## 1comea2022001 - 2021. In particular, they succeeded in raising fiscal revenue and providing substantial cash transfers to the poor.

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### Executive summary and SMP objectives
- Population: 850,000.
- Officially recorded COVID-related infections and deaths by December 13, 2021: 4,569 infections and 151 deaths.
- Growth projections: 1.6 percent in 2021 and 3.8 percent in 2022.
- SMP period: July 22–December 31, 2021, with test dates at end-September and end-December.
- SMP aims:
  - Contain and recover from the pandemic.
  - Start implementing reforms to overcome fragility, boost inclusive growth, and limit risks (drawing on the 2019 Article IV medium-term strategy).
- Policy priorities:
  - Raise fiscal revenue to support investment in human and physical capital and enhance debt sustainability.
  - Enhance quality of spending, improve public financial management, strengthen SOE oversight, and strengthen the financial sector to enable greater credit provision and limit fiscal risks.
  - Strengthen governance and reduce vulnerability to corruption, including enhanced public reporting on large public procurement projects (including beneficial ownership information) and creating an effective asset declaration framework for senior public officials.
- SMP review outcome (end-September):
  - Met six out of seven quantitative targets and both structural benchmarks.
  - Domestic primary deficit was kept below initial projections and the unadjusted program ceiling, but exceeded the ceiling after adjustment for higher-than-programmed revenue.
  - Extension of the SMP requested to March 15, 2022 and rescheduling of three structural benchmarks at risk to end-February 2022.
- Staff views:
  - SMP implementation at end-September was satisfactory.
  - Substantial overperformance in revenue, with half assumed to carry over into future years, is particularly welcome.
  - Staff urges authorities to meet all end-December quantitative targets, including by slowing non-priority spending to meet the adjusted fiscal ceiling.
  - Staff supports the request to delay three structural benchmarks to end-February 2022 and extend the SMP to March 15, 2022, while urging acceleration of structural reforms.

### Background and recent economic developments
- COVID-19 impact:
  - Pandemic had a substantial adverse impact; economic activity stagnated in 2020 and remained muted in 2021.
  - Easing of strict lockdown measures as new COVID casualties remained low.
  - At end-November, 29 percent of the population have been fully vaccinated (almost all with Sinopharm, via donations).
  - Airports and seaports fully open; many earlier mitigation measures phased out; cash transfer program to the poor substantially expanded.
- Economic activity and inflation:
  - Activity picked up somewhat after Q1 2021; visitor arrivals appear to have recovered somewhat.
  - Inflation remains low but anecdotal evidence suggests some recent rises due to supply bottlenecks (e.g., higher prices of imported construction materials).
- External sector and reserves:
  - Central bank exchanged full SDR allocation for 2021 (SDR 17.1 million) and deposited proceeds at the French Treasury earning interest of 2.5 percent per year.
  - Gross international reserves projections for 2021 broadly unchanged: stronger current account accompanied by lower-than-expected loan disbursements.
  - Real effective exchange rate depreciated by 3.5 percent since end-September.
- Debt and financial sector risks:
  - Risk of external debt distress: high. DSA (Country Report 21/235) found three out of four external debt burden indicators breached thresholds, moving risk from “moderate” to “high”.
  - Key driver: contracting in late 2020 of a loan equivalent to 4.5 percent of GDP on non-concessional terms (hotel construction).
  - Pandemic weakening and costs of recapitalizing SNPSF contributed to increased debt burden.
  - Banking sector deteriorated in 2020: capital adequacy, asset quality, and profitability worsened; liquidity indicators improved on average but mask interbank differences.
- Financial Soundness Indicators (2016–2020) — selected series (levels as reported):
  - Regulatory Capital to Risk-Weighted Assets: 19.6, 21.2, 22.3, 27.9, 25.2.
  - Capital to Assets: 11.4, 12.5, 13.6, 10.9.
  - Non-performing Loans to Total Gross Loans: 21.7, 24.8, 24.3, 22.5, 23.7.
  - Non-performing Loans Net of Provisions to Capital: 38.7, 49.1, 40.7, 29.4, 35.4.
  - Return on Equity: 9.0, -0.7, -0.5, -0.7, -7.6.
  - Liquid Assets to Short Term Liabilities: 84.8, 94.8, 88.1, 104.3.
  - Customer Deposits to Total (Non-interbank) Loans: 122.7, 132.3, 134.6, 154.7.

### Fiscal performance and program implementation (end-September and end-December outlook)
- Fiscal outturns at end-September 2021 (in KMF millions; and percent of GDP):
  - Revenues: SMP projection 30,666; Outturn 42,457; Initial Budget 52,484.
  - Tax revenues: SMP projection 27,252; Outturn 34,669; Initial Budget 44,867.
  - Nontax revenues: SMP projection 3,414; Outturn 7,788; Initial Budget 7,618.
  - Domestic primary expenditures: SMP projection 47,757; Outturn 56,231; Initial Budget 68,482.
  - Domestic primary current expenditures: SMP projection 41,512; Outturn 45,908; Initial Budget 53,640.
  - Domestically financed investment: SMP projection 6,245; Outturn 10,323; Initial Budget 14,842.
  - Domestic primary balance: SMP projection -17,091; Outturn -13,774; Initial Budget -15,998.
  - Revenues (percent of GDP): 5.7, 7.9, 9.9.
  - Tax revenues (percent of GDP): 5.1, 6.5, 8.5.
  - Nontax revenues (percent of GDP): 0.6, 1.5, 1.4.
  - Domestic primary expenditures (percent of GDP): 8.9, 10.5, 13.0.
  - Primary current expenditures (percent of GDP): 7.8, 8.6, 10.2.
  - Domestically financed investment (percent of GDP): 1.2, 1.9, 2.8.
  - Domestic primary balance (percent of GDP): -3.2, -2.6, -3.0.
- Drivers of fiscal outcomes:
  - Revenue overperformance at end-September: total fiscal revenue KMF 42.5 billion vs projected KMF 30.7 billion. Tax revenue KMF 34.6 billion vs projected KMF 27.3 billion.
    - Overperformance reflects about equal shares of temporary factors (delayed tax payments from 2020 due to changes in filing deadlines) and more permanent factors (improvements in tax and customs administration).
  - Spending overruns: domestic primary expenditure KMF 56.2 billion at end-September (substantially higher than programmed and the initial 2021 budget).
    - Causes: (i) unexpected spending of KMF 2.6 billion on vaccinations (authorities hope for WB reimbursement); (ii) automatic spending out of parts of non-tax revenue that came in higher-than-expected; (iii) weaknesses in spending controls.
- End‑September quantitative targets: six of seven met.
  - Met: Tax revenue (Target 1), Net international reserves (Target 3), Net domestic arrears reduction (Target 4), Cash transfers (Target 5), Avoidance of external arrears (Target 6), Avoidance of contracting non-concessional debt (Target 7).
  - Missed: Domestic primary fiscal deficit after adjustment for higher-than-programmed overall revenue (Target 2).
- Structural benchmarks at end-September: both met.
  - Benchmark 1: Raised number of active taxpayers at large and small taxpayer offices and sent requests to file tax declarations.
  - Benchmark 2: Prepared terms of reference and issued a call for interest for the audit of domestic arrears (staff notes terms of reference later specified to explicitly include cross arrears with SOEs and arrears between SOEs).
- Progress toward end-December targets (staff projection):
  - Likely to meet six out of seven quantitative targets; fiscal balance target at substantial risk.
  - Target 1 (tax revenue): staff projects KMF 44.9 billion (against target KMF 41.9 billion).
  - Target 2 (domestic primary fiscal balance): at risk of missing adjusted ceiling due to Q3 spending overruns; authorities intend to slow non-priority spending and strengthen spending controls.
  - Target 3 (net international reserves): level at end-November remains substantially above program floor.
  - Target 4 (net domestic arrears): prospects favorable given clearance through end-September.
  - Target 5 (cash transfers): overperformance at end-September makes end-December target within reach.
  - Target 6 (avoid external arrears): favorable prospects; note: arrears to Exim Bank India (USD 0.2 million) had arisen by late October/early November; authorities intend to clear these before year-end.
  - Target 7 (no new non-concessional borrowing): authorities report no plans; exploring concessional financing for hospital project with the World Bank.

### Policy priorities, program risks, and recommended actions
- Policy priorities and reforms:
  - Strengthen spending controls and slow non-priority spending to meet adjusted fiscal ceilings given limited fiscal space and high debt-sustainability risks.
  - Continue mobilizing external concessional financing and coordinate capacity development with international partners.
  - Implement public financial management reforms, strengthen SOE oversight, and create an effective asset declaration framework for senior public officials.
  - Strengthen the financial sector and pursue restructuring/recapitalization of SNPSF as needed.
- Risks:
  - High risk of external debt distress driven by recent non-concessional borrowing (4.5 percent of GDP loan) and pandemic effects.
  - Fiscal risks from spending overruns and weaknesses in spending controls.
  - Banking sector weaknesses: deteriorated capital adequacy, asset quality, and profitability in 2020; incomplete information on 2021 FSIs.
  - Potential COVID-19 related risks (including Omicron) remain; authorities remain vigilant to related risks.
- Staff recommendations and support:
  - Urge authorities to meet all end-December quantitative targets, including by slowing non-priority spending and strengthening spending controls.
  - Support extension of SMP to March 15, 2022 and rescheduling of three structural benchmarks to end-February 2022, while urging acceleration of structural reforms to meet outstanding benchmarks on time.
  - Support authorities’ efforts to mobilize external concessional financing and provide capacity development in coordination with partners.

### Progress on end-December structural benchmarks
- The authorities have met 1 of the 6 end-December structural benchmarks and appear to be on track to meet 2 more; they request rescheduling of the remaining 3 benchmarks to end-February 2022.
- Benchmark outcomes:
  - Benchmark 1: Authorities continue making good progress in raising the number of active taxpayers, building on efforts through September.
  - Benchmark 2: Adopted a roadmap for extending the coverage of the Treasury Single Account, with Fund technical assistance, thereby meeting the benchmark.
  - Benchmark 3: Commissioning the audit of domestic arrears is delayed due to administrative slippages; authorities requested rescheduling to end-February 2022.
  - Benchmark 4: Preparatory work on restructuring postal bank SNPSF is delayed due to complexity and organizational challenges; authorities requested rescheduling to end-February 2022.
  - Benchmark 5: Efforts to create a framework for reporting on public procurement are progressing as planned; part of the required actions have been implemented already.
  - Benchmark 6: Strengthening the anti-corruption law for asset declarations and an effective anti-corruption entity is significantly behind schedule due to missed meetings with LEG technical assistance staff and complexity arising in part from 2018 constitutional changes; authorities requested rescheduling to end-February 2022 and have designated an official in charge to allow a LEG mission to start.

### Fiscal projections, composition, and adjustors
- Growth projections:
  - 1.6 percent in 2021.
  - 3.8 percent in 2022.
  - Vaccination progress: starting from 29 percent of the population fully vaccinated at end-November 2021, authorities hope to vaccinate most of the population by the end of 2022.
- Tax revenue projections:
  - Raised to 8.4 percent of GDP for 2021 (from 7.9 percent of GDP).
  - 8.5 percent of GDP in 2022.
- Non-tax revenue: Revised to a constant 1.5 percent of GDP per year (from 1 percent of GDP).
- Domestic primary spending projections: Revised up by somewhat less than revenue; projected domestic primary deficits in 2021 and 2022 are now 0.5 percent of GDP smaller than in the SMP request.
- Fiscal consolidation and financing:
  - Starting in 2023 projections allow full use of higher revenue to smooth consolidation envisaged in the SMP request.
  - At an average 0.8 percent of GDP over the medium term (2022-26), unmet financing needs are now somewhat smaller than envisaged at the time of the SMP request.
- Adjusters and spending flexibility:
  - Staff proposes scaling back the revenue adjustor: authorities may raise spending by half of excess revenue for the first 1 percent of GDP in excess revenue, and by the full amount of any additional revenue.
  - Under current revenue projections the proposed adjustor will lower the program ceiling for the primary domestic fiscal deficit from 3.5 percent of GDP to 3.0 percent of GDP at end-December.
  - Proposed adjustor for unexpected domestic spending on vaccinations will raise the fiscal spending ceiling by the full amount of unanticipated spending on vaccinations; authorities report such spending of KMF 2.6 billion (0.5 percent of GDP).
- Budget and SDR use:
  - Parliament adopted a revised budget for 2021 allowing higher domestically financed investment spending than the SMP; authorities intend to keep the fiscal deficit within program limits and ensure the 2022 budget law is consistent with program projections.
  - The authorities have not yet used any of the 2021 SDR allocation so far; they intend to use one third of the allocation in 2021 and preserve the rest as a fiscal buffer.

### Restructuring the postal bank and financial sector strengthening
- SNPSF restructuring:
  - Preparatory work delayed; staff proposes rescheduling related benchmark to end-February 2022.
  - Benchmark requires splitting SNPSF into postal and banking activities and applying for a banking license based on a viable business plan.
  - Authorities created a focused team to advance the reform.
- Financial sector measures and supervision:
  - BCC to conduct targeted onsite inspections in financial institutions by the end of Q1 2022 to assess asset quality impact from COVID and credit maturity extensions.
  - A commission on NPLs has issued recommendations on accelerating court proceedings.
  - BCC continued work to strengthen risk-based supervision, operationalize bank resolution framework, lay foundations for a government securities market, strengthen liquidity management, and create an emergency liquidity assistance framework with MCM technical assistance.
- Contingent liabilities:
  - Government nationalized a commercial bank in November 2020; the bank holds more than KMF 9 billion in (mostly retail) deposits and represents a substantial contingent liability. Government is seeking a purchaser and should strengthen bank management to avoid losses.
- Banking sector reforms, NPLs, and financial infrastructure:
  - Improve the operating environment for banks by lowering the frequency of government arrears to suppliers and strengthening the judicial system to ensure realization of pledged collateral.
  - Create a bank recovery and resolution framework (a law establishing such a framework was adopted in December 2020).
  - Operationalize the BCC’s emergency liquidity assistance function.
  - Strengthen financial infrastructure by establishing a government securities market.

### Strengthening governance, anti-corruption, and procurement transparency
- Anti-corruption and asset declarations:
  - Adopt in the Council of Ministers amendments to the 2008 anti-corruption law (N° 08-013/AU) to:
    - (i) enhance preventive measures including conflicts of interest and the creation of an effective asset declaration system for senior public officials in line with international best practices aimed at the collection/verification of asset declarations, the imposition of sanctions for failure and false reporting, and the provision of access to the declarations;
    - (ii) set out the legal framework for creating an operationally independent and autonomous public entity with powers to set up the country’s anti-corruption policy priorities, manage an effective asset declarations system, maintain a public anti-corruption complaints platform; and ensuring investigative capacity and powers.
  - Deadlines: December 31, 2021; February 28, 2022.
- Public procurement transparency:
  - Benchmark met if authorities issued a circular/guidance on submission to a nominated procurement agency of documentation on all large public procurement contracts along with names of awarded companies and their beneficial owners; and shared a publication plan.
  - Definition: large public procurement projects = projects amounting to KMF 10 million or more.
- Audit of IMF emergency financing (2020):
  - Court of Auditors to perform the audit.
  - Authorities intend to commission the audit in December 2021, publish the full audit report within six weeks after audit completion, and publish semi-annual reports on follow-up measures for as long as these measures continue.
- Safeguards and AML/CFT:
  - BCC prepared a plan to strengthen internal audit, appointed a vice-governor, plans to adopt IFRS for fiscal year 2021 accounts, and efforts to amend BCC statutes are underway.
  - A national risk assessment is being prepared and will be published in early 2022; thereafter authorities will prepare an AML/CFT law in line with Financial Action Task Force standards.
  - BCC is enhancing risk-based supervision, including onsite inspections.

### Capacity development, data, and next steps
- IMF support: Intensive capacity development program with hands-on technical assistance; Fund placing a peripatetic expert on PFM issues in Comoros (shared with Madagascar).
- Data shortcomings:
  - Delays in data provision across key indicators, particular concerns on fiscal data and national accounts; raw data for aggregate GDP and BoP statistics have significant accuracy limitations.
  - Expanded use of targeted surveys recommended.
  - Authorities may wish to strengthen staffing and equipment of INSEED.
- Potential follow-on financing:
  - Successful SMP implementation could allow discussion of a potential ECF-arrangement in 2022; staff updated quarterly projections for the interim period between the end of the SMP and potential consideration of a financial arrangement.

### Key quantitative outcomes, targets, and selected fiscal/monetary indicators (exact figures preserved)
- Selected end-September 2021 outcomes (cumulative since end previous year, in millions of Comorian francs unless otherwise specified):
  - Floor on tax revenues: Target 27,251.7 / Adjusted 27,251.7 / Actual 34,823.9 — Met
  - Ceiling on the primary domestic fiscal deficit: Target -17,090.9 / Adjusted -5,299.9 / Actual -13,774.2 — Not Met
  - Floor on net international reserves (million KMF): Target 85,900.8 / Adjusted 85,900.8 / Actual 131,400.0 — Met
  - Ceiling on the accumulation of new domestic payments arrears, net: Target 0.0 / Adjusted 0.0 / Actual -2,116.8 — Met
  - Floor on social cash transfers: Target 3,000.0 / Adjusted 3,000.0 / Actual 4,900.0 — Met
  - Ceiling on new external arrears: Target 0.0 / Adjusted 0.0 / Actual 0.0 — Met
  - Ceiling on new nonconcessional external debt contracted or guaranteed by the government: Target 0.0 / Adjusted 0.0 / Actual 0.0 — Met
- Indicative targets and projections (selected):
  - Floor on tax revenues: Actual End-September 2021 34,823.9 / SMP Request End-December 41,925.8 / End-March projection 9,160.5 / End-June projection 20,611.0
  - Ceiling on the primary domestic fiscal deficit: Actual End-September 2021 -13,774.2 / SMP Request End-December -18,259.9 / End-March projection -7,785.8 / End-June projection -13,010.0
  - Floor on net international reserves (million KMF): Actual End-September 2021 131,400.0 / SMP Request End-December 86,278.3 / End-March projection 86,278.3 / End-June projection 86,655.7
  - Floor on social cash transfers: Actual End-September 2021 4,900.0 / SMP Request End-December 5,800.0 / End-March projection 1,275.0 / End-June projection 2,550.0
- Selected macroeconomic projections and indicators (exact series preserved):
  - Real GDP: 3.6 (2018), 1.8 (2019), -0.5 (2020), 1.6 (2021 Est.), 1.6 (2022 SMP Req.), 3.8 (2023 Proj.), 3.7 (2024), 3.9 (2025), 4.3 (2026), 4.4
  - Consumer price index (annual average): 1.7 (2018), 3.7 (2019), 0.8 (2020), -1.0 (2021 Est.), 1.5 (2022 SMP Req.), 1.6 (2023 Proj.), 1.7 (2024), 1.8 (2025), 1.9 (2026), 2.0
  - Total revenue and grants (percent of GDP): 17.8 (2018), 15.8 (2019), 18.3 (2020), 16.5 (2021 Est.), 17.8 (2022 SMP Req.), 17.7 (2023 Proj.), 16.4 (2024), 16.7 (2025), 17.1 (2026), 18.0
  - Gross international reserves (end of period, in millions of U.S. dollars): 198.4 (2018), 200.2 (2019), 292.2 (2020), 350.2 (2021 Est.), 352.8 (2022 SMP Req.), 393.7 (2023 Proj.), 388.5 (2024), 387.0 (2025), 392.1 (2026), 398.9
  - Broad money (end-period, millions CF): 138,528 (2018), 146,711 (2019), 163,547 (2020), 187,727 (2021 SMP Req.), 192,985 (2022 Proj.), 202,634 (2023), 215,805 (2024), 228,043 (2025), 242,412 (2026), 258,203
  - Current account (millions CF): -13,995 (2018), -16,981 (2019), -8,887 (2020), -21,811 (2021 Est.), -8,850 (2022 SMP Req.), -21,461 (2023 Proj.), -32,759 (2024), -26,454 (2025), -34,402 (2026), -42,510

### Risk Assessment Matrix — selected risks and policy responses
- Global Risks:
  - Global resurgence of the Covid-19 pandemic: Relative likelihood Medium; Time Horizon ST, MT; Impact on Comoros High.
    - Policy responses: Speed up vaccination; use social distancing as needed.
  - Uncontrolled Covid-19 local outbreaks and subpar/volatile growth: Relative likelihood High; Time Horizon ST, MT; Impact on Comoros High.
    - Policy responses: Speed up vaccination; use social distancing as needed.
  - Sharp rise in global risk premia: Relative likelihood Medium; Time Horizon ST; Impact on Comoros Low.
    - Policy responses: Strengthen debt sustainability by raising fiscal revenue and adopting a suitable fiscal anchor.
- Domestic Risks:
  - Policy slippages and delayed structural reforms: Relative likelihood High; Time Horizon ST, MT; Impact on Comoros High.
    - Policy responses: Implement macroeconomic policies and structural reforms, particularly those related to raising fiscal revenue.
  - Widespread social discontent and political instability: Relative likelihood High; Time Horizon ST, MT; Impact on Comoros High.
    - Policy responses: Provide support to the most vulnerable; enhance governance, transparency, and the rule of law.
  - Deterioration of SOEs’ financial situation and migration of liabilities to the central government: Relative likelihood High; Time Horizon ST, MT; Impact on Comoros High.
    - Policy responses: Improve supervision of SOEs as described in the SMP.
  - Natural disasters: Relative likelihood Medium; Time Horizon ST, MT; Impact on Comoros High.
    - Policy responses: Implement adaptation strategy discussed in Country Report 20/198.

*International Monetary Fund. Staff report and program documents for the Union of the Comoros SMP (July 22–December 31, 2021).*

### 2021. In particular, they succeeded in raising fiscal revenue and providing substantial cash

### 1comea2022001 - 2021. In particular, they succeeded in raising fiscal revenue and providing substantial cash transfers to the poor.

### Executive summary and SMP objectives
- Population: 850,000.
- Officially recorded COVID-related infections and deaths by December 13, 2021: 4,569 infections and 151 deaths.
- Growth projections: 1.6 percent in 2021 and 3.8 percent in 2022.
- SMP period: July 22–December 31, 2021, with test dates at end-September and end-December.
- SMP aims:
  - Contain and recover from the pandemic.
  - Start implementing reforms to overcome fragility, boost inclusive growth, and limit risks (drawing on the 2019 Article IV medium-term strategy).
- Policy priorities:
  - Raise fiscal revenue to support investment in human and physical capital and enhance debt sustainability.
  - Enhance quality of spending, improve public financial management, strengthen SOE oversight, and strengthen the financial sector to enable greater credit provision and limit fiscal risks.
  - Strengthen governance and reduce vulnerability to corruption, including enhanced public reporting on large public procurement projects (including beneficial ownership information) and creating an effective asset declaration framework for senior public officials.
- SMP review outcome (end-September):
  - Met six out of seven quantitative targets and both structural benchmarks.
  - Domestic primary deficit was kept below initial projections and the unadjusted program ceiling, but exceeded the ceiling after adjustment for higher-than-programmed revenue.
  - Extension of the SMP requested to March 15, 2022 and rescheduling of three structural benchmarks at risk to end-February 2022.
- Staff views:
  - SMP implementation at end-September was satisfactory.
  - Substantial overperformance in revenue, with half assumed to carry over into future years, is particularly welcome.
  - Staff urges authorities to meet all end-December quantitative targets, including by slowing non-priority spending to meet the adjusted fiscal ceiling.
  - Staff supports the request to delay three structural benchmarks to end-February 2022 and extend the SMP to March 15, 2022, while urging acceleration of structural reforms.

### Background and recent economic developments
- COVID-19 impact:
  - Pandemic had a substantial adverse impact; economic activity stagnated in 2020 and remained muted in 2021.
  - Easing of strict lockdown measures as new COVID casualties remained low.
  - At end-November, 29 percent of the population have been fully vaccinated (almost all with Sinopharm, via donations).
  - Airports and seaports fully open; many earlier mitigation measures phased out; cash transfer program to the poor substantially expanded.
- Economic activity and inflation:
  - Activity picked up somewhat after Q1 2021; visitor arrivals appear to have recovered somewhat.
  - Inflation remains low but anecdotal evidence suggests some recent rises due to supply bottlenecks (e.g., higher prices of imported construction materials).
- External sector and reserves:
  - Central bank exchanged full SDR allocation for 2021 (SDR 17.1 million) and deposited proceeds at the French Treasury earning interest of 2.5 percent per year.
  - Gross international reserves projections for 2021 broadly unchanged: stronger current account accompanied by lower-than-expected loan disbursements.
  - Real effective exchange rate depreciated by 3.5 percent since end-September.
- Debt and financial sector risks:
  - Risk of external debt distress: high. DSA (Country Report 21/235) found three out of four external debt burden indicators breached thresholds, moving risk from “moderate” to “high”.
  - Key driver: contracting in late 2020 of a loan equivalent to 4.5 percent of GDP on non-concessional terms (hotel construction).
  - Pandemic weakening and costs of recapitalizing SNPSF contributed to increased debt burden.
  - Banking sector deteriorated in 2020: capital adequacy, asset quality, and profitability worsened; liquidity indicators improved on average but mask interbank differences.
- Financial Soundness Indicators (2016–2020) — selected series (levels as reported):
  - Regulatory Capital to Risk-Weighted Assets: 19.6, 21.2, 22.3, 27.9, 25.2.
  - Capital to Assets: 11.4, 12.5, 13.6, 10.9.
  - Non-performing Loans to Total Gross Loans: 21.7, 24.8, 24.3, 22.5, 23.7.
  - Non-performing Loans Net of Provisions to Capital: 38.7, 49.1, 40.7, 29.4, 35.4.
  - Return on Equity: 9.0, -0.7, -0.5, -0.7, -7.6.
  - Liquid Assets to Short Term Liabilities: 84.8, 94.8, 88.1, 104.3.
  - Customer Deposits to Total (Non-interbank) Loans: 122.7, 132.3, 134.6, 154.7.

### Fiscal performance and program implementation (end-September and end-December outlook)
- Fiscal outturns at end-September 2021 (in KMF millions; and percent of GDP):
  - Revenues: SMP projection 30,666; Outturn 42,457; Initial Budget 52,484.
  - Tax revenues: SMP projection 27,252; Outturn 34,669; Initial Budget 44,867.
  - Nontax revenues: SMP projection 3,414; Outturn 7,788; Initial Budget 7,618.
  - Domestic primary expenditures: SMP projection 47,757; Outturn 56,231; Initial Budget 68,482.
  - Domestic primary current expenditures: SMP projection 41,512; Outturn 45,908; Initial Budget 53,640.
  - Domestically financed investment: SMP projection 6,245; Outturn 10,323; Initial Budget 14,842.
  - Domestic primary balance: SMP projection -17,091; Outturn -13,774; Initial Budget -15,998.
  - Revenues (percent of GDP): 5.7, 7.9, 9.9.
  - Tax revenues (percent of GDP): 5.1, 6.5, 8.5.
  - Nontax revenues (percent of GDP): 0.6, 1.5, 1.4.
  - Domestic primary expenditures (percent of GDP): 8.9, 10.5, 13.0.
  - Primary current expenditures (percent of GDP): 7.8, 8.6, 10.2.
  - Domestically financed investment (percent of GDP): 1.2, 1.9, 2.8.
  - Domestic primary balance (percent of GDP): -3.2, -2.6, -3.0.
- Drivers of fiscal outcomes:
  - Revenue overperformance at end-September: total fiscal revenue KMF 42.5 billion vs projected KMF 30.7 billion. Tax revenue KMF 34.6 billion vs projected KMF 27.3 billion.
    - Overperformance reflects about equal shares of temporary factors (delayed tax payments from 2020 due to changes in filing deadlines) and more permanent factors (improvements in tax and customs administration).
  - Spending overruns: domestic primary expenditure KMF 56.2 billion at end-September (substantially higher than programmed and the initial 2021 budget).
    - Causes: (i) unexpected spending of KMF 2.6 billion on vaccinations (authorities hope for WB reimbursement); (ii) automatic spending out of parts of non-tax revenue that came in higher-than-expected; (iii) weaknesses in spending controls.
- End‑September quantitative targets: six of seven met.
  - Met: Tax revenue (Target 1), Net international reserves (Target 3), Net domestic arrears reduction (Target 4), Cash transfers (Target 5), Avoidance of external arrears (Target 6), Avoidance of contracting non-concessional debt (Target 7).
  - Missed: Domestic primary fiscal deficit after adjustment for higher-than-programmed overall revenue (Target 2).
- Structural benchmarks at end-September: both met.
  - Benchmark 1: Raised number of active taxpayers at large and small taxpayer offices and sent requests to file tax declarations.
  - Benchmark 2: Prepared terms of reference and issued a call for interest for the audit of domestic arrears (staff notes terms of reference later specified to explicitly include cross arrears with SOEs and arrears between SOEs).
- Progress toward end-December targets (staff projection):
  - Likely to meet six out of seven quantitative targets; fiscal balance target at substantial risk.
  - Target 1 (tax revenue): staff projects KMF 44.9 billion (against target KMF 41.9 billion).
  - Target 2 (domestic primary fiscal balance): at risk of missing adjusted ceiling due to Q3 spending overruns; authorities intend to slow non-priority spending and strengthen spending controls.
  - Target 3 (net international reserves): level at end-November remains substantially above program floor.
  - Target 4 (net domestic arrears): prospects favorable given clearance through end-September.
  - Target 5 (cash transfers): overperformance at end-September makes end-December target within reach.
  - Target 6 (avoid external arrears): favorable prospects; note: arrears to Exim Bank India (USD 0.2 million) had arisen by late October/early November; authorities intend to clear these before year-end.
  - Target 7 (no new non-concessional borrowing): authorities report no plans; exploring concessional financing for hospital project with the World Bank.

### Policy priorities, program risks, and recommended actions
- Policy priorities and reforms:
  - Strengthen spending controls and slow non-priority spending to meet adjusted fiscal ceilings given limited fiscal space and high debt-sustainability risks.
  - Continue mobilizing external concessional financing and coordinate capacity development with international partners.
  - Implement public financial management reforms, strengthen SOE oversight, and create an effective asset declaration framework for senior public officials.
  - Strengthen the financial sector and pursue restructuring/recapitalization of SNPSF as needed.
- Risks:
  - High risk of external debt distress driven by recent non-concessional borrowing (4.5 percent of GDP loan) and pandemic effects.
  - Fiscal risks from spending overruns and weaknesses in spending controls.
  - Banking sector weaknesses: deteriorated capital adequacy, asset quality, and profitability in 2020; incomplete information on 2021 FSIs.
  - Potential COVID-19 related risks (including Omicron) remain; authorities remain vigilant to related risks.
- Staff recommendations and support:
  - Urge authorities to meet all end-December quantitative targets, including by slowing non-priority spending and strengthening spending controls.
  - Support extension of SMP to March 15, 2022 and rescheduling of three structural benchmarks to end-February 2022, while urging acceleration of structural reforms to meet outstanding benchmarks on time.
  - Support authorities’ efforts to mobilize external concessional financing and provide capacity development in coordination with partners.

*International Monetary Fund. Staff report and program documents for the Union of the Comoros SMP (July 22–December 31, 2021).*

### 14. The authorities have already met one of the six end-December structural benchmarks

### 14. The authorities have already met one of the six end-December structural benchmarks

### Progress on end-December structural benchmarks
- The authorities have met 1 of the 6 end-December structural benchmarks and appear to be on track to meet 2 more; they request rescheduling of the remaining 3 benchmarks to end-February 2022.
- Benchmark 1: Authorities continue making good progress in raising the number of active taxpayers, building on efforts through September.
- Benchmark 2: Adopted a roadmap for extending the coverage of the Treasury Single Account, with Fund technical assistance, thereby meeting the benchmark.
- Benchmark 3: Commissioning the audit of domestic arrears is delayed due to administrative slippages; authorities requested rescheduling to end-February 2022.
- Benchmark 4: Preparatory work on restructuring postal bank SNPSF is delayed due to complexity and organizational challenges; authorities requested rescheduling to end-February 2022.
- Benchmark 5: Efforts to create a framework for reporting on public procurement are progressing as planned; part of the required actions have been implemented already.
- Benchmark 6: Strengthening the anti-corruption law for asset declarations and an effective anti-corruption entity is significantly behind schedule due to missed meetings with LEG technical assistance staff and complexity arising in part from 2018 constitutional changes; authorities requested rescheduling to end-February 2022 and have designated an official in charge to allow a LEG mission to start.

### Outlook and risks
- Growth projections:
  - 1.6 percent in 2021.
  - 3.8 percent in 2022.
  - Progress in vaccinations supports the outlook: starting from a vaccination rate of 29 percent of the population at end-November 2021, authorities hope to vaccinate most of the population by the end of 2022.
  - Authorities are procuring vaccines suited for young people with support from COVAX and UNICEF; note of vaccine hesitancy and policy measures (restricting access to public buildings for the unvaccinated and requiring vaccinations for civil servants). Authorities stand ready to tighten lockdown measures in case of a new wave.
- Inflation: Revised up somewhat in light of higher import prices, but average annual inflation remains low reflecting base effects and the peg to the euro.
- Current account and reserves:
  - Current account balance revised up in 2021 and to a lesser extent over the medium term, primarily due to more robust remittance inflows.
  - International reserves remain higher over the projection period, dropping to 7.6 months of imports in 2026 (compared to 5.4 months before).
- Risks (substantial): resurgence of the pandemic (e.g., new virus variant), inter-island political tensions, and severe capacity constraints that could undermine program implementation.

### Fiscal projections and composition
- Tax revenue projections:
  - Raised to 8.4 percent of GDP for 2021 (from 7.9 percent of GDP).
  - 8.5 percent of GDP in 2022.
- Non-tax revenue: Revised to a constant 1.5 percent of GDP per year (from 1 percent of GDP).
- Donor support projections: Unchanged from the SMP request.
- Domestic primary spending projections: Revised up by somewhat less than revenue; projected domestic primary deficits in 2021 and 2022 are now 0.5 percent of GDP smaller than in the SMP request.
- Fiscal consolidation and financing:
  - Starting in 2023 projections allow full use of higher revenue to smooth consolidation envisaged in the SMP request.
  - At an average 0.8 percent of GDP over the medium term (2022-26), unmet financing needs are now somewhat smaller than envisaged at the time of the SMP request.
- Adjusters and spending flexibility:
  - Staff proposes scaling back the revenue adjustor: authorities may raise spending by half of excess revenue for the first 1 percent of GDP in excess revenue, and by the full amount of any additional revenue.
  - Under current revenue projections the proposed adjustor will lower the program ceiling for the primary domestic fiscal deficit from 3.5 percent of GDP to 3.0 percent of GDP at end-December.
  - Proposed adjustor for unexpected domestic spending on vaccinations will raise the fiscal spending ceiling by the full amount of unanticipated spending on vaccinations; authorities report such spending of KMF 2.6 billion (0.5 percent of GDP).
- Budget and SDR use:
  - Parliament adopted a revised budget for 2021 allowing higher domestically financed investment spending than the SMP; authorities intend to keep the fiscal deficit within program limits and ensure the 2022 budget law is consistent with program projections.
  - The authorities have not yet used any of the 2021 SDR allocation so far; they intend to use one third of the allocation in 2021 and preserve the rest as a fiscal buffer.

### Fiscal structural reforms — recommendations and actions
- Rescheduling: Staff proposes rescheduling the audit of domestic debt benchmark to end-February 2022; authorities prepared terms of reference and a shortlist of service providers; French Development Agency co-finances and assists with commissioning.
- Key PFM recommendations (in line with IMF technical assistance):
  - Strengthen spending controls (intend to impose quarterly spending limits; create a Treasury Accounting Agency; implement SIMBA software).
  - Adopt an action plan for extending coverage of the Treasury Single Account (structural benchmark).
  - Progress on strengthening fiscal accounting and reporting by adopting the revised PFM Organic Law, Accounting and Fiscal Reporting Regulation, and budget and accounting manuals.
  - Strengthen SOE oversight, ensure SOE tax compliance, and align SOE wage compensation with the civil service.
- Tax policy and administration priorities:
  - Abolish the sales tax exemption for construction materials in the first quarter of 2022 (not yet done).
  - Use Fund technical assistance in early 2022 to determine further tax policy reforms.
  - Tax administration measures: (i) strengthen use of SIGIT software; (ii) ensure transparent procedures to identify and register taxpayers and stop competing taxpayer registration by VIGOR by end-December (delayed from end-September); (iii) improve administration for large and medium taxpayers, including SOEs and those outside the main island; (iv) intensify recovery of unpaid taxes.
  - Customs administration measures: (i) complete transfer of management of fuel products taxes to customs; (ii) strengthen risk management; (iii) deploy an internal control system and develop a decision-making information system; (iv) finalize draft framework instruction for customs procedures.

### Restructuring the postal bank and financial sector strengthening
- Rescheduling: Preparatory work for restructuring postal bank SNPSF delayed; staff proposes rescheduling related benchmark to end-February 2022. Benchmark requires splitting SNPSF into postal and banking activities and applying for a banking license based on a viable business plan. Authorities created a focused team to advance the reform.
- Financial sector measures and supervision:
  - BCC to conduct targeted onsite inspections in financial institutions by the end of Q1 2022 to assess asset quality impact from COVID and credit maturity extensions.
  - A commission on NPLs has issued recommendations on accelerating court proceedings.
  - BCC continued work to strengthen risk-based supervision, operationalize bank resolution framework, lay foundations for a government securities market, strengthen liquidity management, and create an emergency liquidity assistance framework with MCM technical assistance.
- Contingent liabilities: Government nationalized a commercial bank in November 2020; the bank holds more than KMF 9 billion in (mostly retail) deposits and represents a substantial contingent liability. Government is seeking a purchaser and should strengthen bank management to avoid losses.

### Strengthening governance and anti-corruption measures
- Rescheduling: Preparatory work for a framework for asset declarations encountered delays; staff proposes rescheduling related benchmark to end-February 2022. Authorities are strengthening internal coordination to utilize Fund technical assistance.
- Audit of IMF emergency financing (2020):
  - Staff and authorities agreed that the Court of Auditors will perform the audit.
  - Authorities intend to commission the audit in December 2021, publish the full audit report within six weeks after audit completion, and publish semi-annual reports on follow-up measures for as long as these measures continue.
- Safeguards and AML/CFT:
  - Progress on recommendations of the 2020 safeguards assessment: BCC prepared a plan to strengthen internal audit, appointed a vice-governor, plans to adopt IFRS for fiscal year 2021 accounts, and efforts to amend BCC statutes are underway.
  - AML/CFT reforms: A national risk assessment is being prepared and will be published in early 2022; thereafter authorities will prepare an AML/CFT law in line with Financial Action Task Force standards. Meanwhile, BCC is reaching out to commercial banks to raise awareness and is enhancing risk-based supervision, including onsite inspections.

### Capacity development, data, and next steps
- IMF support: Intensive capacity development program with hands-on technical assistance; Fund placing a peripatetic expert on PFM issues in Comoros (shared with Madagascar).
- Data shortcomings: Delays in data provision across key indicators, particular concerns on fiscal data and national accounts; raw data for aggregate GDP and BoP statistics have significant accuracy limitations; expanded use of targeted surveys recommended. Authorities may wish to strengthen staffing and equipment of INSEED.
- Potential follow-on financing: Successful SMP implementation could allow discussion of a potential ECF-arrangement in 2022; staff updated quarterly projections for the interim period between the end of the SMP and potential consideration of a financial arrangement.

### Staff appraisal — key points
- Authorities protected lives and macroeconomic stability during COVID; low recorded COVID infections and deaths attributed in part to strict lockdown measures.
- Growth expected to accelerate in 2022 partly due to vaccinations; Comoros had 29 percent of the population fully vaccinated and ranks among the 10 sub-Saharan African countries with the highest vaccination rates.
- SMP implementation at end-September was satisfactory: authorities met all but one quantitative target and both structural benchmarks; they pushed tax revenue substantially above target and made social transfers above target.
- Domestic primary fiscal balance remained below initial projections and the unadjusted ceiling; the ceiling after adjustment for excess revenue was missed, reflecting weaknesses in expenditure control that authorities are addressing.

*IMF staff summary based on the provided chapter content.*

### 37. Preparations for several structural reforms that were to be completed by

### 1comea2022001 - 37. Preparations for several structural reforms that were to be completed by

### Progress and delays in structural reforms
- Preparations for several structural reforms due by end-December have run into delays.
- Three out of six structural benchmarks at end-December are at risk.
- At the authorities’ request, staff proposes to:
  - Reschedule these benchmarks to end-February 2022.
  - Extend the SMP to March 15, 2022.
- Structural reforms have progressed slowly in areas not directly covered by the SMP.
- Specific unresolved implementation issues:
  - The authorities have not yet removed the sales tax exemption for construction materials.
  - Taxpayers continue to be registered through two IT systems, creating unnecessary complexity that can undermine revenue mobilization.

### Staff responses and recommended corrective actions
- Staff welcomes the authorities’ planned corrective actions, including:
  - A slowing of commitments for non-priority spending.
  - A strengthening of spending controls.
- Fiscal alignment recommendation:
  - It will be important that the budget for 2022 be aligned with fiscal projections under the program.
- Staff support and conditionalities:
  - Staff supports the authorities’ request for extending the SMP to March 15 and rescheduling three structural benchmarks to end-February.
  - Staff urges the authorities to accelerate preparatory work for structural benchmarks and to speed up implementation of structural reforms more broadly.
  - Staff will continue to support the authorities through very substantial technical assistance and capacity building efforts.

### Key quantitative outcomes and targets (End-September 2021; Cumulative since end previous year)
- Target / Adjusted / Actual / Status (selected items)
  - Floor on tax revenues: 27,251.7 / 27,251.7 / 34,823.9 — Met
  - Ceiling on the primary domestic fiscal deficit: -17,090.9 / -5,299.9 / -13,774.2 — Not Met
  - Floor on net international reserves (million KMF): 85,900.8 / 85,900.8 / 131,400.0 — Met
  - Ceiling on the accumulation of new domestic payments arrears, net: 0.0 / 0.0 / -2,116.8 — Met
  - Floor on social cash transfers: 3,000.0 / 3,000.0 / 4,900.0 — Met
  - Ceiling on new external arrears: 0.0 / 0.0 / 0.0 — Met
  - Ceiling on new nonconcessional external debt contracted or guaranteed by the government: 0.0 / 0.0 / 0.0 — Met

### Indicative targets and projections (End-December 2021 and Projections for End-March and End-June 2022)
- Selected items (Actual End-September 2021 / SMP Request End-December / First Review End-December / End-March projection / End-June projection)
  - Floor on tax revenues: 34,823.9 / 41,925.8 / 41,925.8 / 9,160.5 / 20,611.0
  - Ceiling on the primary domestic fiscal deficit: -13,774.2 / -18,259.9 / -18,259.9 / -7,785.8 / -13,010.0
  - Floor on net international reserves (million KMF): 131,400.0 / 86,278.3 / 86,278.3 / 86,278.3 / 86,655.7
  - Ceiling on the accumulation of new domestic payments arrears, net: -2,116.8 / 0.0 / 0.0 / 0.0 / 0.0
  - Floor on social cash transfers: 4,900.0 / 5,800.0 / 5,800.0 / 1,275.0 / 2,550.0
  - Ceiling on new external arrears: 0.0 / 0.0 / 0.0 / 0.0 / 0.0
  - Ceiling on new nonconcessional external debt contracted or guaranteed by the government: 0.0 / 0.0 / 0.0 / 0.0 / 0.0

### Proposed and revised structural benchmarks (timing and comments)
- Benchmark 1:
  - Raise the number of active taxpayers by 10 percent at both the large taxpayer office (from 258 in May) and the medium and small taxpayer office (from 300 in May) and send all these taxpayers requests to file tax declarations.
  - Purpose: Boost tax revenue to enable greater investment in human and physical capital and safeguard debt sustainability.
  - SMP request timing: December 31, 2021
  - Revised timing: December 31, 2021
- Benchmark 2:
  - Adopt a road map for extending the coverage of the Treasury Single Account (TSA) to all transactions relating extrabudgetary entities, public administrative bodies, and foreign-financed projects.
  - Purpose: Enhance PFM by strengthening expenditure control and transparency.
  - SMP request timing: December 31, 2021
  - Revised timing: December 31, 2021 — Already met
- Benchmark 3:
  - Commission an audit of domestic arrears including cross-arrears with SOEs as a step towards preparing a strategy for clearing them.
  - Purpose: Enhance PFM by strengthening budget execution and transparency; improve business climate.
  - SMP request timing: December 31, 2021
  - Revised timing: February 28, 2022
- Benchmark 4:
  - Adopt a law/decree splitting SNPSF into postal and banking activities; and submit to the Central Bank of Comoros (BCC) an application for approval of the new Postal Bank that enshrines: (i) strong governance in line with applicable international standards and the requirements of the BCC as the bank's regulator and supervisor, (ii) a viable business plan adopted in consultation with IMF staff, and (iii) profiles of future managers that ensure adequate management expertise and experience in banking and credit risk management.
  - Purpose: Enhance the management of SOEs and reduce unnecessary drains on the budget.
  - SMP request timing: December 31, 2021
  - Revised timing: February 28, 2022
- Benchmark 5:
  - Issue a circular/guidance regarding the submission to a nominated procurement agency of documentation on all large public procurement contracts along with the names of awarded companies and the name(s) of their beneficial owner(s); and prepare a plan that sets out the steps and timeline for the publication of this documentation along with the names and beneficial ownership information of the assigned companies on an easily accessible website.
  - Purpose: Improve good governance and safeguard public resources.
  - SMP request timing: December 31, 2021
  - Revised timing: December 31, 2021

*Source: https://www.imf.org/-/media/files/publications/cr/2022/english/1comea2022001.pdf*

### 6.  Adopt in the Council of

### 6.  Adopt in the Council of Ministers amendments to the 2008 anti-corruption law (N° 08-013/AU)

### Policy actions and requirements
- Adopt amendments that will:
  - (i) enhance preventive measures including those related to conflicts of interest and the creation of an effective asset declaration system for senior public officials in line with international best practices aimed at the collection/verification of asset declarations, the imposition of sanctions for failure and false reporting, and the provision of access to the declarations;
  - (ii) set out the legal framework for creating an operationally independent and autonomous public entity with powers to set up the country’s anti-corruption policy priorities, manage an effective asset declarations system, maintain a public anti-corruption complaints platform; and ensuring investigative capacity and powers.
- Operationalize asset declaration regime for senior officials to lower corruption risks.

### Deadlines
- December 31, 2021
- February 28, 2022

### Key fiscal and macroeconomic indicators (selected figures preserved exactly as in source)
- Real GDP: 3.6 (2018), 1.8 (2019), -0.5 (2020), 1.6 (2021 Est.), 1.6 (2022 SMP Req.), 3.8 (2023 Proj.), 3.7 (2024), 3.9 (2025), 4.3 (2026), 4.4
- Consumer price index (annual average): 1.7 (2018), 3.7 (2019), 0.8 (2020), -1.0 (2021 Est.), 1.5 (2022 SMP Req.), 1.6 (2023 Proj.), 1.7 (2024), 1.8 (2025), 1.9 (2026), 2.0
- Total revenue and grants (percent of GDP): 17.8 (2018), 15.8 (2019), 18.3 (2020), 16.5 (2021 Est.), 17.8 (2022 SMP Req.), 17.7 (2023 Proj.), 16.4 (2024), 16.7 (2025), 17.1 (2026), 18.0
- Total expenditure and net lending (percent of GDP): 19.2 (2018), 20.2 (2019), 18.8 (2020), 20.7 (2021 Est.), 21.5 (2022 SMP Req.), 22.0 (2023 Proj.), 20.3 (2024), 18.7 (2025), 18.8 (2026), 19.2
- Domestic primary balance (percent of GDP): -1.0 (2018), -2.9 (2019), -1.4 (2020), -3.5 (2021 Est.), -3.0 (2022 SMP Req.), -3.3 (2023 Proj.), -2.0 (2024), -0.1 (2025), -0.1 (2026), -0.2
- Overall balance (cash basis, percent of GDP): -1.2 (2018), -3.9 (2019), -0.8 (2020), -4.2 (2021 Est.), -3.7 (2022 SMP Req.), -4.3 (2023 Proj.), -3.9 (2024), -2.0 (2025), -1.7 (2026), -1.2
- Gross international reserves (end of period, in millions of U.S. dollars): 198.4 (2018), 200.2 (2019), 292.2 (2020), 350.2 (2021 Est.), 352.8 (2022 SMP Req.), 393.7 (2023 Proj.), 388.5 (2024), 387.0 (2025), 392.1 (2026), 398.9
- Current account balance (percent of GDP): -2.9 (2018), -3.3 (2019), -1.7 (2020), -4.1 (2021 Est.), -1.7 (2022 SMP Req.), -3.8 (2023 Proj.), -5.5 (2024), -4.2 (2025), -5.1 (2026), -6.0
- Exports of goods and services (percent of GDP): 12.6 (2018), 12.0 (2019), 7.3 (2020), 8.9 (2021 Est.), 8.6 (2022 SMP Req.), 10.9 (2023 Proj.), 10.9 (2024), 11.0 (2025), 11.1 (2026), 11.2
- Imports of goods and services (percent of GDP): 30.2 (2018), 29.6 (2019), 28.4 (2020), 30.4 (2021 Est.), 30.4 (2022 SMP Req.), 33.6 (2023 Proj.), 33.4 (2024), 31.2 (2025), 31.4 (2026), 31.6

### Fiscal tables — selected exact figures (millions of Comorian francs)
- Total revenue and grants: 87,492 (2018), 82,714 (2019), 95,753 (2020 Est.), 86,856 (2021 Est.), 94,903 (2022 SMP Req.), 99,660 (2023 Proj.), 97,788 (2024), 104,827 (2025), 114,215 (2026), 128,013
- Revenues: 55,099 (2018), 50,013 (2019), 48,538 (2020 Est.), 47,178 (2021 Est.), 54,756 (2022 SMP Req.), 56,259 (2023 Proj.), 61,548 (2024), 67,076 (2025), 73,197 (2026), 80,070
- Tax revenues: 40,617 (2018), 35,563 (2019), 40,411 (2020 Est.), 41,926 (2021 Est.), 44,872 (2022 SMP Req.), 47,757 (2023 Proj.), 52,584 (2024), 57,497 (2025), 63,068 (2026), 69,304
- Total expenditure and net lending: 94,105 (2018), 105,366 (2019), 98,427 (2020 Est.), 109,212 (2021 Est.), 114,848 (2022 SMP Req.), 123,888 (2023 Proj.), 120,692 (2024), 117,229 (2025), 125,818 (2026), 136,463
- Current expenditure: 58,177 (2018), 58,931 (2019), 56,213 (2020 Est.), 65,540 (2021 Est.), 66,730 (2022 SMP Req.), 71,316 (2023 Proj.), 67,969 (2024), 70,421 (2025), 76,109 (2026), 82,730
- Capital expenditure: 36,559 (2018), 43,891 (2019), 40,741 (2020 Est.), 43,672 (2021 Est.), 48,118 (2022 SMP Req.), 52,572 (2023 Proj.), 52,723 (2024), 46,808 (2025), 49,708 (2026), 53,732
- Domestic primary balance: -4,975 (2018), -14,990 (2019), -7,521 (2020 Est.), -18,260 (2021 Est.), -15,815 (2022 SMP Req.), -18,886 (2023 Proj.), -11,803 (2024), -756 (2025), -850 (2026), -1,737
- Overall balance (cash basis): -5,864 (2018), -20,309 (2019), -3,953 (2020 Est.), -22,357 (2021 Est.), -19,945 (2022 SMP Req.), -24,228 (2023 Proj.), -22,905 (2024), -12,403 (2025), -11,602 (2026), -8,449
- Financing (total): 7,562 (2018), 20,697 (2019), 5,611 (2020 Est.), 22,357 (2021 Est.), 19,945 (2022 SMP Req.), 20,769 (2023 Proj.), 18,942 (2024), 5,082 (2025), 6,494 (2026), 3,259
- Foreign (net) financing: 4,905 (2018), 12,194 (2019), 5,863 (2020 Est.), 13,607 (2021 Est.), 15,376 (2022 SMP Req.), 22,483 (2023 Proj.), 24,914 (2024), 8,103 (2025), 7,873 (2026), 3,948

### Monetary and balance of payments highlights (selected exact figures)
- Broad money (end-period, millions CF): 138,528 (2018), 146,711 (2019), 163,547 (2020), 187,727 (2021 SMP Req.), 192,985 (2022 Proj.), 202,634 (2023), 215,805 (2024), 228,043 (2025), 242,412 (2026), 258,203
- Net foreign assets (Central Bank, in millions CF): 85,756 (2018), 88,614 (2019), 118,106 (2020), 144,651 (2021 SMP Req.), 145,742 (2022 Proj.), 159,270 (2023), 155,118 (2024), 152,718 (2025), 153,300 (2026), 154,785
- Current account (millions CF): -13,995 (2018), -16,981 (2019), -8,887 (2020), -21,811 (2021 Est.), -8,850 (2022 SMP Req.), -21,461 (2023 Proj.), -32,759 (2024), -26,454 (2025), -34,402 (2026), -42,510
- Exports (millions CF): 17,986 (2018), 17,831 (2019), 9,502 (2020), 11,832 (2021 Est.), 11,828 (2022 SMP Req.), 16,370 (2023 Proj.), 17,123 (2024), 17,941 (2025), 18,926 (2026), 20,157
- Imports (f.o.b., millions CF): -102,995 (2018), -105,683 (2019), -102,688 (2020), -113,768 (2021 Est.), -108,259 (2022 SMP Req.), -129,732 (2023 Proj.), -136,051 (2024), -135,148 (2025), -145,254 (2026), -155,894
- Oil imports (millions CF): -25,985 (2018), -30,436 (2019), -30,587 (2020), -33,509 (2021 Est.), -33,509 (2022 SMP Req.), -36,295 (2023 Proj.), -36,806 (2024), -37,702 (2025), -38,537 (2026), -39,578

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

### Annex I. Risk Assessment Matrix

### Annex I. Risk Assessment Matrix

### Global Risks
- Global resurgence of the Covid-19 pandemic requiring costly containment efforts.  
  - Relative likelihood: Medium.  
  - Time Horizon: ST, MT.  
  - Impact on Comoros: High.  
  - Policy responses:
    - Speed up vaccination as much as possible given vaccine supply constraints, preferably with vaccines shown to be highly effective.
    - Use of social distancing as needed.
- Uncontrolled Covid-19 local outbreaks and subpar/volatile growth; local outbreak forces new lockdowns while policy response to cushion the economic impact is constrained.  
  - Relative likelihood: High.  
  - Time Horizon: ST, MT.  
  - Impact on Comoros: High.  
  - Policy responses:
    - Speed up vaccination as much as possible given vaccine supply constraints, preferably with vaccines shown to be highly effective.
    - Use of social distancing as needed.
- Sharp rise in global risk premia exposes financial and fiscal vulnerabilities, leading to higher debt service and refinancing difficulties.  
  - Relative likelihood: Medium.  
  - Time Horizon: ST.  
  - Impact on Comoros: Low.  
  - Policy responses:
    - Strengthen debt sustainability by raising fiscal revenue and adopting a suitable fiscal anchor.

### Domestic Risks
- Policy slippages: delayed structural reforms could undermine revenue mobilization, adding pressures on the public finances; taking up of additional non-concessional debt could quickly undermine debt sustainability.  
  - Relative likelihood: High.  
  - Time Horizon: ST, MT.  
  - Impact on Comoros: High.  
  - Policy responses:
    - Implement macroeconomic policies and structural reforms as described in the SMP, particularly those related to raising fiscal revenue.
- Widespread social discontent and political instability as pandemic-related economic support is withdrawn and the opposition continues to reject the 2018 constitution.  
  - Relative likelihood: High.  
  - Time Horizon: ST, MT.  
  - Impact on Comoros: High.  
  - Policy responses:
    - Provide support to the most vulnerable, including those in the smaller islands, as described in the SMP.
    - Enhance governance, transparency, and the rule of law.
- Deterioration of SOEs’ financial situation and ensuing migration of liabilities to the central government.  
  - Relative likelihood: High.  
  - Time Horizon: ST, MT.  
  - Impact on Comoros: High.  
  - Policy responses:
    - Improve supervision of SOEs as described in the SMP.
- Natural disasters (e.g., eruption of the Karthala volcano, another hurricane, or drought).  
  - Relative likelihood: Medium.  
  - Time Horizon: ST, MT.  
  - Impact on Comoros: High.  
  - Policy responses:
    - Implement the adaptation strategy discussed in Country Report 20/198.

### Recent Economic Developments and Outlook
- Pandemic containment and vaccinations:
  - "The cumulative number of the Coronavirus infections and deaths remains low, notwithstanding a recent increase."
  - Vaccination program: "29 percent of the population now fully vaccinated, and on track to reach a third of the population by the end of this year."
  - Stringent social distancing measures eased; temporary policy measures largely phased out except for expanded cash transfer program to the poor.
- Growth projections:
  - Economy projected to grow "by only about 1½ percent in 2021 and 3½ - 4¼ percent per year over the medium term."
- Program performance to date:
  - Met "most (six out of seven) of the quantitative targets" and both end-September structural benchmarks.
  - Substantially higher-than-programmed tax revenue realized.
  - Domestic primary fiscal deficit kept below the unadjusted program ceiling but exceeded the ceiling after adjustment for higher revenue due to:
    - unexpected spending of KMF 2.6 billion on vaccinations (hoping for World Bank reimbursement);
    - automatic spending out of parts of non-tax revenue that came in higher than expected;
    - weaknesses in spending controls.
- End-December expectations:
  - Confident to meet "most (at least six out of seven) end-December quantitative targets" and expect to "exceed the key target on tax revenue mobilization by a substantial margin."
  - Target most at risk: ceiling on the domestic primary fiscal deficit.
  - Requested rescheduling of three structural benchmarks at risk to end-February.

### Government Objectives and Policy Responses (MEFP highlights)
A. Containing and Recovering from the Pandemic
- Continue social distancing as needed and vaccinate population as quickly as possible.
- Coordinate with development partners, particularly the WB, to benefit from financial support for vaccinations.
- As of end-October financed vaccine purchases "to the amount of about KMG 2.6 billion from domestic resources."
- Fiscal support in 2021 and 2022:
  - Envisage raising the overall fiscal deficit towards "3¾-4¼ percent of GDP in 2021 and 2022", slightly smaller than previously envisaged.
  - Consider scaling back support as risks recede with vaccination progress.

B. Laying the Ground for Higher, More Inclusive, and More Robust Growth
- Address key challenges: tight fiscal constraints, vulnerability to shocks, limited civil service implementation capacity, weak judicial system, governance challenges, vulnerability to climate change.

C. Strengthening Fiscal Policy
- Raising fiscal revenue:
  - "Tax revenue in Comoros is the lowest among small island states world-wide."
  - On track to raise revenue by "more than 1 percent of GDP in 2021."
  - Aim to raise tax revenue by "another 0.3 percent of GDP in 2022 and every year thereafter" after accounting for transitory 2021 revenue.
  - Tax administration priorities include:
    - Strengthen use of SIGIT software.
    - Stop competing taxpayer registration by VIGOR by end-December 2021.
    - Improve tax administration for large and medium taxpayers, including SOEs and those outside the main island.
    - Intensify recovery of unpaid taxes.
  - Customs priorities include transferring management of fuel products taxes to customs; strengthening risk management; deploying internal control system; finalizing draft framework instruction for customs procedures.
  - Policy change: remove the sales tax exoneration for construction materials in the first quarter of 2022 (action delayed from Q4 2021).
  - Conditionality under the SMP:
    - Raise number of active taxpayers by 10 percent at both the large taxpayer office (from 258 in May) and the medium taxpayer office (from 300 in May) and send requests to file tax declarations (structural benchmark).
    - Raise fiscal revenue on a quarterly basis in line with the annual objective (quantitative targets).
- Prudent fiscal stance and debt sustainability:
  - Commit to limiting uptake of new debt to levels consistent with bringing debt indicators below high-risk thresholds before end-2020s.
  - Commit to avoid taking up any non-concessional borrowing during the duration of the SMP (quantitative target).
  - Intend to use "about one third of the recent SDR allocation for fiscal spending in 2021" and preserve the rest as a buffer.
- Fiscal framework for 2021:
  - Revenue and grants projected at "17.8 percent of GDP."
  - Intend to spend (at most) "21.5 percent of GDP," of which at least "1.1 percent of GDP for cash transfers to the poor" (quantitative targets).
  - This translates to an overall cash deficit of "3.7 percent of GDP" and, under current donor support assumptions, a domestic primary fiscal deficit of "3 percent of GDP," below the ceiling for the domestic primary fiscal deficit of "3.5 percent of GDP" (quantitative targets).
- Strengthening quality of spending and PFM:
  - Adopt a supplementary budget for 2021.
  - Adopt road map for extending coverage of the Treasury Single Account (TSA) to all transactions relating to extrabudgetary entities, public administrative bodies, and foreign-financed projects (structural benchmark).
  - Revise budget framework law of 2012; adopt Accounting and Fiscal Reporting Regulation and budget and accounting manuals; create a Treasury Accounting Agency; fully implement SIMBA software.
  - Enhance spending controls: strengthen commitment controls, cash management, limit use of exceptional payment procedures, adopt quarterly spending limits.
- Arrears and SOE oversight:
  - Commission an audit of domestic arrears including cross-arrears with SOEs (structural benchmark).
  - Recommit to zero net accumulation of new domestic arrears (quantitative target), operationalized as ensuring net accumulation of arrears in 2021 is no higher than net accumulation in the first half of 2021 (KMF 625 million).
  - Renew commitment to avoid accumulating external arrears (quantitative target).
  - Improve SOE oversight: conclude performance contracts with major SOEs; require certified annual balance sheets and profit and loss statements; seek staffing and compensation adjustments; end cross-arrears settlement between the State and SOEs, starting with the state-owned oil company SCH.

D. Monetary Policy and Financial Sector
- BCC will continue prudent monetary policy anchored by cooperation agreement with France and the peg of the Comorian Franc to the Euro.
- Banking sector challenges:
  - NPLs were "around 25 percent of gross credits" before Covid-19 and have grown further since then.
  - Liquidity strains have appeared in some banks in the wake of the pandemic.
  - Financial safety net not fully developed; emergency central bank liquidity assistance facility remains to be created.
  - Lack of financial infrastructure inhibits interbank lending; no organized market, no lending instrument, no collateral; government does not yet issue any bills or bonds.
- Postal Bank SNPSF restructuring:
  - Planned restructuring will result in large fiscal costs over 2021-23.
  - External audit estimated recapitalization and restructuring needs at "US$ 26.9 million (2.1 percent of GDP)."

*Source: 1comea2022001 - Annex I. Risk Assessment Matrix*

### 24.      The government  intends to do the following:

### 24.      The government  intends to do the following:

### Banking sector reforms, NPLs, and financial infrastructure
- Improve the operating environment for banks by:
  - Lowering the frequency of government arrears to suppliers.
  - Further strengthening the judicial system to ensure that banks can realize pledged collateral. A commission on NPLs, gathering the ministry of Finance, the ministry of Justice and the BCC, has recently issued recommendations on accelerating the drafting of court decisions.
- Understand better the drivers and incidence of NPLs:
  - The BCC will implement targeted onsite inspections in financial institutions by the end of Q1 2022 to assess the impact of Covid-19 measures on NPLs.
  - A survey that was conducted in recent months on this has failed.
- Strengthen the financial sector safety net:
  - Create a bank recovery and resolution framework (a law establishing such a framework was adopted in December 2020).
  - Operationalize the BCC’s emergency liquidity assistance function.
- Strengthen financial infrastructure by establishing a government securities market.
- Proceed with the restructuring of SNPSF:
  - Adopt a restructuring strategy that minimizes fiscal risks.
  - Adopt a law/decree splitting SNPSF into postal and banking activities.
  - Submit to the Central Bank of Comoros (BCC) an application for approval of the new Postal Bank that enshrines:
    - (i) strong governance in line with applicable international standards and the requirements of the BCC as the bank's regulator and supervisor,
    - (ii) a viable business plan adopted in consultation with IMF staff,
    - (iii) profiles of future managers that ensure adequate management expertise and experience in banking and credit risk management (structural benchmark, Table 4).

### Preserving external stability
- Maintain reserves coverage and policy commitments:
  - Gross reserves at a comfortable level: "gross reserves of 9 months of imports".
  - Expected to reach a peak in 2022 thanks to strong remittances inflows and then decline gradually.
  - Agreed floor on net international reserves corresponding to gross reserves of 6.8 months of imports (floor on net international reserves, quantitative target, Table 3).
- Policy constraints and commitments:
  - Continue dialogue with the IMF on any balance-of-payments difficulties.
  - Avoid measures that compound balance-of-payments difficulties, including:
    - Not imposing new or intensifying existing restrictions on the making of payments and transfers for international transactions,
    - Not imposing trade restrictions for balance-of-payments purposes,
    - Not adopting multiple currency practices,
    - Not entering into bilateral payments agreements inconsistent with Article VIII of the IMF’s Articles of Agreement.

### Strengthening resilience to natural disasters and climate change
- Government aims to enhance resilience through three pillars:
  - (i) Strengthen efforts to enhance structural resilience through infrastructure and other investments.
  - (ii) Build financial resilience by creating fiscal buffers.
  - (iii) Boost post-disaster (including social) resilience by contingency planning and investments to allow an effective disaster response.
- Implementation notes:
  - Pillar (i) will become increasingly possible as efforts to raise domestic revenue succeed.
  - Comoros will also need support from the international community to finance investment needed to adapt to climate change.

### Strengthening governance and reducing vulnerability to corruption
- Rule of law:
  - Judicial system struggles to ensure property rights and enforce contracts.
  - Steps taken to strengthen the judicial system, including by enhancing its equipment; these efforts have resulted in an acceleration of court cases.
  - Government will try to strengthen the system further.
- Fiscal transparency:
  - Strengthen public financial management (PFM) and oversight of SOEs; enhance fiscal accounting and reporting.
  - Specific measures:
    - Regularly publish comprehensive information on all large public procurement projects:
      - Issue a circular/guidance regarding submission to a nominated procurement agency of documentation on all large public procurement contracts along with names of awarded companies and name(s) of their beneficial owner(s).
      - Prepare a plan setting out steps and timeline for publication of this documentation along with names and beneficial ownership information of awarded companies on an easily accessible website (structural benchmark, Table 4). Work has progressed well and is expected to meet the benchmark ahead of time.
    - Commission and ensure preparation of an independent third-party audit of the spending of IMF emergency financing provided under the RCF/RFI of April 2020:
      - Ask the Court of Auditors to prepare this audit with technical assistance from the IMF.
      - Commit to commission the audit in December 2021, publish the full audit report within six weeks after audit completion, and publish semi-annual reports on follow-up measures for as long as follow-up measures continue.
- Anti-corruption and asset declarations:
  - Strengthen asset declaration regime for high-level officials by adopting in the Council of Ministers amendments to the 2008 anti-corruption law (N° 08-013/AU) that will:
    - (i) enhance preventive measures including conflicts of interest and create an effective asset declaration system for senior public officials in line with international best practices aimed at collection/verification of asset declarations, imposition of sanctions for failure and false reporting, and provision of access to the declarations,
    - (ii) set out legal framework for creating an operationally independent and autonomous public entity with powers to set anti-corruption policy priorities, manage an effective asset declarations system, maintain a public anti-corruption complaints platform, and ensure investigative capacity and powers (structural benchmark, Table 4).
  - Timing and implementation:
    - Work has seen some delays; government will do its best to meet the benchmark by end-February at the latest and will pull in experts from the Ministry of Justice and the Court of Auditors.
- Civil service management:
  - Address capacity constraints, absenteeism, and recover wages paid to “ghost workers”.
  - Explore strengthening hiring via competition/entrance exams across the civil service (already used at the central bank).
  - Strengthen training by creating a school of national administration and introduce performance management.
  - Avoid election-related hiring.

### Other issues (Central Bank, AML/CFT, and statistics)
- Central Bank of Comoros (BCC) actions:
  - Implement key recommendations of the latest IMF safeguards assessment:
    - Strengthen internal audit and financial reporting practices, including by adopting International Financial Reporting Standards (IFRS).
    - Amend BCC legal framework to enhance autonomy.
  - BCC has prepared a plan for strengthening internal audit and appointed a vice-governor.
  - BCC intends to adopt IFRS for the accounts of fiscal year 2021 and is undertaking efforts to amend the BCC statutes.
- Strengthening AML/CFT framework:
  - A national risk assessment is being prepared and will be published in early 2022.
  - Thereafter, prepare an AML/CFT law in line with Financial Action Task Force standards and adopt it.
  - Meanwhile, BCC is raising awareness with commercial banks and enhancing risk-based supervision, including onsite inspections to assess compliance with existing AML/CFT regulations.
- Statistical capacity:
  - Government recognizes serious shortcomings in economic data across sectors.
  - Committed to ensuring INSEED will have sufficient human and capital resources to collect timely price data and continue updating national accounts.
  - No progress yet since start of the SMP but hope to do so in early 2022.

### Program monitoring, quantitative targets, and structural benchmarks (selected numeric targets and outcomes)
- Monitoring and review:
  - IMF staff will monitor the SMP using quantitative indicators (Table 3) and structural benchmarks (Table 4).
  - The second review will assess performance under:
    - (i) end-December 2021 quantitative indicators,
    - (ii) end-December 2021 and end-February 2022 structural benchmarks.
  - If authorities provide fiscal data for end-December 2021 by end-February 2022, the review mission could start in March 2022 at the earliest.
- Selected end-September 2021 outcomes (In millions of Comorian francs, cumulative since end of previous year, unless otherwise specified):
  - Floor on tax revenues:
    - Target: 27,251.7
    - Adjusted: 27,251.7
    - Actual: 34,823.9
    - Status: Met
  - Ceiling on the primary domestic fiscal deficit:
    - Target: -17,090.9
    - Adjusted: -5,299.9
    - Actual: -13,774.2
    - Status: Not Met
  - Floor on net international reserves (million KMF):
    - Target: 85,900.8
    - Adjusted: 85,900.8
    - Actual: 131,400.0
    - Status: Met
  - Ceiling on the accumulation of new domestic payments arrears, net:
    - Target: 0.0
    - Adjusted: 0.0
    - Actual: -2,116.8
    - Status: Met
  - Floor on social cash transfers:
    - Target: 3,000.0
    - Adjusted: 3,000.0
    - Actual: 4,900.0
    - Status: Met
  - Ceiling on new external arrears:
    - Target: 0.0
    - Adjusted: 0.0
    - Actual: 0.0
    - Status: Met
  - Ceiling on new nonconcessional external debt contracted or guaranteed by the government:
    - Target: 0.0
    - Adjusted: 0.0
    - Actual: 0.0
    - Status: Met
- Selected Table 3 excerpts (Actual, SMP Request, First Review projections, cumulative since end of previous year):
  - Floor on tax revenues:
    - Actual (2021): 34,823.9
    - SMP Request (End-December): 41,925.8
    - First Review (End-December): 41,925.8
    - End-March projections: 9,160.5 (SMP Request), 9,551.3 (First Review)
    - End-June projections: 20,611.0 (SMP Request), 21,490.5 (First Review)
  - Ceiling on the primary domestic fiscal deficit:
    - Actual (2021): -13,774.2
    - SMP Request (End-December): -18,259.9
    - First Review (End-December): -18,259.9
    - End-March projections: -7,785.8 (SMP Request), -7,534.4 (First Review)
    - End-June projections: -13,010.0 (SMP Request), -12,255.9 (First Review)
  - Floor on net international reserves (million KMF):
    - Actual (2021): 131,400.0
    - SMP Request (End-December): 86,278.3
    - First Review (End-December): 86,278.3
    - End-March projections: 86,278.3 (both)
    - End-June projections: 86,655.7 (both)
  - Floor on social cash transfers:
    - Actual (2021): 4,900.0
    - SMP Request (End-December): 5,800.0
    - First Review (End-December): 5,800.0
    - End-March projections: 1,275.0 (both)
    - End-June projections: 2,550.0 (both)
  - Ceilings on new external arrears and on new nonconcessional external debt remain at 0.0 across targets and projections.
- Structural benchmarks (selection and timing):
  - Raise number of active taxpayers by 10 percent at both large taxpayer office (from 258 in May) and medium and small taxpayer office (from 300 in May) and send requests to file tax declarations:
    - SMP timing: December 31, 2021
    - Revised timing: December 31, 2021
  - Adopt a road map for extending coverage of the Treasury Single Account (TSA) to extrabudgetary entities, public administrative bodies, and foreign-financed projects:
    - SMP timing: December 31, 2021
    - Revised timing: December 31, 2021
    - Status: Already met
  - Commission an audit of domestic arrears including cross-arrears with SOEs:
    - SMP timing: December 31, 2021
    - Revised timing: February 28, 2022
  - Adopt a law/decree splitting SNPSF into postal and banking activities; submit to BCC an application for approval of the new Postal Bank that enshrines governance, viable business plan in consultation with IMF staff, and manager profiles:
    - SMP timing: December 31, 2021
    - Revised timing: February 28, 2022
  - Issue a circular/guidance on submission to a nominated procurement agency of documentation on all large public procurement contracts with names and beneficial ownership, and prepare a publication plan:
    - SMP timing: December 31, 2021
    - Revised timing: December 31, 2021
  - Adopt in the Council of Ministers amendments to the 2008 anti-corruption law (N° 08-013/AU) to operationalize asset declaration regime for senior officials:
    - SMP timing: December 31, 2021
    - Revised timing: February 28, 2022

### Technical Memorandum of Understanding (TMU) — structural benchmark definitions (selected)
- Active taxpayers benchmark (conditions to be met at end-December):
  - Direction des Grandes Entreprises: number reaches 284 and those taxpayers have been sent requests to file tax declarations.
  - Direction des Moyennes et Petites Entreprises: number reaches 330 and those taxpayers have been sent requests to file tax declarations.
  - Active taxpayers are defined as taxpayers that exhibit economic activity.
- TSA benchmark:
  - Met if, by end-December 2021, authorities have shared with staff a plan setting out difficulties of extending TSA coverage to transactions relating to extrabudgetary entities, public administrative bodies, and foreign-financed projects.
- Audit of domestic debt benchmark:
  - Met if, by end-February 2022, authorities have commissioned from a well-established reputable firm an audit of domestic arrears including cross-arrears with SOEs to validate outstanding invoices and establish the stock of outstanding arrears (government arrears to SOEs, SOE arrears to government, and arrears between SOEs).
- SNPSF restructuring benchmark (met if, by end-February 2022):
  - Adopted a law or issued a decree splitting SNPSF into postal and banking activities, e.g., setting forth the articles of association of the new Postal Bank; and
  - Submitted to the BCC an application for approval of the new Postal Bank that enshrines:
    - (i) strong governance in line with applicable international standards and BCC requirements,
    - (ii) a viable business plan adopted in consultation with IMF staff,
    - (iii) profiles of future managers that ensure adequate management expertise and experience in banking and credit risk management.
  - Governance considered strong if it meets the Basel Committee on Banking Supervision’s Guidelines on Corporate Governance Principles for Banks of July 2015.
  - Managers considered experienced if they meet conditions imposed by the BCC on bank managers.

*Source: 1comea2022001 - 24. The government intends to do the following: (PDF chapter/section).*

### 5.      The benchmark  relating to preparatory  steps on reporting  on public procurement  will

### 1comea2022001 - 5.      The benchmark  relating to preparatory  steps on reporting  on public procurement  will

### Benchmark on preparatory steps for reporting on public procurement
- Benchmark considered met if, by end-December 2021, the authorities have:
  - Issued a circular/guidance regarding the submission to a nominated procurement agency of documentation on all large public procurement contracts along with the names of awarded companies and the name(s) of their beneficial owner(s); and
  - Shared with staff a plan that sets out the steps and timeline for the publication of this documentation along with the names and beneficial ownership information of awarded companies on an easily accessible website.
- Required documentation will include signed public procurement contracts, identification of the mode of tender and selection criteria.
- Definition of large public procurement projects: projects amounting to KMF 10 million or more.

### Definitions and computation methods
- External and domestic defined on a residency basis.
- Program exchange rate is the average rate projected in 2021 as of end August, specifically:
  - 411.91 KMF per U.S. dollar
  - 491.97 KMF per euro
  - 591.38 KMF per SDR
  - 549.22 KMF per AfDB Accounting Unit
- Term government refers to the government of the Union of the Comoros; excludes local governments, the Central Bank of Comoros (BCC), and any public entity with independent legal status, including state-owned enterprises.
- Government domestic revenue:
  - Comprises all tax and non-tax revenue of the government as reported in the Table of Government Financial Operations (TOFE) prepared by the Treasury in the Ministry of Finance, Budget and the Banking Sector.
  - Revenue assessed on a cash basis but includes imputed tax revenue on the salaries of civil servants and administrative housing as well as imputed tax revenue equivalent to the amounts withheld by SCH to provide fuel for the government's consumption and to recover the subsidy on the supply of fuel for SONELEC.
  - To avoid measurement difficulties, total imputed tax revenue in 2021 is fixed at KMF 4,985 billion at end- December, equal to the realizations in 2020.
  - Revenue includes recovered tax arrears but excludes outstanding tax arrears.
  - Proceeds from grants, loans, and asset sales do not count as revenue.
- Government domestically financed expenditure:
  - Comprises all government spending including spending financed by grants, budget support loans, non-concessional loans, and World Bank financing for strengthening the social safety net.
  - Excludes expenditure financed by other project-specific external grants or concessional loans (such as technical assistance, capital maintenance, vaccines, fund transfers or investments in fixed assets).
  - Recapitalization and restructuring costs of state-owned enterprises, such as the SNPSF, are excluded from expenditure and in the case of recapitalization costs are instead recorded as acquisition of assets under financing (“below the line”).
  - Spending is assessed on a payment-order basis but includes also spending executed before payment authorization and not yet regularized.
- Domestic primary fiscal balance: domestic revenue less domestically financed expenditure, excluding interest payments.
- Net international reserves (NIR) of the BCC (for program-monitoring):
  - Defined as short-term (i.e., original maturities of one year or less), tradable foreign assets of the BCC minus short-term external liabilities, and liabilities to the IMF.
  - Excludes foreign assets that are pledged or otherwise encumbered external assets, including assets used as collateral or guarantees for third-party liabilities, or not fully convertible.
  - Securities whose market value on the last day of the year differs by over 20 percent from their original nominal issue price will be assessed at their market value as reported by the BCC.
  - Banks’ deposits related to capital or licensing requirements, and banks’ reserves denominated in foreign currency are excluded from the program definition of NIR.
  - When calculating NIR, all values are to be converted to the actual mid-point market exchange rates prevailing at the test date.
- Debt definition: as in paragraph 8 of the Guidelines on Public Debt Conditionality in Fund Arrangements, Decision No. 15688 (Dec. 5, 2014) — liabilities created under a contractual agreement requiring future payments in assets or services.
- Concessional debt: debt with a grant element of at least 35 percent; grant element calculated as difference between nominal value and net present value, expressed as a percentage of nominal value.
  - Net present value of debt at contracting date calculated by discounting future debt service payments using a 5 percent discount rate.
- Domestic (external) payment arrears of the government defined as any of:
  - (i) invoices from resident (non-resident) suppliers unpaid within 90 days from the date the payment order (ordonnancement) was cleared, unless non-delivery can be ascertained;
  - (ii) obligations under specific contracts not paid at the time stipulated in the contracts;
  - (iii) tax credits confirmed by the proper authorities after review and not paid within 90 days from the date the payment order was issued;
  - (iv) wages and salaries and any payments to a government employee due in a given month but unpaid on the 30th day of the following month.
  - Arrears exclude debt service forgiven or rescheduled to a later date.
- Social cash transfers: cash transfers supporting vulnerable households that have a direct effect on reducing poverty, including those financed by international development partners.

### Quantitative targets and adjusters
- All quantitative targets (MEFP Tables 1 and 3) assessed cumulatively from the beginning of the calendar year unless stated otherwise.
- Adjusters will account for unexpected developments in budget grants and loans and World Bank support for the project on strengthening the social safety net.
- Floor on tax revenue:
  - Tax portion of government revenue as described above, with imputed revenue in 2021 assumed to equal KMF 4,985 million through end-December, equal to the outturn in 2020.
  - The sought-after increase in revenue in 2021 (0.2 percent of GDP relative to 2020 outturns) must be realized entirely in the cash portion of revenue.
- Ceiling on the domestic primary fiscal deficit will be adjusted as follows:
  - Projected budget support grants and loans at end-December 2021* (in millions of KMF):
    - Budget support grants
      - World Bank 0
      - AfDB** 2,389
      - France 1,968
      - Saudi Arabia 2,500
    - Budget support loans
      - AfDB** 1,730
    - *Cumulative from the beginning of the calendar year.
    - **Full amount of the financial support has already been disbursed.
  - Adjustment rules:
    - Ceiling on the domestic primary fiscal deficit will be fully adjusted downward (i.e., more negative) for unexpected spending on vaccinations that is not financed by support for vaccinations from development partners such as the World Bank.
    - Ceiling will be adjusted upward (i.e., less negative) by one half of the amount by which domestic revenue exceeds expectations, capped at 0.5 percent of GDP. Result: authorities can spend half of any excess revenue for the first 1 percent of revenue, and all of any additional revenue.
    - For reference, domestic revenue is projected to reach KMF 47,175 million in December 2021.
- Floor on net international reserves (NIR) of the BCC will not be adjusted for unexpected changes in budget grants and loans.
  - Authorities would not need to add to reserves any excess in budget grants and loans.
  - In case of a shortfall in budget grants or loans, authorities would still be able to meet the unadjusted target unless a simultaneous shock causes large reserve outflows.
- Ceilings on domestic (external) arrears apply to net accumulation of arrears in the second half of 2021, assessed by subtracting clearance of arrears (incurred in 2021 or earlier) from gross accumulation of arrears, both in the second half of 2021.
  - Domestic arrears accumulated in 2021 through end-June are estimated at KMF 1,779.3.
  - Clearance of domestic arrears outstanding prior to 2021 is estimated at KMF 1,154.6 million as of end-June 2021.
  - External arrears at end-June 2021 stood at USD 6 million.
- Floors on social cash transfers will not be adjusted for unexpected changes in World Bank grants for this project or budget support grants and loans.
  - Authorities would not need to raise these transfers if external support exceeds expectations.
  - Authorities would not be able to reduce these transfers if external support falls short.
- Ceiling on contracting or guaranteeing new non-concessional debt by the government or the BCC will be assessed continuously and excludes IMF credit.
  - Excludes normal short-term import and supplier credits (self-liquidating).
  - Debt being rescheduled or restructured is excluded to the extent used for debt management operations that improve the overall public debt profile.
  - A debt is considered contracted on the signature date of the contract.

### Reporting requirements and additional information
- Authorities will report to staff the information and data in the form mutually agreed with the reporting agency and the frequencies and deadlines specified.
- Authorities will transmit promptly any data revisions and consult staff regarding any information or data not specifically addressed but necessary for program monitoring.
- Periodic data required for the SMP (selected items with frequency and deadline):
  - Real Sector
    - INSEED: Consumer Price Index — Monthly — 1 month
    - INSEED: National accounts, including GDP deflator (historical data and projections) — Annually — 9 months
    - INSEED/BCC: Economic bulletin / note, including data in Excel file — Quarterly — 3 months
    - SONELEC/INSEED/BCC: Electricity production and consumption — Quarterly — 1 mois
  - Monetary Sector
    - BCC: Monetary statistics, government net position, BCC accounts and consolidated accounts of other depository corporations, and reserve position — Monthly — 45 days
  - Fiscal Sector
    - CREF: Tofe (including a file detailing social spending: education, health, support for the most vulnerable) — Quarterly — 2 months
    - Tresor: Treasury cash flows — Monthly — 2 weeks
    - Debt Service: Monitoring of public debt (contracted debt, disbursed debt, interest payments, principal repayment) by external creditor and by domestic financial institution — Quarterly — 1 month
    - Debt Service: External debt arrears — Monthly — 1 month
    - Debt Service: Debt arrears with domestic financial institutions — Monthly — 1 month
    - Debt Service: Debt bulletin — Quarterly — 3 months
    - Customs: Imports in detail (volume, value and corresponding revenue for each tax and duty) — Monthly — 1 month
    - Customs: Exports in detail (volume, value and corresponding revenue for each tax and duty) — Monthly — 1 month
    - General Planning Commission (CGP)/CREF: Monitoring of projects by donor, specifying the terms of project financing (loans or grants) and their nature (investment or current expenditure) — Quarterly — 45 days
  - External Sector
    - BCC: Imports including all petroleum products (volume, value) — Quarterly — 2 months
    - BCC: Exports (volume, value) — Quarterly — 2 months
    - BCC: Formal remittances — Quarterly — 1 month
    - BCC: Informal remittances — Annually — 4 months
    - BCC/National Tourist Office: Number of visitors — Annually — 3 months
    - BCC: Balance of payments — Annually — 4 months
  - Financial Sector
    - BCC/Banking supervision: Financial soundness indicators of the banking system — Quarterly — 1 month
    - BCC/Banking supervision: Monitoring reports of SNPSF, BDC and BFC — Quarterly — 1 month

*Source: 1comea2022001 - 5.      The benchmark  relating to preparatory  steps on reporting  on public procurement  will (IMF).*

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_Source: https://www.imf.org/-/media/files/publications/cr/2022/english/1comea2022001.pdf_