resilience, which requires infrastructure and other investments;
  - (ii) building financial resilience, which involves notably creating fiscal buffers; and
  - (iii) boosting post-disaster (including social) resilience, which requires contingency planning and investments to allow an effective disaster response.
- Authorities’ implementation status:
  - Pillar I: The WB is helping enhance resilience of infrastructure and services in areas affected by cyclone Kenneth; UNDP is helping improve the existing cyclone early warning system.
  - Pillar II: Implementing the policies recommended in this report should help make progress by building/preserving fiscal and other buffers.
  - Pillar III: The authorities are receiving donor support to put in place an integrated risk management system.
- Authorities’ Views: The authorities are aware of Comoros’ vulnerability to natural disasters and agreed with the need to pursue a comprehensive strategy. They believe creating fiscal space and accelerating inclusive growth will be critical for success to provide resources for needed investments.

### Other issues
- A safeguards assessment update is in progress.
  - The 2020 update found that the central bank continues to face capacity constraints.
  - Internal audit operations are constrained and financial reporting practices could be strengthened.
  - The legal framework has remained unchanged since the 2010 assessment; amendments are needed to enhance the central bank’s autonomy.
  - Recommendations include co-sourcing of internal audit activities and adoption of International Financial Reporting Standards.
- Continued efforts with external partners’ support to strengthen statistical capacity are important to enhance effective macroeconomic policymaking and surveillance, particularly for central government finances, balance of payments and national accounts statistics.

### Staff appraisal — key findings, risks, and priorities
- Recent policy successes exist; Comoros benefits from two structural advantages: large remittances and low crime and violence.
- Two interlocking vicious circles of fragility threaten transformation into a dynamic emerging market:
  - Institutional fragility: tensions between the islands and weak governance resulting in a weak civil service and a weak judicial system.
  - Economic fragility: severe constraints on domestic resources and pronounced vulnerability to shocks.
- Fragility has weighed on economic performance; per-capita GDP has grown only slowly. Recent challenges included political uncertainty and cyclone Kenneth, with limited fiscal buffers.
- Under baseline projections, growth is expected to rebound in 2020 but remain moderate over the medium term.
- Key risks:
  - Near-term: growth decline (from inter-island tensions, weaker global growth, or natural disasters); fiscal stress (from volatility in revenue with credit constraints); and financial sector stress.
  - Medium to longer-term: risk of external debt distress (assessed as “moderate” for now but buffers are shrinking).
  - External position assessed broadly in line with fundamentals and desirable policy settings, but longer-term risks remain (e.g., from volatility in some inflows and a narrow export base).
- Strengthened policies under an “active policy scenario” could gradually lift Comoros out of fragility, spur inclusive growth, and limit risks:
  - Authorities would need to tackle both vicious circles by strengthening governance (civil service, rule of law), raising fiscal revenue, enhancing PFM, strengthening SOE oversight, strengthening the financial sector, and implementing a targeted growth strategy.
  - Enhance resilience via prudent fiscal and monetary policies and disaster resilience measures.
  - Result: growth would likely rise to around 4½ percent per year and risks would recede, thanks for example to enhanced debt sustainability.
- Prioritization of reforms is key given limited implementation capacity:
  - Strengthening the civil service is likely the single most important reform: hire and promote based on merit, enhance training of officials, set realistic expectations and hold public servants to them.
  - Strengthening the judicial system to ensure enforcement of property rights and contracts: enhance funding, strengthen staffing by complementing professional judges with laymen judges, and strengthen arbitration; refrain from political interference.
  - Enhancing fiscal revenue: opportunities for quick wins exist (e.g., broadening the tax-base to include a larger share of already known companies, following up more determinedly with delinquent taxpayers); eliminate unproductive fiscal spending such as keeping the postal bank afloat.
- The Fund will need to support the authorities with sustained policy advice and capacity building efforts, in collaboration with the World Bank and other development partners.

*International Monetary Fund*

### 61.      Staff recommends that the next Article IV consultation be held on the standard

### Staff recommends that the next Article IV consultation be held on the standard 12-month cycle.

### Key macroeconomic indicators and outlook
- Real GDP (annual percent change): 3.5 (2018); 4.2 (2019); 3.6 (2020); 1.9 (2021); 4.4 (2022); 3.5 (2023); 3.6 (2024, baseline); 3.7 (2025, baseline); 3.8 (2024, policy scenario); 4.3 (2025, policy scenario).
- GDP deflator (annual percent change): 1.6 (2018); 0.3 (2019); 1.1 (2020); 3.2 (2021); 1.2 (2022); 2.0 (2023); 1.9 (2024); 1.9 (2025).
- Consumer price index (annual average): 0.8 (2018); 0.1 (2019); 1.7 (2020); 3.3 (2021); 1.4 (2022); 2.1 (2023); 2.0 (2024); 2.0 (2025).

### Fiscal position and public finances
- Total revenue and grants (percent of GDP, baseline): 14.2 (2018); 17.2 (2019); 13.9 (2020); 16.1 (2021); 17.5 (2022); 16.7 (2023); 16.7 (2024); 16.7 (2025).
- Total revenue (percent of GDP): 8.8 (2018); 10.2 (2019); 11.3 (2020); 8.7 (2021); 9.1 (2022); 9.2 (2023); 9.4 (2024); 9.6 (2025).
- Tax revenue (percent of GDP): 7.9 (2018); 9.4 (2019); 8.3 (2020); 7.0 (2021); 7.8 (2022); 7.9 (2023); 7.9 (2024); 8.0 (2025).
- Total grants (percent of GDP): 5.4 (2018); 7.1 (2019); 2.5 (2020); 7.5 (2021); 8.5 (2022); 7.4 (2023); 7.3 (2024); 6.8 (2025).
- Total expenditure and net lending (percent of GDP): 18.7 (2018); 16.9 (2019); 14.9 (2020); 18.4 (2021); 19.7 (2022); 19.1 (2023); 19.1 (2024); 18.8 (2025).
- Current expenditure (percent of GDP): 11.1 (2018); 10.3 (2019); 11.3 (2020); 10.6 (2021); 11.1 (2022); 11.5 (2023); 11.8 (2024); 11.8 (2025).
- Capital expenditure (percent of GDP): 6.3 (2018); 6.3 (2019); 3.6 (2020); 7.8 (2021); 8.7 (2022); 7.6 (2023); 7.3 (2024); 7.3 (2025).
- Domestic primary balance (percent of GDP, baseline): -3.1 (2018); -1.1 (2019); -1.2 (2020); -2.5 (2021); -2.7 (2022); -2.8 (2023); -2.7 (2024); -2.6 (2025).
- Overall balance (cash basis, percent of GDP, baseline): -4.9 (2018); 0.2 (2019); -0.4 (2020); -2.2 (2021); -2.2 (2022); -2.5 (2023); -2.4 (2024); -2.3 (2025).
- Excluding grants (percent of GDP, baseline): -10.3 (2018); -6.9 (2019); -2.9 (2020); -9.7 (2021); -10.7 (2022); -9.9 (2023); -9.7 (2024); -8.9 (2025).

### Financing and debt dynamics
- Net financing (percent of GDP, baseline): 4.2 (2018); -0.1 (2019); 0.7 (2020); 2.2 (2021); 2.2 (2022); 2.5 (2023); 2.4 (2024); 2.4 (2025).
- Foreign (Including IMF) financing (percent of GDP): 1.2 (2018); -0.2 (2019); 0.2 (2020); 2.1 (2021); 2.3 (2022); 2.5 (2023); 2.4 (2024); 2.4 (2025).
- Domestic financing (percent of GDP): 3.0 (2018); 0.0 (2019); 0.5 (2020); 0.1 (2021); -0.1 (2022); 0.0 (2023); 0.0 (2024); 0.0 (2025).
- Public sector debt (percent of GDP, baseline): 16.5 (2018); 17.1 (2019); 19.6 (2020); 23.8 (2021); 27.1 (2022); 29.3 (2023); 30.0 (2024); 30.7 (2025).

### Monetary aggregates and credit
- Broad money (percent change): 10.3 (2018); 1.8 (2019); 8.5 (2020); 5.1 (2021); 4.6 (2022); 4.8 (2023); 5.5 (2024); 5.6 (2025).
- Money (percent change): 6.9 (2018); 1.3 (2019); 5.4 (2020); 3.1 (2021); 2.7 (2022); 2.9 (2023); 3.7 (2024); 3.7 (2025).
- Credit to the private sector (percent change, baseline): 7.2 (2018); 6.2 (2019); 1.2 (2020); 2.0 (2021); 2.0 (2022); 2.1 (2023); 2.8 (2024); 3.5 (2025).
- Velocity (GDP/end-year broad money): 3.6 (2018); 3.7 (2019); 3.5 (2020); 3.6 (2021); 3.6 (2022); 3.6 (2023); 3.6 (2024); 3.6 (2025).

### External sector and balance of payments
- Current account (percent of GDP, baseline): -4.3 (2018); -2.1 (2019); -2.8 (2020); -3.8 (2021); -5.5 (2022); -4.9 (2023); -4.4 (2024); -3.5 (2025).
- Current transfers (net, percent of GDP): 10.9 (2018); 13.8 (2019); 13.8 (2020); 13.5 (2021); 13.6 (2022); 13.4 (2023); 13.4 (2024); 13.2 (2025).
- Exports of goods and services (percent of GDP): 10.7 (2018); 11.9 (2019); 12.9 (2020); 12.3 (2021); 12.4 (2022); 12.5 (2023); 12.6 (2024); 12.6 (2025).
- Imports of goods and services (percent of GDP): 26.5 (2018); 28.4 (2019); 30.0 (2020); 30.1 (2021); 31.8 (2022); 31.1 (2023); 30.6 (2024); 29.5 (2025).
- Trade balance (percent of GDP, baseline): -15.1 (2018); -15.9 (2019); -17.1 (2020); -17.4 (2021); -19.1 (2022); -18.4 (2023); -17.9 (2024); -17.0 (2025).

### Reserves and external liquidity
- Gross international reserves (end of period, millions of U.S. dollars, baseline): 160.0 (2018); 209.3 (2019); 198.4 (2020); 196.4 (2021); 197.7 (2022); 201.3 (2023); 208.2 (2024); 217.0 (2025).
- Reserves in months of imports of goods & services: 7.2 (2018); 8.2 (2019); 6.7 (2020); 6.6 (2021); 5.9 (2022); 5.8 (2023); 5.8 (2024); 5.7 (2025).
- Nominal GDP (CF millions): 450,159 (2018); 469,217 (2019); 490,958 (2020); 521,084 (2021); 550,382 (2022); 581,086 (2023); 613,251 (2024); 647,681 (2025).
- GDP per capita (nominal, US Dollars, baseline): 1,256 (2018); 1,301 (2019); 1,386 (2020); 1,357 (2021); 1,397 (2022); 1,451 (2023); 1,501 (2024); 1,553 (2025).

### Policy scenario highlights (differences versus baseline)
- Policy scenario real GDP: 3.6 (2023); 3.9 (2024); 4.2 (2025) compared with baseline 3.5 (2023); 3.6 (2024); 3.7 (2025).
- Policy scenario current account (percent of GDP): -4.5 (2022); -4.4 (2023); -3.9 (2024); -2.4 (2025) versus baseline -5.5 (2022); -4.9 (2023); -4.4 (2024); -3.5 (2025).
- Policy scenario gross international reserves (millions of U.S. dollars): 198.8 (2022); 203.7 (2023); 214.4 (2024); 231.1 (2025) versus baseline 197.7 (2022); 201.3 (2023); 208.2 (2024); 217.0 (2025).
- Policy scenario public sector debt (percent of GDP): 26.1 (2022); 28.2 (2023); 28.8 (2024); 29.2 (2025) versus baseline 27.1 (2022); 29.3 (2023); 30.0 (2024); 30.7 (2025).

### Fiscal and policy implications signaled by the data
- Grants and transfers are a large and persistent share of government and national income: total grants 5.4 percent of GDP (2018) rising to 7.1 percent (2019) and remaining material through projections.
- Excluding grants, the fiscal balance is substantially weaker: excluding grants -10.3 percent of GDP (2018) and projected -8.9 percent of GDP (2025) in the baseline.
- External transfers (private and official) substantially offset Comoros’ large trade deficits: current transfers net 10.9 percent of GDP (2018) and projected 13.2 percent of GDP (2025, baseline).
- Growth in credit to the private sector remains weak: credit to the private sector growth 7.2 percent (2018); 6.2 percent (2019); 1.2 percent (2020); projected 3.5 percent (2025, baseline).
- Fiscal space remains constrained: primary domestic balances are negative across the projection period (e.g., domestic primary balance -2.6 percent of GDP in 2025, baseline), while public debt rises over time.

*Sources: Comorian authorities; IMF staff estimates and projections.*

### Annex I. Social Spending and Social Outcomes in Comoros

### Annex I. Social Spending and Social Outcomes in Comoros

### Overview
- Social outcomes are mixed: poverty is broadly in line with the average of lower-middle income countries (LMICs), while overall SDG attainment and education and health outcomes are weak (close to the SSA average).
- Remaining poverty and weak SDG outcomes weigh on population wellbeing and the economy’s growth potential.
- Staff advises raising the volume of efficient elements of social spending while preserving debt sustainability and improving spending efficiency.

### Poverty, SDG Performance, and Human Capital
- Poverty and trends
  - Poverty declined by 10 percentage points during 2004–13.
  - Using a poverty line of U.S.$3.2 per day, 38 percent of the population are poor (compared to an average 67 percent in SSA and 44 percent in LMICs).
  - Using a poverty line of U.S.$1.9 per day, 18 percent are extremely poor (compared to an average 41 percent in SSA and 14 percent in LMICs).
  - Among the extremely poor, the depth of poverty is limited (6 percent).
  - Risk of poverty is higher among those who do not receive remittances and the rural population.
- SDG and human capital indicators
  - Overall SDG index value: 53 in Comoros versus 54 in SSA and 68 in middle-income countries.
  - Only 37 percent of 15–19-year-olds are able to read.
  - Infant mortality: 57 per 1,000 births.
  - Childhood stunting: 31 percent of children are affected.
  - World Bank Human Capital Index (aggregate score): 0.41 in Comoros (compared to 0.40 for SSA and 0.48 for LMICs) — "a child in Comoros can expect to be only 41 percent as productive as a child benefitting from ideal health and education services."

### Social Assistance: Coverage and Constraints
- Government social assistance is very limited and financed from general revenue.
- Government social assistance policy focuses on labor-intensive public works, cash transfers to households, and measures to reduce malnutrition.
  - Present implementation: a cash-for-work program reaches about 5,000 families; other policy elements are not being implemented, likely due mainly to insufficient funds.
- The World Bank and UNICEF operate two transfer programs that partially fill the gap.
- The limited depth of extreme poverty suggests that additional transfers could lower extreme poverty at low cost.
- Note on social insurance: the government runs a retirement fund providing pensions to 10 percent of the population over 65 years old; staff will aim to better understand contribution-financed social insurance.

### Education and Health Spending: Volume and Efficiency
- Education
  - Public spending on education: 4.2 percent of GDP in Comoros vs. 4 percent of GDP in SSA.
  - Spending appears to go almost entirely to teachers’ salaries; spending on education infrastructure and supporting services (e.g., teacher training) is very low.
  - Consequences: notionally one of the highest teacher-to-student ratios in SSA, substantial teacher absenteeism, weak teacher quality, and underdeveloped education infrastructure.
- Health
  - Public spending on health: 1.0–1.4 percent of GDP in Comoros vs. 1.8 percent of GDP in SSA.
  - Spending also appears concentrated in salaries with very low spending on infrastructure.
  - Consequences: few hospitals providing limited services; many Comorians seek treatment abroad.
  - Authorities have started building a large new hospital in the capital, financed in part by a large non-concessional loan; plans for funding its operation are unclear.

### Policy Recommendations and Priorities
- Raise both the volume and the efficiency of health and education spending while preserving debt sustainability.
- Efficiency improvements
  - Consult with the World Bank on efficiency measures.
  - Education high-impact items: teacher training, provision of school materials, and school maintenance; reduce gender gap in education outcomes.
  - Health high-impact items: improvement of primary care through co-financing of vaccination, better provision of medicines for health centers, improving health insurance for the poor, and maintaining facilities; prioritize primary care over building one large hospital while resources are limited.
- Volume and fiscal balance
  - Address the tension between raising spending and preserving debt sustainability mainly by raising revenue and containing unproductive spending.
  - Expand transfers to the poor in the near term, given limited depth of extreme poverty and low cost of additional transfers.
- Implementation guidance
  - Focus scarce resources on high-impact, efficient spending items first (e.g., primary health care, teacher training, school materials) rather than large capital projects whose recurrent costs and financing may be unclear.

*Source: IMF staff (Annex I. Social Spending and Social Outcomes in Comoros).*

### 0.1 percent of 2018 GDP) a three-year loan contracted with the local representative of India’s

### 1comea2020002 - 0.1 percent of 2018 GDP) a three-year loan contracted with the local representative of India’s

### Coverage of Contingent Liabilities
- Text Table 2: Coverage of the Contingent Liabilities’ Stress Test — sources: Comorian authorities, and IMF staff.
- Country's coverage of public debt includes: the central government, central bank, government-guaranteed debt.
- Other elements of the general government not captured in 1.: 0 percent of GDP.
- Estimated domestic arrears: 1.8 percent of GDP.
- SoE's debt (guaranteed and not guaranteed by the government) 1/: 2 percent of GDP.
- PPP: 35 percent of PPP stock; 0.0 reported in table cell.
- Financial market (the default value of 5 percent of GDP is the minimum value): 5 percent of GDP; reported 7.1 percent of GDP after inclusion of SNPSF resolution plan cost.
- Total (2+3+4+5) (in percent of GDP): 10.9.
- Note 1/: The default shock of 2% of GDP will be triggered for countries whose government-guaranteed debt is not fully captured under the country's public debt definition (1.). If it is already included in the government debt (1.) and risks associated with SoE's debt not guaranteed by the government is assessed to be negligible, a country team may reduce this to 0%.

### Nominal Stock of External PPG Debt, 2018 (Table highlights)
- Total External Debt: 224.1 (Millions of U.S. dollars; end-of-period).
- Multilateral Creditors: 30.3
  - IMF: 11.0
  - IDA: 19.3
- Bilateral Creditors: 145.0
  - Saudi Arabia: 44.9
  - India: 38.9
  - China: 30.9
  - Kuwait: 25.9
  - France: 3.4
  - Mauritius: 0.9
  - Others: 48.8
- Excludes $2.72mn of hospital debt owed by Comoros to France that is the subject of ongoing negotiations.
- The Mauritius loan and its arrears were canceled in early 2019.
- Source: Comorian authorities.

### Recent Borrowing and Assumptions
- World Bank recently provided a non-zero ceiling for non-concessional borrowing of Euro 25 million.
- Loan contracted in 2018 from the Eastern and Southern African Trade and Development Bank (TDB) to finance El-Maarouf hospital: US$10 million disbursed in 2019; remaining amount assumed disbursed equally in 2020 and 2021 in this DSA.
- Financing terms of the loan from TDB: a 7.5 percent floating interest rate, 10 years maturity, with no grace period; fees raise the effective interest rate by one half of one percentage point.
- Projections include concessional financing of US$ 82 million from a Chinese bank between 2019 and 2021 and non-concessional financing of Euro 25 million from the TDB between 2019 and 2021.
- DSA assumes all contracted-but-undisbursed loans will be fully disbursed as planned.

### Macroeconomic Forecasts (baseline and comparisons)
- Baseline includes October 2019 WEO assumptions and latest available information on Comoros’ debt.
- Revised GDP series and projections:
  - Growth expected to accelerate from 3.6 percent in 2018 and over the medium to 3.8 percent over the longer term.
- Cyclone Kenneth expected to bring volatility in 2019 and 2020.
- Inflation:
  - Expected to reach 3.3 percent in 2019, 1.4 percent in 2020, and 2 percent over the medium-to long-term.
- External sector:
  - Current account deficit (CAD): projected 3.8 percent of GDP in 2019 and 5.5 percent of GDP in 2020, compared to 2.8 percent of GDP in 2018.
- Fiscal:
  - 2019 overall fiscal deficit on a cash basis expected to widen to 2.2 percent of GDP (from 0.4 percent of GDP in 2018), including grants.
  - Fiscal revenue expected to decline by 2.7 percentage points to 8.7 percent of GDP in 2019.
  - Starting in 2020, deficit averaging 2.3 percent of GDP over the long-run.
- External borrowing:
  - New borrowings on concessional terms projected to rise over the medium term.
  - Grant element of new borrowing assumed about 35 percent.
- Domestic borrowing:
  - Expected to remain very limited; projected to reach 4.5 percent of GDP in 2039 under baseline.

- Selected projection table (2019-2025 / 2029 / 2039):
  - GDP Growth Rate (percent): 3.3; 3.5; 3.6 (baseline columns show 3.5; 3.8; 3.8 comparators)
  - Inflation, end of period (percent): 2.1; 2.0; 2.0 (comparators 2.2; 2.0; 2.0)
  - Government Revenues and Grants (percent of GDP): 10.1; 10.8; 11.4 (comparators 9.3; 9.9; 10.4)
  - Overall Fiscal Balance (percent of GDP): -2.4; -2.2; -2.3 (comparators -2.3; -2.2; -2.4)
  - FDI (percent of GDP): 0.8; 1.1; 1.2 (comparators 0.7; 1.1; 1.2)
  - Current Account Deficit (Percent of GDP): 5.7; 3.5; 1.8 (comparators 4.2; 3.5; 3.0)
  - Export of Goods and Services (annual percentage growth): 5.4; 6.0; 6.6 (comparators 5.1; 6.0; 6.3)
  - Import of Goods and Services (annual percentage growth): 5.4; 5.3; 5.6 (comparators 5.2; 6.0; 5.7)

### Debt Arrears
- Authorities’ action plan to clear external arrears between April 2018 and March 2019 not executed due to reduced revenue and Cyclone Kenneth.
- Agreement with Mauritius authorities to cancel loan of US$0.9 million (arrears estimated at US$0.8 million) reached in early 2019.
- External arrears reached US$5.7 million or 0.5 percent of 2019 GDP at end-November 2019:
  - Arrears of US$2.5 million (0.2 percent of GDP) to bilateral creditors France, Kuwait, India, and Saudi Arabia.
  - 0.3 percent of GDP to the Arab Bank for Economic Development in Africa.
- Baseline and policy scenario assume clearance of all external arrears by end-2020, in line with authorities’ July 2019 Letter of Intent.
- Authorities engaged in discussions with BADEA regarding rescheduling of debt service and regularization of arrears.
- Domestic arrears stock tentatively estimated KMF 9.1 billion (1.8 percent of GDP) at end-2018; included in contingent liability test pending exhaustive audit.
- Authorities committed to an audit of domestic arrears, including cross-arrears between the state and SOEs, subject to grant financing for such an audit.

### Country Classification and Stress Test Scenarios
- Debt carrying capacity assessed as medium; CI based on 2018 CPIA and October WEO 2019 is 2.97.
- Under medium capacity thresholds:
  - PV of debt-to-GDP ratio: 40 percent
  - PV of debt-to-exports ratio: 180 percent
  - Debt service-to-exports ratio: 15 percent
  - Debt service-to-revenue ratio: 18 percent
- Benchmark for PV of total public debt: 55 percent of GDP.
- Comoros qualifies for the natural disaster scenario; size of shock fixed at 10 percent of GDP.

### External Debt Sustainability — Findings from the DSA
- External debt distress rating maintained at moderate.
- All debt and debt service indicators remain below thresholds under baseline macroeconomic assumptions but show upward long-run trends.
- Stress tests/alternative scenarios highlight vulnerability to:
  - Natural disasters,
  - Shocks to exports (identified as most extreme for PV external debt-to-exports and debt service-to-exports ratios),
  - Depreciation (identified as most extreme for debt service-to-revenue ratio).
- PV of external debt-to-exports ratio shows limited space to absorb shocks; projected to reach 161 percent in 2029 (exceeding 140 percent threshold beyond which space is assessed as limited).
- Other indicators have substantial space.
- Policy scenario effects:
  - Fiscal deficit moderately lower: 1.9 percent of GDP (policy) vs. 2.3 percent of GDP (baseline).
  - Long-term growth of exports increased to 4.8 percent of GDP (policy) vs. 3.8 percent (baseline).
  - Current account deficit lower in long term: 1.8 percent of GDP (policy) vs. 3 percent (baseline).
  - Capacity to absorb shocks improves from “limited” to “some” space under policy scenario.

### Total Public Debt Sustainability
- Public-sector domestic debt small: projected rise from 0.1 percent of GDP in 2019 to 4.5 percent of GDP in 2039 (baseline).
- Under policy scenario, domestic debt projected to reach 7 percent of GDP in 2039.
- No breaches of public debt benchmark under baseline or adverse scenarios.
- PV of total PPG debt-to-GDP increases from 14 percent in 2019 to 29.3 percent in 2039, remaining well below benchmark.
- Natural disasters are the most extreme shock for PV of debt-to-GDP and PV of debt-to-revenue; one-time depreciation is most extreme for debt service-to-revenue ratio.

### Risk Rating and Vulnerabilities
- External debt distress rating: “moderate” with limited space to absorb shocks.
- Under current policies, Comoros may slide into high risk of external debt distress in the next few years due to potential breach of PV of external debt-to-exports ratio.
- Adverse scenarios continue to emphasize vulnerabilities from:
  - Deterioration of export performance,
  - Natural disasters,
  - Exchange rate shocks under the peg to the Euro.

*Source: IMF staff and Comorian authorities (from the provided DSA excerpt).*

### 21.      The policy adjustment scenario boosts Comoros’ capacity to absorb shocks from

### 21.      The policy adjustment scenario boosts Comoros’ capacity to absorb shocks from

### Policy implications and authorities’ views
- The policy adjustment scenario changes Comoros’ capacity to absorb shocks from “limited” to “some” space.
- Critical actions under the scenario:
  - Make faster progress on domestic resource mobilization.
  - Proceed cautiously on taking up new concessional debt.
  - Tightly limit the taking up of new non-concessional debt.
- Authorities’ views:
  - Authorities acknowledge the importance of maintaining the risk of debt distress at “moderate” and building space to absorb shocks.
  - They understand the importance of strengthening policies as described in the policy scenario, and of seeking grants and concessional financing and avoiding, as much as possible, non-concessional financing.
  - They reiterated their intention to clear all external arrears by end-2020, if possible.
  - Authorities requested technical assistance from the World Bank to improve debt management, including on debt reporting.

### External Debt Sustainability — Baseline scenario (selected indicators, 2016–39)
- External debt (nominal), of which PPG:
  - 2016: 16.4
  - 2017: 17.0
  - 2018: 19.6
  - 2019: 23.8
  - 2020: 26.9
  - 2021: 29.3
  - 2022: 30.0
  - 2023: 30.6
  - 2024: 31.2
  - 2029: 33.1
  - 2039: 20.2 (note: table columns include projections and a 2039 column)
- Change in external debt:
  - 2016: 2.5
  - 2017: 0.5
  - 2018: 2.7
  - 2019: 4.1
  - 2020: 3.2
  - 2021: 2.3
  - 2022: 0.7
  - 2023: 0.6
  - 2024: 0.6
  - 2029: 0.4
  - 2039: 0.4
- Identified net debt-creating flows:
  - 2016: 3.4
  - 2017: 0.8
  - 2018: 0.7
  - 2019: 3.1
  - 2020: 3.8
  - 2021: 3.3
  - 2022: 2.7
  - 2023: 2.3
  - 2024: 1.6
  - 2029: -0.2
  - 2039: -2.0
- Non-interest current account deficit:
  - 2016: 4.3
  - 2017: 2.1
  - 2018: 2.7
  - 2019: 3.7
  - 2020: 5.3
  - 2021: 4.6
  - 2022: 4.0
  - 2023: 3.7
  - 2024: 3.4
  - 2029: 1.8
  - 2039: 0.0
- Exports and imports (percent of GDP):
  - Exports: 2019: 12.3; 2020: 12.4; 2021: 12.5; 2023: 12.6; 2029: 13.2
  - Imports: 2019: 30.1; 2020: 31.8; 2021: 31.1; 2023: 30.6; 2029: 26.4
- Net current transfers (negative = inflow):
  - 2019: -13.5; 2020: -13.6; 2021: -13.4; 2023: -13.3; 2029: -12.9
  - Official transfers (of which: official): 2019: -1.4; 2020: -1.5; 2021: -1.4; 2029: -1.1
- Endogenous debt dynamics (contributions):
  - Contribution from nominal interest rate: generally 0.1–0.5 over series
  - Contribution from real GDP growth: negative contributions ranging from -0.4 to -1.5 across projections
- Residual (includes exceptional financing, valuation adjustments):
  - 2016: -0.9; 2017: -0.2; 2018: 2.0; 2019: 1.0; 2020: -0.7; 2021: -1.0; 2022: -2.0; 2023: -1.7; 2024: -1.0; 2029: 0.6; 2039: -3.4

### External Debt — Key sustainability ratios (Baseline)
- PV of PPG external debt-to-GDP ratio (selected projected values):
  - 2023: 17.6
  - 2024: 17.8
  - 2029: 24.9
- PV of PPG external debt-to-exports ratio (selected values):
  - 2023: 147.5
  - 2024: 150.5
  - 2029: 188.5
- PPG debt service-to-exports ratio (selected values):
  - 2019: 7.9
  - 2020: 5.8
  - 2021: 6.3
  - 2028: 8.7
  - 2029: 10.7
- PPG debt service-to-revenue ratio (selected values):
  - 2019: 11.2
  - 2020: 8.2
  - 2021: 8.8
  - 2028: 11.4
  - 2029: 13.9
- Gross external financing need (Million of U.S. dollars):
  - 2019: 51.0
  - 2020: 66.6
  - 2021: 63.2
  - 2028: 52.8
  - 2029: 38.2

### Policy Adjustments Scenario — Selected outcomes (2016–39)
- External debt (nominal) — PPG:
  - 2019: 23.8
  - 2020: 26.1
  - 2021: 28.2
  - 2022: 28.7
  - 2023: 29.2
  - 2024: 29.5
  - 2025: 29.7
  - 2026: 30.0
  - 2027: 30.3
  - 2028: 30.6
  - 2029: 30.8
  - 2039: 20.2
- Change in external debt (policy adjustments):
  - 2019: 4.1
  - 2020: 2.3
  - 2021: 2.1
  - 2022: 0.5
  - 2023: 0.5
  - 2024: 0.3
  - 2025: 0.2
  - 2029: 0.2
  - 2039: -0.8
- Identified net debt-creating flows (policy adjustments):
  - 2019: 3.1
  - 2020: 2.8
  - 2021: 2.9
  - 2022: 2.3
  - 2023: 1.6
  - 2024: 0.6
  - 2025: 0.2
  - 2026: -0.1
  - 2027: -0.2
  - 2029: -0.1
  - 2039: -1.2
- Non-interest current account deficit (policy adjustments):
  - 2019: 3.7
  - 2020: 4.3
  - 2021: 4.2
  - 2022: 3.6
  - 2023: 3.0
  - 2024: 2.4
  - 2025: 2.1
  - 2026: 1.8
  - 2027: 1.8
  - 2029: 1.9
  - 2039: 1.0
- Residual (policy adjustments):
  - 2016: -0.9; 2017: -0.2; 2018: 2.0; 2019: 1.0; 2020: -0.6; 2021: -0.7; 2022: -1.7; 2023: -1.1; 2024: -0.3; 2029: 0.4; 2039: -3.4

### Policy Adjustments — Key sustainability indicators (selected)
- PV of PPG external debt-to-GDP ratio (policy adjustments, selected):
  - 2021: 10.9
  - 2022: 13.8
  - 2023: 15.6
  - 2024: 17.0
  - 2029: 19.6
- PV of PPG external debt-to-exports ratio (policy adjustments, selected):
  - 2021: 84.7
  - 2022: 111.8
  - 2023: 125.5
  - 2024: 135.7
  - 2029: 138.8
- PPG debt service-to-exports ratio (policy adjustments, selected):
  - 2019: 7.9
  - 2020: 5.8
  - 2021: 6.2
  - 2026: 7.4
  - 2029: 7.8
- PPG debt service-to-revenue ratio (policy adjustments, selected):
  - 2019: 11.2
  - 2020: 8.2
  - 2021: 8.6
  - 2027: 11.9
  - 2029: 12.9
- Gross external financing need (Million of U.S. dollars, policy adjustments):
  - 2019: 51.0
  - 2020: 54.4
  - 2021: 57.2
  - 2022: 53.4
  - 2029: 40.2

### Fiscal and macro assumptions underpinning projections (selected)
- Real GDP growth (percent):
  - Baseline and policy adjustments: projections range from 1.9 to 4.8 in various years; policy adjustments list 2024: 4.2; 2025: 4.4; 2029: 4.8; long-run: 3.3 and 4.0 in memoranda.
- GDP deflator in US dollar terms (change in percent):
  - Selected values: 2016: 1.3; 2018: 5.6; 2019: -1.3; 2020: 1.2; 2029: 1.9; memoranda: -0.5 and 1.9 in different columns.
- Effective interest rate (percent):
  - Range: 0.5, 0.4, 0.6, 0.7, 0.9, 1.1, 1.2, 1.3 in projections.
- Government revenues (excluding grants, percent of GDP):
  - 2016: 8.0; 2017: 9.4; 2018: 10.6; 2019: 8.7; 2020: 8.8; 2021: 9.0; 2029: 8.9; memoranda: 8.6 and 9.2.
- Grant element of new public sector borrowing (percent) under policy adjustments (selected):
  - 2020: 37.4; 2021: 40.9; 2022: 43.2; 2023: 49.5; 2024: 51.1; 2025: 50.7; 2026: 49.8; 2027: 48.4; 2028: 47.3; 2029: 46.7; 2039: 43.6
- Aid flows (Million of US dollars, policy adjustments):
  - 2019: 80.5; 2020: 69.7; 2021: 71.0; 2022: 55.8; 2023: 61.3; 2024: 63.3; 2025: 66.9; 2026: 72.4; 2027: 78.1; 2028: 81.7; 2029: 85.4; memoranda: 116.8
- Grant-equivalent financing (percent of GDP, policy adjustments, selected):
  - 2020: 4.9; 2021: 3.7; 2022: 3.5; 2023: 2.6; 2024: 2.6; 2025: 2.6; 2026: 2.5; 2027: 2.5; 2028: 2.4; 2029: 2.4; 2039: 1.6
- Grant-equivalent financing (percent of external financing, policy adjustments, selected):
  - 2020: 56.4; 2021: 58.9; 2022: 59.2; 2023: 65.2; 2024: 65.5; 2025: 65.3; 2026: 64.5; 2027: 62.8; 2028: 61.4; 2029: 60.8; memoranda: 61.8

### Public sector debt — Policy adjustments scenario (selected)
- Public sector debt (percent of GDP):
  - 2019: 23.8
  - 2020: 26.2
  - 2021: 28.3
  - 2022: 28.8
  - 2023: 29.3
  - 2024: 29.6
  - 2025: 33.0
  - 2026: 36.7
  - 2029: 20.8 (table includes multiple columns; these are selected values as presented)
- Identified debt-creating flows (public DSA, policy adjustments):
  - 2019: 3.3
  - 2020: 6.4
  - 2021: 7.7
  - 2022: 7.8
  - 2023: 8.0
  - 2024: 7.7
  - 2025: 7.6
  - 2026: 6.9
  - 2027: 8.3
  - 2028: 1.5
  - 2029: 7.3
- Primary deficit (percent of GDP, public DSA, policy adjustments):
  - 2019: 6.9
  - 2020: 9.1
  - 2021: 9.2
  - 2022: 9.4
  - 2023: 9.2
  - 2024: 9.2
  - 2025: 9.2
  - 2026: 8.5
  - 2027: 10.1
  - 2028: 2.4
  - 2029: 8.7
- PV of public debt-to-GDP ratio (policy adjustments, selected):
  - 2023: 17.0
  - 2024: 17.4
  - 2029: 26.5
- Debt service-to-revenue and grants ratio (policy adjustments, selected):
  - 2019: 8.6
  - 2020: 7.1
  - 2021: 7.9
  - 2027: 20.9
  - 2029: 33.0
- Gross financing need (percent of GDP, policy adjustments, selected):
  - 2019: 7.9
  - 2020: 9.8
  - 2021: 10.0
  - 2025: 10.1
  - 2029: 13.3

*Sources: Country authorities; and staff estimates and projections.*

### Annex V. External Stability Assessment

### Annex V. External Stability Assessment

### Overall assessment
- Comoros’ external stability is at only limited risk in the short to medium term, but longer-term risks are substantial.
- Short-to-medium-term factors supporting stability:
  - External position at end-2019 is assessed to be broadly consistent with fundamentals and desirable policy settings.
  - Regular inflow of large remittances is a stabilizing element.
  - Risks from sudden changes in (non-FDI) capital flows are small because the capital account remains largely closed.
- Longer-term risks and uncertainties:
  - Foreign exchange coverage has fallen to slightly less than adequate levels and is projected to gradually decline further.
  - Foreign exchange inflows depend in part on volatile foreign aid and a narrow range of exports subject to shocks such as natural disasters.
  - Inhospitable business climate and capacity constraints impede competitiveness and export growth.
  - Lack of data on the net international investment position prevents application of the EBA light external sustainability analysis, increasing uncertainty.
- Mitigating factor: Limited external gross public debt combined with a largely closed capital account suggests risks to external sustainability are likely limited.

### A. External sector — recent developments
- Cyclone Kenneth (struck Comoros in April 2019):
  - Expected adverse impact on the current account over the next few years.
  - Increased imports of goods for reconstruction and deceleration of exports of goods lead to a projected current account deficit averaging 4.3 percent of GDP over the 2020–25 period.
  - Foreign aid and private transfers will not fully offset the impact on reserves.
- Foreign aid volatility:
  - Despite substantial aid promises after Cyclone Kenneth, the additional aid has not materialized so far.
  - Public transfers dropped in 2019 and are expected to stabilize at 1.4 percent of GDP over 2020–23.
  - Gross international reserves expected to continue decreasing in months of imports of goods and services before stabilizing at 5.7 months from 2023 on.
- Narrow export base and vulnerability:
  - Three products constitute more than 80 percent of Comoros’ goods exports over 2010–19:
    - cloves (58 percent)
    - vanilla (12 percent)
    - ylang-ylang (11 percent)
  - Vulnerable to price volatility and shocks such as natural disasters.
  - Policy priorities include boosting export of staple products and their higher-value varieties and strengthening other promising exports, such as tourism.
- Financing structure:
  - The trade deficit is financed principally by remittances.
  - Capital and financial accounts are marked by limited FDI and debt relief.

### B. External position assessment
- Comoros is assessed to be “credit constrained” because it does not regularly borrow from international capital markets and is not rated to be “investment grade” (borrowing from international capital markets defined as at least one issuance of bonds per year in the last five years).
- Methodology:
  - Staff used the revised EBA-lite Current Account (CA) model, Index of the Real Effective Exchange Rate (IREER) approach, and judgment.
  - Models establish CA and IREER “norms” based on fundamentals and desirable policy settings, and decompose gaps into policy-related, shock-related, and unexplained residuals.
  - External sustainability (ES) approach could not be used due to absence of international investment position data for Comoros.
- Model results and judgment at end-2019:
  - CA approach:
    - Model-based CA deficit norm of 5.3–5.4 percent of GDP.
    - Difference with the observed CA (the “CA Gap”) of 0.8-1 percentage points of GDP.
    - Policy gap of 1.3 percentage points of GDP, mainly because public health spending (at 1.0–1.4 percent of GDP) is much below the desirable level of 2–3.2 percent of GDP.
  - IREER approach:
    - Very small difference between observed REER and its norm, with a misalignment of 2.3 and to 2.6 percent.
- EBA-lite table summary (end-2019):
  - CA model (Current Account Balance/GDP)
    - ICRG: proxied by WGI of comparators — Norm: -5.4 | Actual: -3.8 | CA Gap (percent): 1.0
    - ICRG: LICs average — Norm: -5.4 | Actual: -3.8 | CA Gap (percent): 0.9
    - ICRG: Fragile States average — Norm: -5.3 | Actual: -3.8 | CA Gap (percent): 0.8
  - IREER (log REER)
    - ICRG: proxied by WGI of comparators — Norm: 4.564 | Actual: 4.587 | REER Gap (percent): 2.3
    - ICRG: LICs average — Norm: 4.563 | Actual: 4.587 | REER Gap (percent): 2.4
    - ICRG: Fragile States average — Norm: 4.561 | Actual: 4.587 | REER Gap (percent): 2.6

### C. Reserve adequacy
- IMF reserve adequacy metric (for credit-constrained countries) compares current international reserves with an optimal level balancing marginal benefits and costs.
- Optimal level for Comoros using the small state classification: 6.8 months of goods and services imports.
- Actual reserves at end-2019: 6.6 months of imports — slightly below the optimal level.
- Projection: gross international reserves expected to stabilize at 5.7 months from 2023 on (see above under recent developments).

### D. Structural competitiveness
- Business environment and governance:
  - Comoros ranks 160 out of 190 countries on the 2020 World Bank Doing Business Indicators.
  - Major weaknesses: enforcing contracts (179th), resolving insolvency (168th), paying taxes (168th), starting a business (158th), protecting minority investors (162th).
  - Underperforms in the four CPIA clusters against SSA average; CPIA scores over 2008-18 suggest little progress in structural reforms and social inclusion and equity.
- Human development and human capital:
  - HDI for 2017 ranks Comoros at 165 out of 189 countries and territories (low human development category).
  - HDI value increased from 0.449 to 0.503 between 2004 and 2017, but improvement remains among the lowest in SSA countries.
  - World Bank human capital index suggests Comoros’ human capital remains very limited (near the SSA average).
- Implication: Weak business climate and limited human capital undermine export growth and longer-term external stability; easing the complexities of doing business and strengthening human capital are important for external stability.

### Status of recommendations from 2018 Article IV consultation and July 2019 LOI commitments
- Implementation of 2018 Article IV recommendations — selected items and status:
  - Achieving fiscal sustainability:
    - Action plan for tax administration and customs: Limited progress.
    - PFM reforms to strengthen budget execution: Limited progress; progress toward budget credibility in the 2020 budget law and initial efforts on “ghost workers” and GISE software.
    - Budgeting revenues and expenses of SCH and MAMWE relating to the fuel subsidy: Done (budgeted in 2019 and 2020 budgets).
    - Audit of domestic payment and cross-arrears: Not done; authorities committed subject to grant financing.
    - Public investment management and public investment strategy: Not done.
  - Safeguarding external sustainability:
    - Maintain substantial international reserves buffer: Limited progress; foreign reserves coverage fell to slightly less than adequate levels due to cyclone impacts.
    - Prudent debt management and reliance on concessional borrowing: Limited progress; risk of external debt distress remains “moderate” but space to absorb shocks declined to “limited”; authorities took a large non-concessional loan for a hospital.
    - Automatic payment mechanism for external debt service payments: Not done.
  - Modernizing monetary policy and financial stability:
    - Address financial sector vulnerabilities and high NPLs: Some progress in strengthening bank supervision; poor asset quality and troubles of SNPSF remain risks.
    - AML/CFT framework alignment: Limited progress; authorities formulated and begun implementing a time-bound action plan to address GIABA shortcomings; Penal Code revised with target approval by National Assembly before April 2020 ahead of May 2020 GIABA Plenary.
    - Identify funds to resolve SNPSF: Limited progress; authorities agreed SNPSF should be restructured and are working with the World Bank on options.
  - Macro-critical structural reforms:
    - Improve statistical capacity and economic data provision: Some progress; national accounts updated adopting the 1993 SNA methodology.
    - Address infrastructure gaps, electricity supply, governance, gender inequality: Limited progress; some progress on electricity, governance remains weak, pronounced gender inequality in educational outcomes per World Bank SCD.
- July 2019 Letter of Intent (LOI) commitments — selected commitments and implementation status (about half a year elapsed since LOI):
  - Strengthen tax administration: In progress (improved follow-up with defaulting taxpayers; mixed tax/customs brigade conditions improved but brigade not fully operational).
  - Strengthen credibility, transparency, accountability of PFM (realistic 2020 budget law, better TSA implementation, audit domestic arrears): In progress (realistic 2020 budget; TSA use improved; audit of arrears not yet commissioned).
  - Contain civil service wage bill without lowering services: In progress (wage bill stabilized; computerizing wage management; initial efforts on absentee and “ghost workers”).
  - Enhance oversight of state enterprises: In progress (main SOEs signed performance contracts).
  - Carry out prudent borrowing policy to contain external debt distress at “moderate”: In progress (risk remains moderate; under current policies Comoros may slide into high risk in coming years).
  - Strengthen financial sector supervision and resolve SNPSF: In progress (some progress in supervision; SNPSF restructuring options with World Bank).
  - Enable a Safeguards Assessment of the Central Bank: Done.
  - Build resilience to natural disasters: In progress (early stages; receiving donor support to enhance infrastructure resilience and integrated risk management).
  - Assist most vulnerable affected by the cyclone: Unknown (humanitarian partners provided emergency aid and Directorate of Civil Security helped distribute aid; unclear extent to which needs of most vulnerable were met).

*Source: IMF staff estimates.*

### Annex VIII. Capacity Development Strategy

### Annex VIII. Capacity Development Strategy

### Macroeconomic Environment
- Key challenges: overcome fragility; relax fiscal resource constraints to enable greater public investment and social spending; enhance economy’s resilience.
- Present key risks: short-term fiscal stresses and risk of longer-term debt distress; risk of financial sector stress; risk of economic dislocation from natural disasters.
- Governance: improvements in governance capacity are essential.
- Coordination: Fund departments and the country team maintain close contact with the Comorian authorities to align capacity development activities with needs.

### Assessment of Capacity Development to Date
- Intensity: Comoros has continued to benefit from intense capacity development efforts since the last Article IV consultation.
- Focus: Bulk of missions took place in the fiscal domain, principally revenue administration and PFM; national statistics agency received support for revising national accounts data and developing a harmonized price index.
- Outcomes:
  - Dialogue: Missions engaged in fruitful technical-level dialogue with authorities.
  - Progress: Observed progress in strengthening capacity has been slow.
  - Revenue: Revenue performance remains limited.
  - PFM: Reforms to enhance budget realism, streamline expenditures and improve project execution have advanced only slowly (Background Note on PFM).
  - Statistics: Downward trend in capacity has been stopped, but the gap to SSA and small states averages remains sizeable.

### Authorities’ Views
- Positive: Authorities believe Fund capacity development improved their capacity and helped implement several reforms, particularly in public finances.
- Examples of implemented reforms:
  - Creation and operation of the Single Treasury Account.
  - Adoption of new Tax and Customs codes.
  - Migration to a more modern customs data system (“ASYCUDA World”).
- Constraints: Authorities conceded that in some instances progress has been slow and reforms have not yet been implemented, citing principally a lack of human capacity.
- Preferences for future CD:
  - Hands-on delivery and on-site context.
  - Focus on training government officials in implementing existing regulations rather than producing additional reports.
  - Revenue administration, particularly Customs, highlighted as an area where hands-on training and monitoring would be helpful.
  - Noted that the presence of a resident advisor in Customs would be very useful.

### Capacity Development Priorities
- Agreed top priorities for coming years:
  - (i) continue to build capacity in revenue administration (both tax and customs agencies);
  - (ii) PFM (budget preparation and execution);
  - (iii) improve financial supervision and regulation;
  - (iv) help prepare contingency plans for responding to potential financial sector stress.
- Lesser priority areas:
  - Strengthening statistical capacity;
  - Debt data recording and reporting and Medium-Term Debt Management Capacity (authorities requested capacity building from the World Bank).
- Implementation approach: Given limited absorption capacity, Fund staff will focus CD on training officials in implementing existing regulations or previous recommendations and will clearly indicate priority ranking of any new recommendations.

- Top Priorities and Objectives (as listed):
  - Revenue Administration
    - Tax Administration Core Functions
    - Customs Administration Core Functions
    - Revenue Administration Management & Governance
  - Public Financial Management
    - Budget Preparation
    - Budget Execution & Control
    - Fiscal Reporting
    - PFM Laws & Institutions
  - Financial Supervision & Regulation
    - Risk-Based Supervision & Other Supervisory Processes
    - IFRS/Accounting for NPLs
    - Basel II/III Implementation
    - Financial Crisis Management Resolution Frameworks
    - Contingency Planning for Crises

### Relations with the Fund — Key Financial and Program Figures
- Membership: Joined September 21, 1976; Article VIII.
- Quota and holdings:
  - Quota 17.80 (SDR Millions) 100.00 percent quota.
  - Fund holdings of currency (Holdings Rate) 20.81 116.92.
  - Reserve position in Fund 2.93 16.48.
- SDR Department:
  - Net cumulative allocation 8.50 100.00.
  - Holdings 9.55 112.26.
- Outstanding Purchases and Loans:
  - RCF Loans 2.97 16.70.
  - Emergency Assistance 1 5.93 33.30.
  - ECF Arrangement 4.83 27.13.
- Latest Financial Arrangements:
  - ECF: Sep. 21, 2009 — Dec. 23, 2013; Amount Approved (SDR Million) 13.57; Amount Drawn (SDR Million) 13.57.
  - SAF: Jun. 21, 1991 — Jun. 20, 1994; Amount Approved (SDR Million) 3.15; Amount Drawn (SDR Million) 2.25.
- Overdue Obligations and Projected Payments to Fund (SDR millions; based on existing use of resources and present holdings of SDRs):
  - Forthcoming 2020: Principal 1.87; Charges/interest 0.10; Total 1.97.
  - Forthcoming 2021: Principal 1.40; Charges/interest 0.10; Total 1.51.
  - Forthcoming 2022: Principal 1.83; Charges/interest 0.10; Total 1.93.
  - Forthcoming 2023: Principal 3.43; Charges/interest 0.07; Total 3.50.
  - Forthcoming 2024: Principal 2.22; Charges/interest 0.02; Total 2.24.
- Implementation of HIPC Initiative:
  - Decision point date July 2010.
  - Assistance committed by all creditors (US$ Million) 4 144.80; Of which: IMF assistance (US$ million) 4.27 (SDR equivalent in millions) 2.89.
  - Completion point date December 2012.
  - Disbursement of IMF assistance (SDR Million): Assistance disbursed to the member 2.89; Interim Assistance - ; Completion Point balance 2.89; Additional disbursement of interest income 0.07; Total disbursements 2.97.

### Safeguards and Exchange Rate
- Safeguards Assessment (Banque Centrale des Comores, BCC):
  - BCC continues to face capacity constraints frequently encountered by small central banks.
  - External audit arrangements broadly aligned to international practices.
  - Needs: enhance transparency in financial reporting; align internal audit operations with international standards; strengthen system of internal controls; improve audit committee’s oversight.
  - Legal amendments needed to enhance the BCC’s autonomy.
- Exchange Rate Arrangements:
  - Currency: Comorian franc pegged to the Euro at €1 = CF 492.
  - Comoros has accepted obligations of Article VIII, Sections 2(a), 3, and 4 and maintains an exchange system free of restrictions on current international transactions.
- Article IV Consultation: Last concluded on June 13th, 2018 (Country Report No. 18/189). Directors emphasized need to create fiscal space, prioritize infrastructure and social spending, strengthen governance, reduce gender inequality, improve statistical capacity, and safeguard debt sustainability.

### Recent Technical Assistance (selection with dates and subjects)
- MCM, AFS Jan-16 Risk Based Supervision
- MCM Jan-16 Bank Supervision and Regulation
- STA Jan-16 Balance of Payments Statistics
- FAD Jan-16 Treasury Single Account
- FAD Jan-16 TADAT Assessment of the Comoros Tax Authority
- FAD, AFS Mar-16 Strengthen Customs Control on Non-Petroleum Excisable Goods Including Exemptions
- MCM Apr-16 Revisions to the Banking Law and Strengthening the Operational Framework for Monetary Policy
- MCM Mar-16 Bank Restructuring
- STA, AFS Apr-16 National Accounts
- STA Jun-16 Government Finance Statistics
- FAD, AFS Jun-16 Development of Customs Code Regulations - Offsite
- FAD Jul-16 Revenue Administration
- FAD, AFS Jan-17 PFM priority action plan for 2017-2019
- MCM, AFS Jan-17 Risk Based Supervision
- STA, AFS Apr-17 National Accounts
- AFS Apr-17 Revenue Administration
- MCM, AFS Apr-17 Risk Based Supervision
- STA, AFS May-17 Price Statistics
- AFS Jun-17 Development of Customs value evaluation
- AFS Jul-17 Revenue Administration
- FAD, AFS Aug-17 Macro-fiscal framework and budget credibility
- STA, AFS Aug-17 Consumer Prices/Producer Price
- MCM Sept-17 Introduction of Central Bank Securities
- AFS Sept-17 Pension Fund
- AFS Sept-17 Revenue Administration
- STA, AFS Dec-17 National Accounts
- AFS Jan-18 Pension Fund
- AFS Jan-18 Strengthening the Accounting System
- AFS May-18 Strengthening of large enterprises Service
- AFS May-18 National Accounts
- AFS May-18 Improve the preparation of the budgetary implementation
- STA June-18 Government Finance Statistics
- AFS Oct-18 National Accounts
- AFS Feb-19 Consumer Price Statistics
- AFS Feb-19 National Accounts
- AFS Aug-19 National Accounts
- FAD Sep-19 Tax Administration
- AFS Oct-19 Orientation Program
- FAD Nov-19 State Owned Enterprises Surveillance
- AFS Dec-19 Tax Administration
- AFS Dec-19 PFM Treasury Operations and Accounting

- Resident representation: Resident representative post established in September 1991 was closed in December 1995; reestablished in May 2012. Currently there is no resident representative in Moroni.

### Joint World Bank–IMF Work Program for 2020 — Key Structural Reform Areas and Division of Labor
- Agreed diagnosis: Comoros suffers from pronounced fragility with two interlocking vicious circles — political/institutional fragility and economic fragility. These limit investment and depress current and future growth.
- Macrocritical structural reforms and responsibilities:
  - Enhancing civil service management, governance, and rule of law (key improvements: strengthen civil service and judicial system). No Bank or Fund work planned in this area at present.
  - Improving local governance: WB lead; study to examine incentives and collaboration between traditional and formal governance systems.
  - Strengthening asset declaration regime for high-level officials: Fund lead.
  - Reform of tax and customs policy and administration: Fund lead (reduce tax and customs exemptions; strengthen large taxpayers’ unit; strengthen customs valuation procedures).
  - Reform of public financial management, including SOE oversight: Fund lead.
  - Strengthening financial sector regulation and supervision: Fund and Bank collaborating; Bank advising on restructuring SNPSF; Bank and Fund to coordinate.
  - Implementing a well-targeted growth strategy (Bank lead) — focus areas: electricity capacity, telecom, financial sector access, statistics, fisheries, reconstruction (post-Cyclone Kenneth), competitiveness of value chains in agriculture, tourism, transport services, health and social safety nets.
  - Enhancing resilience to climate change (Bank lead) — projects/analysis on recovery from climate disasters; disaster risk management and urban resilience; climate-smart agriculture; community-based fisheries governance; blue economy; renewable energy.
- Information-sharing requests:
  - Fund team requests updates on progress in macrocritical structural reform areas at least quarterly.
  - Bank team requests updates on the Fund’s assessments of macroeconomic policies and prospects at least quarterly in the context of Art. IV and other missions.

- Joint work program highlights (2020): Bank and Fund missions and products listed in the work program; Fund expected to conduct two missions (mid and late 2020) related to expected SMP and possible financial arrangement; CD to be delivered in line with the CD Strategy; DSA updates as needed.

### Statistical Issues — Data Adequacy for Surveillance
- General: Data provision has serious shortcomings that significantly hamper surveillance. Inadequate staffing, funding, and institutional environment undermine the accuracy and comparability of almost all macroeconomic statistics, with the partial exception of monetary and financial statistics.
- National accounts:
  - NSO lacks adequate financial resources, staff capacity, and institutional environment.
  - No quarterly estimates are produced.
  - A mission in July 2019 helped revise the 2016 GDP estimates and compile new GDP estimates for 2017 and 2018.
  - Lack of institutional arrangements to produce official statistics on agriculture still hinders the quality of national accounts.
  - Mission recommended that the NSO collect business data on a yearly basis.
- Consumer prices:
  - Comoros adopted the COMESA Harmonized Consumer Price Index (HCPI) as its national CPI from January 2017.
  - Base year is 2011; expenditure weights based on the 2014 household survey.
  - A mission in February 2019 addressed duplication, misclassification, and seasonality; assisted in compilation of an improved CPI series from August 2012 to December 2018 with base year 2011.
- Government finance statistics:
  - Fiscal statistics compiled include the Union and the three autonomous Islands and are aggregated into a “Tableau des Operations Financières de l’Etat” (TOFE) broadly aligned to the Government Finance Statistics Manual (GFSM) analytical framework.

*Source: Annex VIII. Capacity Development Strategy — Staff Report for the 2019 Article IV Consultation — Informational Annex (March 2, 2020).*

### 1986. The data suffers from comprehensiveness and accuracy issues as the source data used for

### 1comea2020002 - 1986. The data suffers from comprehensiveness and accuracy issues as the source data used for

### Data quality and compilation issues
- Fiscal statistics (TOFE) compilation suffers from comprehensiveness and accuracy issues because the source data are scattered and not from the Union or Islands’ general ledgers (Balance Générale des Comptes du Trésor).
- No data are compiled on stock positions of financial assets and liabilities, although some information is available for the Union.
- Improvements to data quality and compilation consistent with GFSM 2014 require strengthening the legal and institutional frameworks supporting GFS compilation.
- No data ROSC is available.

### Monetary and financial statistics
- The Central Bank of Comoros (BCC) produces adequate monetary statistics on:
  - its own accounts,
  - commercial banks,
  - the development bank,
  - deposits collected by the Société nationale des postes et des services financiers (chèques postaux and saving passbooks),
  - two microfinance networks.
- The Franc Zone arrangement has established accounting and prudential standards that prevent data disruptions.
- Major shortcoming: absence of data on the large amount of Euro cash in circulation, handicapping surveillance.
- In June 2009 the BCC started reporting monetary and financial statistics to the IMF using Standardized Report Forms (SRFs).
- The current presentation and content of monetary statistics accords largely with the IMF’s Monetary and Financial Statistics Manual 2000.
- The Central bank of Comoros (CBO) compiles SRFs for the central bank and other depository corporations (ODCs), which are published in the International Financial Statistics (IFS). The CBO does not compile SRFs for the other financial corporations.
- Financial Soundness Indicators: Comoros compiles eleven of the twelve core Financial Soundness Indicators for deposit takers. Reporting to the IMF Statistics Department is irregular; latest reported data refer to December 2016.

### External sector and external statistics
- Despite technical assistance and some improvements, shortcomings in coverage, data sources, compilation and dissemination continue to affect accuracy and reliability.
- Annual balance of payments data are published in BOPSY.
- International investment position (IIP) data are not compiled.
- External debt statistics are not reported to the World Bank’s Quarterly External Sector Database (QEDS).
- Only annual BOP data are reported to STA. Data on IIP and External Debt are not reported.

### Participation in data dissemination frameworks and reporting to STA
- Comoros has participated in the enhanced General Data Dissemination System (eGDDS) since February 2013 and disseminates metadata for 11 of the 15 recommended data categories, plus one supplementary category (industrial production index).
- National accounts: Comoros is not reporting any national accounts data to STA.
- Consumer prices: In July 2015 Comoros delivered to STA monthly CPI series covering January 2000 – October 2014; no further reporting since then.
- Government finance statistics: No regular compilation and dissemination of fiscal data (TOFE). No GFS data are reported to GFSY or IFS. Data are compiled on GFSM 1986 / TOFE basis only when requested by the African Department; these data are incomplete (both transactional and institutional coverage) and do not accurately reflect the fiscal position.
- External sector statistics: Only annual BOP data reported to STA; IIP and External Debt not reported.

### COVID-19 pandemic: transmission channels, likely impacts, and recommended responses (staff supplement as of March 16, 2020)
- Context and preparedness:
  - As of the supplement, Comoros had not reported a domestic COVID-19 outbreak.
  - Authorities quarantined a group of students from China in early February and banned travelers from China and some other heavily affected countries.
  - Authorities sought funding for health system preparedness of US$2.2 million (0.2 percent of GDP); France and Saudi Arabia have indicated they will provide this financing.
- Likely transmission channels and spillovers:
  - Lower growth in Europe may translate into lower remittances inflows (gross remittances receipts accounted for 17.3 percent of GDP in 2019).
  - Lower international travel is likely to reduce tourist arrivals (tourism-related exports of services account for 6.1 percent of GDP).
  - Decline in global commodity prices, including petroleum, will make key imports cheaper; impacts on Comoros’ export goods are uncertain given some prices fixed in longer-term contracts (cloves, vanilla, ylang-ylang).
  - China’s participation in public investment projects could be temporarily halted, adversely affecting growth (e.g., telecommunications upgrades).
  - Tighter global financial conditions and disruptions of value chains likely have little direct impact given limited integration, but indirect impacts via other channels are possible.
- Health risk if outbreak occurs:
  - The health system could be quickly overwhelmed (WHO ranks preparedness at the lowest level), potentially causing large transitory inability to work and numerous fatalities.
- Immediate priority actions (health):
  - Urgently and comprehensively assess, frontload, and prioritize essential health expenditure for prevention, detection, control and treatment, in coordination with health authorities.
  - Follow WHO guidelines to scale up health expenditure, including rapid case identification/isolation/treatment, contact tracing, community engagement, safe burials, infection control, and laboratory testing.
- Economic policy recommendations to mitigate impact:
  - Fiscal policy: Cushion the most adverse effects in 2020, then return fiscal position to medium-term paths from 2021 onward. Expand healthcare resources and consider targeted temporary support for impacted households. Authorities may lack financing; should reach out to partners for additional grant or concessional loan financing given Comoros’ as yet moderate risk of external debt distress.
  - Monetary and exchange rate policy: Fixed exchange rate cannot facilitate adjustment. Reserves are only slightly lower than adequate, suggesting room for a temporary drawdown.
  - Financial sector regulation and supervision: Consider targeted, time-bound extension of loan maturities for borrowers in hard-hit sectors and monitor loan performance to protect financial stability.
- External support:
  - Authorities should continue to reach out to donors and IFIs for grant and concessional financing; drawing on IMF and World Bank financing tools could help catalyze broader grant and concessional financing.

### Executive Board assessment and policy priorities
- Directors endorsed the staff appraisal concluding the 2019 Article IV Consultation (concluded March 18, 2020).
- Noted policy successes: strengthened electricity provision, opened telecommunications sector, created a Treasury Single Account.
- Fragility: Two interlocking vicious circles—institutional fragility (inter-islands tensions, weak governance, weak civil service, weak judicial system) and economic fragility (severe constraints on domestic resources, vulnerability to shocks and climate-related disasters).
- Recent performance: Growth slowed to 3.6 percent in 2018 and 1.9 percent in 2019 due to political uncertainty and cyclone Kenneth; external accounts weakened and fiscal challenges intensified.
- Baseline outlook: Under assumption of slow policy improvements and absent major shocks, growth expected to recover somewhat but remain moderate; medium- and longer-term risks include risk of external debt distress (assessed as “moderate”).
- Active policy scenario (strengthened policies) could lift growth to around 4½ percent per year and reduce risks through enhanced debt sustainability and resilience.
- Prioritization of reforms given limited implementation capacity:
  - Strengthen the civil service: hiring and promoting based on merit, enhanced training, setting realistic expectations and accountability.
  - Strengthen the judicial system: enhance funding, strengthen staffing cost-effectively (e.g., complement professional judges with laymen judges), strengthen arbitration, and refrain from political interference.
  - Enhance fiscal revenue: broaden the tax base to include a larger share of known companies and pursue delinquent taxpayers; eliminate unproductive fiscal spending (example: keeping the postal bank afloat).
- IMF support: Fund to provide sustained policy advice and capacity building, in collaboration with the World Bank and other development partners.

### Selected economic and financial indicators, 2016-25 (Baseline Scenario) — key figures
- National income and prices (annual percentage change)
  - Real GDP: 2016: 3.5; 2017: 4.2; 2018: 3.6; 2019: 1.9; 2020: 4.4; 2021: 3.5; 2022: 3.6; 2023: 3.7; 2024: 3.8; 2025: 3.8
  - GDP deflator: 2016: 1.6; 2017: 0.3; 2018: 1.1; 2019: 3.2; 2020: 1.2; 2021: 2.0; 2022: 1.9; 2023: 1.9; 2024: 1.9; 2025: 1.9
  - Consumer price index (annual average): 2016: 0.8; 2017: 0.1; 2018: 1.7; 2019: 3.3; 2020: 1.4; 2021: 2.1; 2022: 2.0; 2023: 2.0; 2024: 2.0; 2025: 2.0
- Money and credit
  - Net foreign assets: 2016: -13.1 2017: 12.6 2018: 4.2 2019: -5.6 2020: 1.6 2021: 2.9 2022: 5.8 2023: 8.7 2024: 7.6 2025: 5.2
  - Domestic credit: 2016: 33.5 2017: -0.4 2018: 4.9 2019: 6.9 2020: 0.5 2021: 0.7 2022: 0.9 2023: -0.3 2024: 1.4 2025: 4.0
  - Credit to the private sector: 2016: 7.2 2017: 6.2 2018: 1.2 2019: 2.0 2020: 2.0 2021: 2.1 2022: 2.5 2023: 2.8 2024: 3.5 2025: 4.3
  - Broad money: 2016: 10.3 2017: 1.8 2018: 8.5 2019: 5.1 2020: 4.6 2021: 4.8 2022: 5.5 2023: 5.6 2024: 5.7 2025: 5.8
  - Velocity (GDP/end-year broad money): 2016: 3.6 2017: 3.7 2018: 3.5 2019: 3.6 2020: 3.6 2021: 3.6 2022: 3.6 2023: 3.6 2024: 3.6 2025: 3.6
- External sector (growth and volumes)
  - Exports, f.o.b.: 2016: 8.2 2017: 0. 26.2 2018: 5.5 2019: 1.3 2020: -0.9 2021: 5.8 2022: 5.8 2023: 6.1 2024: 6.3 2025: 6.3
  - Imports, f.o.b.: 2016: -0.4 2017: 12.1 2018: 11.1 2019: 7.2 2020: 12.7 2021: 2.4 2022: 3.4 2023: 4.1 2024: 4.2 2025: 4.2
  - Export volume: 2017: 31.5 2018: -1.0 2019: 2.9 2020: 5.0 2021: -0.1 2022: 6.3 2023: 6.3 2024: 5.8 2025: 5.8 2026: 5.7 (note: series formatting in source)
  - Import volume: 2016: 2.0 2017: 12.4 2018: 11.1 2019: 0.1 2020: 10.3 2021: 5.9 2022: 4.9 2023: 4.5 2024: 4.0 2025: 3.9
  - Terms of trade: 2016: 14.6 2017: 11.8 2018: -0.3 2019: -4.6 2020: -2.8 2021: 2.9 2022: 1.5 2023: 1.1 2024: 0.8 2025: 0.7
- Investment and savings (percent of GDP)
  - Gross fixed capital formation: 2016: 13.1; 2017: 14.2; 2018: 15.8; 2019: 16.1; 2020: 16.0; 2021: 15.9; 2022: 15.8; 2023: 15.7; 2024: 15.6; 2025: 15.4
  - Gross national savings: 2016: 8.8; 2017: 12.1; 2018: 13.2; 2019: 13.1; 2020: 13.2; 2021: 12.9; 2022: 12.8; 2023: 12.8; 2024: 12.8; 2025: 12.8
- Government budget (percent of GDP)
  - Total revenue and grants: 2016: 14.2; 2017: 17.2; 2018: 13.9; 2019: 16.1; 2020: 17.5; 2021: 16.7; 2022: 16.7; 2023: 16.7; 2024: 16.4; 2025: 16.3
  - Total revenue: 2016: 8.8; 2017: 10.2; 2018: 11.3; 2019: 8.7; 2020: 9.1; 2021: 9.2; 2022: 9.4; 2023: 9.5; 2024: 9.6; 2025: 9.7
    - Tax Revenue: 2016: 7.9; 2017: 9.4; 2018: 8.3; 2019: 7.0; 2020: 7.8; 2021: 7.9; 2022: 7.9; 2023: 8.0; 2024: 8.1; 2025: 8.2
    - Non-tax Revenue: 2016: 0.9; 2017: 0.8; 2018: 3.0; 2019: 1.7; 2020: 1.3; 2021: 1.4; 2022: 1.5; 2023: 1.5; 2024: 1.5; 2025: 1.6
  - Total grants: 2016: 5.4; 2017: 7.1; 2018: 2.5; 2019: 7.5; 2020: 8.5; 2021: 7.4; 2022: 7.3; 2023: 7.2; 2024: 6.8; 2025: 6.6
  - Total expenditure and net lending: 2016: 18.7; 2017: 16.9; 2018: 14.9; 2019: 18.4; 2020: 19.7; 2021: 19.1; 2022: 19.1; 2023: 19.1; 2024: 18.8; 2025: 18.6
  - Current expenditure: 2016: 11.1; 2017: 10.3; 2018: 11.3; 2019: 10.6; 2020: 11.1; 2021: 11.5; 2022: 11.8; 2023: 11.8; 2024: 11.8; 2025: 11.8
  - Capital expenditure: 2016: 6.3; 2017: 6.3; 2018: 3.6; 2019: 7.8; 2020: 8.7; 2021: 7.6; 2022: 7.3; 2023: 7.3; 2024: 7.1; 2025: 6.9
  - Domestic primary balance2: 2016: -3.1; 2017: -1.1; 2018: -1.2; 2019: -2.5; 2020: -2.7; 2021: -2.8; 2022: -2.7; 2023: -2.7; 2024: -2.6; 2025: -2.4
  - Overall balance (cash basis): 2016: -4.9; 2017: 0.2; 2018: -0.4; 2019: -2.2; 2020: -2.2; 2021: -2.5; 2022: -2.4; 2023: -2.4; 2024: -2.4; 2025: -2.3
    - Excluding grants: 2016: -10.3; 2017: -6.9; 2018: -2.9; 2019: -9.7; 2020: -10.7; 2021: -9.9; 2022: -9.7; 2023: -9.5; 2024: -9.2; 2025: -8.9
  - Net Financing: 2016: 4.2; 2017: -0.1; 2018: 0.7; 2019: 2.2; 2020: 2.2; 2021: 2.5; 2022: 2.4; 2023: 2.4; 2024: 2.4; 2025: 2.3
    - Foreign (Including IMF): 2016: 1.2; 2017: -0.2; 2018: 0.2; 2019: 2.1; 2020: 2.3; 2021: 2.5; 2022: 2.4; 2023: 2.4; 2024: 2.4; 2025: 2.3
    - Domestic: 2016: 3.0; 2017: 0.0; 2018: 0.5; 2019: 0.1; 2020: -0.1; 2021: 0.0; 2022: 0.0; 2023: 0.0; 2024: 0.0; 2025: 0.0
  - Financing gap/errors and omissions: 2016: 0.7; 2017: -0.1; 2018: -0.3; 2019: 0.0; 2020: 0.0; 2021: 0.0; 2022: 0.0; 2023: 0.0; 2024: 0.0; 2025: 0.0
- External sector (percent of GDP)
  - Exports of goods and services: 2016: 10.7; 2017: 11.9; 2018: 12.9; 2019: 12.3; 2020: 12.4; 2021: 12.5; 2022: 12.6; 2023: 12.6; 2024: 12.6; 2025: 12.6
  - Imports of goods and services: 2016: 26.5; 2017: 28.4; 2018: 30.0; 2019: 30.1; 2020: 31.8; 2021: 31.1; 2022: 30.6; 2023: 30.2; 2024: 29.9; 2025: 29.5
  - Current account balance: 2016: -4.3; 2017: -2.1; 2018: -2.8; 2019: -3.8; 2020: -5.5; 2021: -4.9; 2022: -4.4; 2023: -4.0; 2024: -3.7; 2025: -3.5
    - Excluding official and private transfers: 2016: -15.2; 2017: -16.0; 2018: -16.6; 2019: -17.3; 2020: -19.0; 2021: -18.3; 2022: -17.7; 2023: -17.3; 2024: -16.9; 2025: -16.6
  - Private remittances, net3: 2016: 9.4; 2017: 10.3; 2018: 12.3; 2019: 12.1; 2020: 12.1; 2021: 12.0; 2022: 12.0; 2023: 12.0; 2024: 12.0; 2025: 12.0
  - External debt: 2016: 16.4; 2017: 17.0; 2018: 19.6; 2019: 23.8; 2020: 27.0; 2021: 29.3; 2022: 30.0; 2023: 30.7; 2024: 31.3; 2025: 31.7
  - Official grants and loans: 2016: 6.8; 2017: 7.1; 2018: 3.1; 2019: 10.5; 2020: 11.6; 2021: 10.4; 2022: 10.2; 2023: 10.2; 2024: 9.8; 2025: 9.5
  - Gross international reserves (end of period)
    - In millions of U.S. dollars: 2016: 160.0; 2017: 209.3; 2018: 198.4; 2019: 196.4; 2020: 197.7; 2021: 201.3; 2022: 208.2; 2023: 217.0; 2024: 227.6; 2025: 238.2
    - In months of imports of goods & services: 2016: 7.2; 2017: 8.2; 2018: 6.7; 2019: 6.6; 2020: 5.9; 2021: 5.8; 2022: 5.8; 2023: 5.7; 2024: 5.7; 2025: 5.7
  - Exchange rate CF/US$ (period average): 2016: 444.6; 2017: 435.6; 2018: 416.4; 2019: 439.4
- Memorandum items
  - Public sector debt (in Percent of GDP)4: 2016: 16.5; 2017: 17.1; 2018: 19.6; 2019: 23.8; 2020: 27.1; 2021: 29.4; 2022: 30.1; 2023: 30.8; 2024: 31.3; 2025: 31.8
  - GDP (nominal, in billions of CF): 2016: 450.2; 2017: 469.2; 2018: 491.0; 2019: 521.1; 2020: 550.4; 2021: 581.1; 2022: 613.3; 2023: 647.7; 2024: 684.8; 2025: 724.3
  - GDP per capita (nominal, in US Dollars): 2016: 1,256; 2017: 1,301; 2018: 1,386; 2019: 1,357; 2020: 1,397; 2021: 1,451; 2022: 1,501; 2023: 1,553; 2024: 1,610; 2025: 1,670

*Prepared by African Department; Staff Supplement on the COVID-19 Pandemic and Its Impact on Comoros’ Outlook and Risks; data and analysis as presented in the source document.*

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_Source: https://www.imf.org/-/media/files/publications/cr/2020/english/1comea2020002.pdf_