## _cr06192

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---

### Executive Summary — Background and Political Developments
- Political situation improving; the first constitutional presidential rotation envisaged to take place in April 2006.
- Social tensions increased due to protracted civil service wage arrears and a recent significant adjustment of oil prices.
- Fuel price adjustments implemented: 40 percent increase for gasoline and 71 percent increase for diesel. Government rolled back the price increase on kerosene and lowered customs duties on a range of basic foodstuffs.

### Recent Economic and Social Developments (findings and implications)
- Macroeconomic environment in 2005 remained lackluster, hampered by:
  - Sharp deterioration in terms of trade;
  - Depressed vanilla prices;
  - Oil import costs that have more than doubled.
- Monetary policy: remained prudent; inflation subdued. Year-on-year inflation was zero in August 2005 but expected to pick up in the last quarter due to fuel price hikes.
- Real effective exchange rate (REER) appreciation: 17 percent over the past five years, weakening competitiveness.
- External current account (excluding transfers) expected to widen in 2005 to 7.6 percent of GDP.
- Comoros is HIPC eligible; debt sustainability assessment as of end-2004 showed a debt-to-exports ratio of around 400 percent.
- Remittances remained buoyant in 2005, but net foreign assets fell in the first half of the year.
- Vanilla sector: collapse in world prices over past two years; only top-quality vanilla being exported. Lenders extended repayment periods on past crop credits; government set more differentiated prices for the 2005 crop based on quality. Medium-term expectation: major restructuring of the vanilla sector and donor-supported diversification programs.
- Social conditions: widespread poverty and lack of opportunity; many depend on remittances and civil service employment. Average government salary lag: three-month delays in paying government salaries over past two years. Government spending on health and education did not increase during 2005 as intended.
- Monetary developments in 2005: broad money fell by about 4 percent in the first semester, reflecting a fall in money demand in the form of time deposits. Net claims on the government increased slightly; credit to the private sector fell.

### Fiscal and Program Performance (Staff-Monitored Program, SMP)
- Fiscal performance improved in Q2 2005 but structural reform lagged.
- For end-June 2005: missed 3 of 8 quantitative targets. Wage expenditures exceeded program ceiling; domestic and external arrears to multilateral creditors recorded small net accumulations (about US$0.5 million, essentially to the African Development Bank and the Islamic Development Bank).
- Second-quarter revenue improvements enabled end-June revenue and primary budget surplus targets to be met.
- Risk of missing end-September and end-December quantitative targets based on preliminary Q3 information: sharp fall in pace of revenue collection in Q3; wages difficult to rein in sufficiently to meet end-year targets.
- Authorities’ corrective measures:
  - Revenue-raising measures;
  - Containment of wage costs;
  - Agreement to visible progress on structural reforms before year-end.
- Treasury obtained a new statutory advance from the central bank of FC 1.5 billion (equivalent to 1 percent of GDP) and used it to reduce outstanding wage arrears beyond program provisions.
- Authorities indicated intent to regularize outstanding nonreschedulable external arrears before year-end.

Box — Fiscal Measures Adopted in July 2005 (policy measures)
- Revenue measures:
  - Elimination of all discretionary customs exemptions;
  - Cut in the customs duty on flour imports and elimination of the exemption for bakeries;
  - Simplification of the customs duties and taxes for imports by air freight (adding a flat 20 percent to the transaction value in lieu of actual freight costs to determine CIF valuation).
- Wage-bill containment measures:
  - Immediate freeze on new hirings and retrenchement of temporary personnel;
  - Suspension of planned integrations of temporary personnel hired since September 2003 and of new staff;
  - Requirement of prior approval by the Council of Ministers of new recruitments;
  - Elimination from the civil service roster of all fired, deceased, and absentee personnel;
  - Immediate application of all retirements scheduled for 2005;
  - Elimination of some allowances;
  - Computerization and better control of the civil service payment roster.

### Structural Reforms and Financial Sector (analysis and risks)
- Structural reform delays: public procurement law adopted on August 1; harmonization of budget nomenclature completed but computerized monitoring of expenditure awaits donor financing; customs subcontracting delayed pending broader customs reform; limited progress on offsetting cross debts between government and public enterprises and on privatizations (Comoros Telecom and SCH).
- Financial sector developments:
  - Increased interest from foreign banks; one new banking license granted in 2005.
  - Donor-supported project to improve handling of emigrants’ remittances.
  - 2006 plans: expand regulatory oversight over two microfinance institutions; initiate restructuring of the national development bank and the postal financial services company.
- Staff concern: banks’ overexposure to the vanilla sector and implications for prudential compliance.

### Budget and Medium-Term Financing (targets, gaps, recommendations)
- 2006 budget objectives:
  - Prudent fiscal stance while increasing social expenditure;
  - Preserve consolidation from the 2005 program;
  - Make room to clear arrears and start implementing the I-PRSP.
- 2006 budget numeric targets:
  - Primary surplus targeted at 2 percent of GDP (versus 1.8 percent of GDP for 2005);
  - 1.6 percent of GDP budgeted for clearance of arrears.
- Key tax policy recommendations from FAD technical assistance to be incorporated into the 2006 Finance Law: reduce customs duties in favor of domestic taxes and adopt an ad valorem tax on petroleum products.
- Financing gap and constraints:
  - Full financing of the 2006 budget not yet identified: a gap of US$6.4 million (1.6 percent of GDP) to be covered with external support at the donors’ roundtable.
  - Domestic financing limited to FC 400 million (0.3 percent of GDP) to safeguard the exchange arrangement.

### Interim Poverty Reduction Strategy Paper (I-PRSP) — priorities and implementation
- I-PRSP finalized to support donors’ roundtable; draws on widespread consultations and sets out seven priorities for sustained and equitable economic growth.
- I-PRSP underpinned by a macroeconomic framework aligned with objectives of reducing poverty and securing macroeconomic stability and with the government’s medium-term program. Cost estimates for envisaged social programs were added to the initial draft.
- Implementation to start in 2006 with donor support; I-PRSP intended to better coordinate donor assistance at the donors’ roundtable.
- Staff suggestion: authorities explicitly indicate top priorities among many proposed projects.

### Forward-Looking Issues, Main Risks, and Policy Imperatives
- Fiscal consolidation remains critical for SMP success; government needs to address slippages related to excessive public spending (notably civil service wage bill) and domestic arrears accumulation.
- Main program risk: excessively large civil service remains the major risk to program implementation and macroeconomic stability. Without major retrenchments, the civil service will continue to constrain public finances and prevent the much-needed increase in social expenditures.
- The forthcoming donors’ roundtable is key to Comoros’ medium-term economic and social adjustment prospects and to jumpstarting I-PRSP implementation.
- Authorities committed to stepping up reforms to establish a policy track record necessary to initiate PRGF discussions; meeting SMP quantitative targets is critical to establishing that track record.

### Selected Key Statistics and Projections (preserved exactly as in source)
- Real GDP growth: 2.3 (2002), 2.1 (2003), 1.9 (2004), 2.8 (2005), 3.3 (2006), 4.1 (2007), 5.0 (2008)
- Real GDP per capita: 0.2 (2002), 0.0 (2003), -0.2 (2004), 0.7 (2005), 1.2 (2006), 2.0 (2007), 2.8 (2008)
- Nominal GDP (in millions of Comorian francs): 128,980 (2002), 138,444 (2003), 146,319 (2004), 151,066 (2005), 160,566 (2006), 175,250 (2007), 189,757 (2008)
- Nominal GDP (in millions of U.S. dollars): 247.5 (2002), 316.4 (2003), 369.8 (2004), 392.1 (2005), 411.0 (2006), 449.0 (2007), 486.5 (2008)
- Nominal GDP per capita (in U.S. dollars): 439.1 (2002), 549.6 (2003), 629.0 (2004), 653.0 (2005), 670.3 (2006), 716.9 (2007), 760.6 (2008)
- Consumer price index (annual averages): 3.5 (2002), 3.8 (2003), 4.5 (2004), 3.0 (2005), 3.0 (2006), 3.0 (2007), 3.0 (2008)
- Exports, f.o.b. (annual % change): 9.9 (2002), 26.2 (2003), -41.9 (2004), -39.5 (2005), 3.8 (2006), 4.3 (2007), 5.2 (2008)
- Imports, f.o.b. (annual % change): -0.8 (2002), 10.1 (2003), 10.4 (2004), 15.0 (2005), 5.1 (2006), -1.7 (2007), 9.6 (2008)
- Domestic revenue (in percent of GDP): 27.3 (2002), 3.8 (2003), 0.5 (2004), 9.8 (2005), 6.0 (2006), 14.7 (2007), 8.9 (2008)
- Total expenditure and net lending (in percent of GDP): 25.9 (2002), -6.9 (2003), -7.4 (2004), -0.2 (2005), 12.7 (2006), 17.9 (2007), 7.4 (2008)
- Investment: 12.2 (2002), 11.6 (2003), 10.2 (2004), 10.1 (2005), 11.5 (2006), 13.7 (2007), 14.0 (2008)
- Gross national savings: 11.6 (2002), 7.3 (2003), 7.6 (2004), 3.1 (2005), 4.6 (2006), 8.8 (2007), 8.4 (2008)
- External current account (incl. official transfers): -0.6 (2002), -4.3 (2003), -2.6 (2004), -7.0 (2005), -6.9 (2006), -5.0 (2007), -5.6 (2008)
- Exports of goods and nonfactor services (percent of GDP): 39.1 (2002), 57.7 (2003), 59.6 (2004), 56.2 (2005), 58.6 (2006), 62.3 (2007), 66.8 (2008)
- Imports of goods and nonfactor services (percent of GDP): 64.9 (2002), 90.2 (2003), 102.7 (2004), 119.2 (2005), 122.6 (2006), 121.9 (2007), 133.2 (2008)
- Outstanding external debt (in percent of GDP): 85.7 (2002), 82.9 (2003), 79.0 (2004), 76.0 (2005), 71.4 (2006), 65.4 (2007), 62.2 (2008)
- Gross international reserves (end of period; in millions of U.S. dollars): 80.9 (2002), 97.2 (2003), 96.2 (2004), 84.4 (2005), 75.2 (2006), 80.5 (2007), 79.6 (2008)
- Reserves in months of imports (c.i.f.): 13.8 (2002), 11.5 (2003), 11.1 (2004), 8.6 (2005), 7.4 (2006), 7.9 (2007), 7.2 (2008)
- External payments arrears (end of year; in millions of U.S. dollars): 65.4 (2002), 85.1 (2003), 88.5 (2004), 89.9 (2005), 0.0 (2006), 0.0 (2007), 0.0 (2008)
- Trade composition highlights (exports, percent of exports of goods and nonfactor services):
  - Vanilla: 12.7 (2002), 20.9 (2003), 8.6 (2004), 3.3 (2005), 3.4 (2006), 3.5 (2007), 3.7 (2008)
  - Cloves: 4.1 (2002), 5.9 (2003), 7.3 (2004), 5.2 (2005), 5.3 (2006), 5.5 (2007), 5.8 (2008)
  - Ylang-ylang (perfume oil): 2.0 (2002), 1.5 (2003), 2.1 (2004), 2.3 (2005), 2.4 (2006), 2.5 (2007), 2.6 (2008)

### Quantitative Indicative Targets under the 2005 SMP (selected cumulative figures, In millions of Comorian francs)
- Floor on the domestic primary balance: 2,081 9 295 643 2,620 2,694
- Floor on total domestic revenues: 7,427 4,641 10,155 10,932 19,082 24,756
- Ceiling on the wage bill: 2,933 3,214 6,268 6,542 9,000 11,732
- Ceiling on expenditures made by cash advances: 200 128 425 285 665 900
- Ceiling on the net accumulation of new domestic arrears: 0 83 0 83 0 0
- Ceiling on accumulation of debt service arrears towards multilateral creditors: 0 104 0 299 0 0

### Structural Indicative Targets under the 2005 SMP (measures, deadlines, progress)
- Fiscal administration and budgeting:
  - Transfer shared revenues to the special account with the central bank: Deadline — Continuous; Progress — Implemented
  - Amend tendering laws/practices to strengthen public procurement: Deadline — End-June 2005; Progress — Adopted on August 1, 2005
  - Preserve single customs administration and subcontract customs services: Deadline — End-June 2005; Progress — Subcontracting delayed at World Bank request
  - Harmonize budget nomenclature and introduce computerized real-time monitoring: Deadline — End-September 2005; Progress — Harmonization achieved; computerized monitoring awaiting donor financing
  - Offset debts of government and public/parapublic enterprises: Deadline — End-December 2005; Progress — Preparatory work ongoing
- Legal environment:
  - Adoption by parliament of organic law on distribution of competencies: Deadline — End-February 2005; Progress — Implemented
- Structural privatizations:
  - Privatize the Comorian Hydrocarbons Company: Deadline — End-December 2005; Progress — Preparatory work ongoing
  - Privatize Comoros Telecom: Deadline — End-December 2006; Progress — Preparatory work ongoing

### Relations with the Fund and Development Partners (operational facts)
- IMF membership: Joined 09/21/76; Article VIII.
- Quota: 8.90 SDR Millions (100.00 percent of quota). Fund holdings of currency: 8.36 (93.91). Reserve position in Fund: 0.54 (6.11).
- Outstanding Purchases and Loans: None.
- Latest financial arrangements: SAF Approval Date 06/21/91; Expiration Date 06/20/94; Amount Approved (SDR millions) 3.15; Amount Drawn (SDR millions) 2.25.
- Exchange rate arrangement: Comorian franc pegged to the Euro at €1 = CF 492.
- Article IV consultation: 2005 Article IV consultation concluded on July 18, 2005 (Country Report No. 05/299).
- Recent technical assistance (selected): MFD July 2003; MFD Sep.-Oct. 2003; MFD Feb. 2004; MFD March 2004 / Oct. 2004 / March 2005; FAD Aug. 2005 (Tax policy).

- World Bank relations (as of October 6, 2005):
  - 19 IDA credits totaling US$132.5 million since 1976.
  - Active portfolio: Social Services Project (SSP), a four-year operation of US$13.3 million; SSP became effective on September 29, 2004.
  - Transitional Support Strategy Update (TSSU) objectives: (i) maintaining basic social services; (ii) supporting national reconciliation and transition to viable institutional structure.
  - IFC: no activity in Comoros. MIGA: country has not yet joined.
  - Active credits (as of September 30, 2005): Services Support Project FY2004 Approved 13.3 Committed 3.8 Disbursed.

*Italic source attribution: IMF staff report content as provided in the supplied PDF extract.*

### Executive Summary ......................................................................................................

### Executive Summary

### Background and Political Developments
- The political situation continues to improve; the first constitutional presidential rotation is envisaged to take place in April 2006.
- Social tensions have increased due to protracted civil service wage arrears and a recent significant adjustment of oil prices.
- Fuel price increases: 40 percent for gasoline and 71 percent for diesel. The government rolled back the price increase on kerosene and lowered customs duties on a range of basic foodstuffs.

### Recent Economic and Social Developments
- General economic conditions in 2005 remained lackluster, hampered by the sharp deterioration in terms of trade, depressed vanilla prices, and oil import costs that have more than doubled.
- Monetary policy remained prudent and inflation was subdued; year-on-year inflation was zero in August 2005 but is expected to pick up in the last quarter due to fuel price hikes.
- Real effective exchange rate (REER) appreciation: 17 percent over the past five years.
- External current account (excluding transfers) is expected to widen in 2005 to 7.6 percent of GDP.
- Comoros is HIPC eligible; a debt sustainability assessment as of end-2004 showed a debt-to-exports ratio of around 400 percent.
- Remittances remained buoyant in 2005, but net foreign assets fell in the first half of the year.
- Vanilla sector: collapse in world prices over past two years; only top-quality vanilla is being exported. Lenders extended repayment periods on past crop credits; government set more differentiated prices for the 2005 crop based on quality. Medium-term: major restructuring of the vanilla sector and donor-supported diversification programs are expected.
- Social conditions: widespread poverty and lack of opportunity; many depend on remittances and civil service employment. Average government salary lag: three-month delays in paying government salaries over past two years. Government spending on health and education did not increase during 2005 as intended.
- Monetary developments in 2005: broad money fell by about 4 percent in the first semester, reflecting a fall in money demand in the form of time deposits. Net claims on the government increased slightly; credit to the private sector fell.

### Fiscal and Program Performance (Staff-Monitored Program, SMP)
- Fiscal performance improved in Q2 2005 but structural reform lagged.
- For end-June 2005: Comoros missed 3 of 8 quantitative targets. Wage expenditures exceeded the program ceiling; domestic and external arrears to multilateral creditors recorded small net accumulations (about US$0.5 million, essentially to the African Development Bank and the Islamic Development Bank). Second-quarter revenue improvements enabled end-June revenue and primary budget surplus targets to be met.
- Risk of missing end-September and end-December quantitative targets based on preliminary Q3 information: sharp fall in pace of revenue collection in Q3; wages difficult to rein in sufficiently to meet end-year targets.
- The authorities have taken measures to adhere to fiscal targets: revenue-raising measures, containment of wage costs, and agreement to visible progress on structural reforms before year-end.
- Treasury obtained a new statutory advance from the central bank of FC 1.5 billion (equivalent to 1 percent of GDP) and used it to reduce outstanding wage arrears beyond program provisions.
- Authorities indicated intent to regularize outstanding nonreschedulable external arrears before year-end.

Box 1 — Fiscal Measures Adopted in July 2005
- Revenue measures:
  - Elimination of all discretionary customs exemptions;
  - Cut in the customs duty on flour imports and elimination of the exemption for bakeries (to prevent existing abuses);
  - Simplification of the customs duties and taxes for imports by air freight (by adding a flat 20 percent to the transaction value in lieu of actual freight costs to determine CIF valuation).
- Measures to contain the wage bill:
  - Immediate freeze on new hirings and retrenchement of temporary personnel;
  - Suspension of planned integrations of temporary personnel hired since September 2003 and of new staff;
  - Requirement of prior approval by the Council of Ministers of new recruitments;
  - Elimination from the civil service roster of all fired, deceased, and absentee personnel;
  - Immediate application of all retirements scheduled for 2005;
  - Elimination of some allowances;
  - Computerization and better control of the civil service payment roster.

### Structural Reforms and Financial Sector
- Structural reform delays: public procurement law adopted late (August 1); harmonization of budget nomenclature completed but computerized monitoring of expenditure awaits donor financing; customs subcontracting delayed pending broader customs reform; limited progress on offsetting cross debts between government and public enterprises and on privatizations (Comoros Telecom and SCH).
- Financial sector: increased interest from foreign banks; one new banking license granted in 2005. Donor-supported project to improve handling of emigrants’ remittances. Plans for 2006 to expand regulatory oversight over two microfinance institutions and to initiate restructuring of the national development bank and the postal financial services company.
- Staff concern: banks’ overexposure to the vanilla sector and implications for prudential compliance.

### Budget and Medium-Term Financing
- 2006 budget aims at a prudent fiscal stance while increasing social expenditure; preserves consolidation from the 2005 program and makes room to clear arrears and start implementing the I-PRSP.
- 2006 budget targets: primary surplus of 2 percent of GDP (versus 1.8 percent of GDP for 2005); 1.6 percent of GDP budgeted for clearance of arrears.
- Key tax policy recommendations from FAD technical assistance to be incorporated into the 2006 Finance Law: reduce customs duties in favor of domestic taxes and adopt an ad valorem tax on petroleum products.
- Full financing of the 2006 budget not yet identified: a gap of US$6.4 million (1.6 percent of GDP) to be covered with external support at the donors’ roundtable. Domestic financing limited to FC 400 million (0.3 percent of GDP) to safeguard the exchange arrangement.

### Interim Poverty Reduction Strategy Paper (I-PRSP)
- The I-PRSP was finalized to support preparations for the donors’ roundtable; it draws on widespread consultations and sets out seven priorities for sustained and equitable economic growth.
- The I-PRSP is underpinned by a macroeconomic framework aligned with objectives of reducing poverty and securing macroeconomic stability and with the government’s medium-term program. Cost estimates for envisaged social programs were added to the initial draft.
- Implementation of the I-PRSP is to start in 2006 with donor support; the I-PRSP will serve to better coordinate donor assistance at the donors’ roundtable.
- Staff suggested authorities explicitly indicate top priorities among many proposed projects.

### Forward-Looking Issues and Assessment
- Fiscal consolidation remains critical for SMP success; government needs to address slippages related to excessive public spending (notably civil service wage bill) and domestic arrears accumulation.
- The forthcoming donors’ roundtable is key to Comoros’ medium-term economic and social adjustment prospects and to jumpstarting I-PRSP implementation.
- Authorities committed to stepping up reforms to establish a policy track record necessary to initiate PRGF discussions; meeting SMP quantitative targets is critical to establishing that track record.

*Source: _cr06192 - Executive Summary*

### 19.      Comoros has continued to consolidate national stability through the

### _cr06192 - 19.      Comoros has continued to consolidate national stability through the

### Political stability and power-sharing
- Rotating the presidency in April 2006 is key to validating the new constitutional provisions.
- President Azali’s declaration that he would step down on schedule is cited as a reassuring indication that the process is moving in the right direction.
- Notwithstanding considerable efforts to overcome political division, progress under the SMP has remained uneven.
- The government was only partially successful in bringing the SMP back on track at end-June.

### External shocks and economic conditions
- Economic conditions were hampered in 2005 by the surge in oil prices and depressed vanilla prices, which lowered personal incomes and weakened economic activity.
- Despite the recent absence of inflation, competitiveness weakened markedly over the last five years.
- Within the context of the fixed exchange rate regime, structural policy reforms are needed to:
  - relaunch the vanilla and tourism sectors;
  - foster new exports in which Comoros has competitive potential (such as fisheries and high-value exotic agricultural products).

### Fiscal actions, SMP implementation, and social considerations
- The government took strong actions to strengthen revenue collection and control public spending despite adverse political and external environments.
- The increase in fuel prices in September will ensure cost recovery and fiscal stability, and secure supplies for the domestic market; to stave off social unrest it was accompanied by:
  - lowering of customs duties on essential foodstuffs;
  - increasing domestic taxes on luxury items to offset the loss of revenue.
- Preliminary information for Q3 2005 suggests Comoros will not meet the end-September and end-December quantitative targets: revenue collection fell sharply in the third quarter and wages were not reined in sufficiently to meet end-December targets.
- Authorities are urged to strive to come as close as possible to the SMP objectives to underscore commitment to macroeconomic stability.

### Main program risk: civil service and arrears
- Comoros’s excessively large civil service remains the major risk to program implementation and macroeconomic stability.
- Despite difficult measures taken in July to contain wage costs, absent major retrenchments the civil service will continue to constrain public finances and prevent the much-needed increase in social expenditures.
- The reduction in salary arrears beyond program objectives resulted in bank financing above SMP targets and a crowding out of social outlays; any further such operation should not be pursued until earmarked donor financing has become available.

### Structural reform and privatization
- Structural reform has lagged partly because of a lack of external assistance and partly because domestic reform momentum has not been generated.
- Delay in customs reform reflects a deliberate reevaluation of priorities, taking into account World Bank technical assistance recommendations.
- Preparations for privatizations have been slow due to political hesitation and adverse economic conditions; the December deadline for two privatizations is at risk, although recent steps have been taken to prepare the companies for sale.

### Poverty reduction strategy and donor support
- Completion of the I-PRSP is a major landmark for a broad-based strategy to fight poverty; it benefited from extensive consultations, sets out clear objectives, and is underpinned by an appropriate macroeconomic framework.
- Implementation of the I-PRSP should catalyze civil society participation in social development and attract financial and technical support from foreign partners.
- The forthcoming donors roundtable—the first in almost a decade—will be important to Comoros’s economic and social adjustment prospects over the medium term.
- The country is in dire need of a major increase in foreign assistance to consolidate reforms, launch the I-PRSP, and make meaningful progress toward the Millennium Development Goals.

### Key statistics and indicators (selected figures preserved exactly as in source)
- Real GDP growth: 2.3 (2002), 2.1 (2003), 1.9 (2004), 2.8 (2005), 3.3 (2006), 4.1 (2007), 5.0 (2008)
- Real GDP per capita: 0.2 (2002), 0.0 (2003), -0.2 (2004), 0.7 (2005), 1.2 (2006), 2.0 (2007), 2.8 (2008)
- Nominal GDP (in millions of Comorian francs): 128,980 (2002), 138,444 (2003), 146,319 (2004), 151,066 (2005), 160,566 (2006), 175,250 (2007), 189,757 (2008)
- Nominal GDP (in millions of U.S. dollars): 247.5 (2002), 316.4 (2003), 369.8 (2004), 392.1 (2005), 411.0 (2006), 449.0 (2007), 486.5 (2008)
- Nominal GDP per capita (in U.S. dollars): 439.1 (2002), 549.6 (2003), 629.0 (2004), 653.0 (2005), 670.3 (2006), 716.9 (2007), 760.6 (2008)
- Consumer price index (annual averages): 3.5 (2002), 3.8 (2003), 4.5 (2004), 3.0 (2005), 3.0 (2006), 3.0 (2007), 3.0 (2008)
- Exports, f.o.b. (annual % change): 9.9 (2002), 26.2 (2003), -41.9 (2004), -39.5 (2005), 3.8 (2006), 4.3 (2007), 5.2 (2008)
- Imports, f.o.b. (annual % change): -0.8 (2002), 10.1 (2003), 10.4 (2004), 15.0 (2005), 5.1 (2006), -1.7 (2007), 9.6 (2008)
- Domestic revenue (in percent of GDP): 27.3 (2002), 3.8 (2003), 0.5 (2004), 9.8 (2005), 6.0 (2006), 14.7 (2007), 8.9 (2008)
- Total expenditure and net lending (in percent of GDP): 25.9 (2002), -6.9 (2003), -7.4 (2004), -0.2 (2005), 12.7 (2006), 17.9 (2007), 7.4 (2008)
- Investment: 12.2 (2002), 11.6 (2003), 10.2 (2004), 10.1 (2005), 11.5 (2006), 13.7 (2007), 14.0 (2008)
- Gross national savings: 11.6 (2002), 7.3 (2003), 7.6 (2004), 3.1 (2005), 4.6 (2006), 8.8 (2007), 8.4 (2008)
- External current account (incl. official transfers): -0.6 (2002), -4.3 (2003), -2.6 (2004), -7.0 (2005), -6.9 (2006), -5.0 (2007), -5.6 (2008)
- Exports of goods and nonfactor services (percent of GDP): 39.1 (2002), 57.7 (2003), 59.6 (2004), 56.2 (2005), 58.6 (2006), 62.3 (2007), 66.8 (2008)
- Imports of goods and nonfactor services (percent of GDP): 64.9 (2002), 90.2 (2003), 102.7 (2004), 119.2 (2005), 122.6 (2006), 121.9 (2007), 133.2 (2008)
- Outstanding external debt (in percent of GDP): 85.7 (2002), 82.9 (2003), 79.0 (2004), 76.0 (2005), 71.4 (2006), 65.4 (2007), 62.2 (2008)
- Gross international reserves (end of period; in millions of U.S. dollars): 80.9 (2002), 97.2 (2003), 96.2 (2004), 84.4 (2005), 75.2 (2006), 80.5 (2007), 79.6 (2008)
- Reserves in months of imports (c.i.f.): 13.8 (2002), 11.5 (2003), 11.1 (2004), 8.6 (2005), 7.4 (2006), 7.9 (2007), 7.2 (2008)
- External payments arrears (end of year; in millions of U.S. dollars): 65.4 (2002), 85.1 (2003), 88.5 (2004), 89.9 (2005), 0.0 (2006), 0.0 (2007), 0.0 (2008)
- Trade composition highlights (exports, percent of exports of goods and nonfactor services):
  - Vanilla: 12.7 (2002), 20.9 (2003), 8.6 (2004), 3.3 (2005), 3.4 (2006), 3.5 (2007), 3.7 (2008)
  - Cloves: 4.1 (2002), 5.9 (2003), 7.3 (2004), 5.2 (2005), 5.3 (2006), 5.5 (2007), 5.8 (2008)
  - Ylang-ylang (perfume oil): 2.0 (2002), 1.5 (2003), 2.1 (2004), 2.3 (2005), 2.4 (2006), 2.5 (2007), 2.6 (2008)

*Source: IMF staff report _cr06192 - 19.      Comoros has continued to consolidate national stability through the (selected excerpts and tables).*

### 1. Population below 1 US$ a day (percent)...............

### _cr06192 - 1. Population below 1 US$ a day (percent)...............

### Millennium Development Goals indicators (Comoros)
- Goal 1: Eradicate extreme poverty and hunger
  - 1. Population below 1 US$ a day (percent)...............
  - 2. Poverty gap ratio at 1 US$  a day (percent)...............
  - 3. Share of income or consumption held by poorest 20 percent (percent)...............

- Target 2: Halve, between 1990 and 2015, the proportion of people suffering hunger
  - 4. Prevalence of child malnutrition (percent of children under 5): 18.5 25.8 25.4 269.3
  - 5. Population below minimum level of dietary energy consumption (percent)...............

- Goal 2: Achieve universal primary education
  - Target 3: Ensure that, by 2015, children will be able to complete a full course of primary schooling
    - 6. Net primary enrollment ratio (percent of relevant age group): 52.0 54.7 ... 100.0
    - 7. Percentage of cohort reaching grade 5: 45.5 ... 100.0
    - 8. Youth literacy rate (percent age 15-24): 56.7 57.7 58.8 59.0 ...

- Goal 3: Promote gender equality and empower women
  - Target 4: Eliminate gender disparity in primary and secondary education, preferably by 2005, and at all levels of education by 2015
    - 9. Ratio of girls to boys in primary and secondary education (percent): 71.0 81.3 82.4 ... 100.0
    - 10. Ratio of young literate females to males (percent ages 15-24): 77.8 78.5 79.4 79.5 100.0
    - 11. Share of women employed in the nonagricultural sector (percent)...............
    - 12. Proportion of seats held by women in the national parliament (percent)...............

- Goal 4: Reduce child mortality
  - Target 5: Reduce by two-thirds between 1990 and 2015, the under-5 mortality rate
    - 13. Under 5 mortality rate (per 1,000): 120.0 100.0 82.0 79.0 40.0
    - 14. Infant mortality rate (per 1,000 live births): 88.0 74.0 61.0 59.0 ...
    - 15. Immunization against measles (percent of children under 12 months): 87.0 69.0 70.0 71.0

- Goal 5: Improve maternal health
  - Target 6: Reduce by three fourths, between 1990 and 2015, the maternal mortality ratio
    - 16. Maternal mortality ratio (modeled estimate, per 100,000 live births): ......480.0......
    - 17. Proportion of births attended by skilled health personnel: ...51.6 61.8......

- Goal 6: Combat HIV/AIDS, malaria, and other diseases
  - Target 7: Halt by 2015, and begin to reverse, the spread of HIV/AIDS
    - 18. HIV prevalence among females (percent ages 15-24)...............
    - 19. Contraceptive prevalence rate (percent of women ages 15-49): ...21.0.........
    - 20. Number of children orphaned by HIV/AIDS...............
  - Target 8: Halt by 2015, and begin to reverse, the incidence of malaria and other major diseases
    - 21. Prevalence of death associated with malaria...............
    - 22. Share of population in malaria risk areas using effective prevention and treatment...............
    - 23. Incidence of tuberculosis (per 100,000 people): ......61.0 60.7 ...
    - 24. Tuberculosis cases detected under DOTS (percent): ...60.0 43.0 ......

- Goal 7: Ensure environmental sustainability
  - Target 9: Integrate the principles of sustainable development into policies and programs. Reverse the loss of environmental resources.
    - 25. Forest area (percent of total land area): 5.4 ... 3.6 ......
    - 26. Nationally protected areas (percent of total land area): ...0.0 0.0
    - 27. GDP per unit of energy use (PPP $ per kg oil equivalent)...............
    - 28. CO2 emissions (metric tons per capita): 0.2 0.1 0.1 ......
    - 29. Proportion of population using solid fuels...............
  - Target 10: Halve by 2015 proportion of people without access to safe drinking water
    - 30. Access to improved water source (percent of population): 88.0 ... 96.0......
  - Target 11: Achieve by 2020 significant improvement for at least 100 million slum dwellers
    - 31. Access to improved sanitation (percent of population): 98.0 ... 98.0......
    - 32. Access to secure tenure (percent of population)...............

- Goal 8: Develop a Global Partnership for Development
  - Target 16: Develop and implement strategies for productive work for youth
    - 45. Unemployment rate of population ages 15-24 (total)...............
      - Female...............
      - Male...............
  - Target 17: Provide access to affordable essential drugs
    - 46. Proportion of population with access to affordable essential drugs...............
  - Target 18: Make available new technologies, especially information and communications
    - 47. Fixed line and mobile telephones (per 1,000 people): 7.5 7.2 12.2 13.5 ...
    - 48. Personal computers (per 1,000 people): 0.1 0.3 5.5 5.5 ...

- Sources: World Bank; and IMF staff estimates.
- Note: Targets 12-15 and indicators 33-44 are excluded because they cannot be measured on a country-specific basis.

### Quantitative Indicative Targets under the Staff-Monitored Program, January–December 2005 (In millions of Comorian francs, cumulative since beginning of year)
- Indicative targets and preliminary outcomes (March, June, September, December columns)
  - Floor on the domestic primary balance: 2,081 9 295 643 2,620 2,694
  - Floor on total domestic revenues: 7,427 4,641 10,155 10,932 19,082 24,756
  - Ceiling on the wage bill: 2,933 3,214 6,268 6,542 9,000 11,732
  - Ceiling on expenditures made by cash advances: 200 128 425 285 665 900
  - Ceiling on the net accumulation of new domestic arrears: 0 83 0 83 0 0
  - Ceiling on new nonconcessional external debt contracted or guaranteed by the State 2/ : 000000
  - Ceiling on new short-term external debt contracted or guaranteed by the State 2/ : 0 00000
  - Ceiling on accumulation of debt service arrears towards multilateral creditors: 0 104 0 299 0 0
- Notes:
  - 1/ Definitions of the indicative targets and the adjusters are provided in the technical memorandum of understanding (TMU).
  - 2/ Excluding trade credits.

### Structural Indicative Targets under the 2005 Staff-Monitored Program (Measures, deadlines, progress)
- Fiscal
  - Transfer shared revenues to the special account with the central bank of the Comoros and strictly apply the revenue sharing mechanism based on the quotas.
    - Deadline: Continuous
    - Progress: Implemented
  - Amend prevailing laws and practices for tendering with a view to strengthening public procurement rules.
    - Deadline: End-June 2005
    - Progress: Adopted on August 1, 2005
  - Preserve the single customs administration and subcontract customs services to a private provider, with performance requirements.
    - Deadline: End-June 2005
    - Progress: At the request of the World Bank experts, subcontracting will be delayed until the reform program is fully implemented.
  - Harmonize all levels of budget nomenclature and introduce computerized system for real-time monitoring of the expenditures.
    - Deadline: End-September 2005
    - Progress: The harmonization of the budget nomenclature was achieved. The computerized monitoring of expenditure is awaiting donor financing.
  - Offset the debts of the government and the public and parapublic enterprises and clear the balance.
    - Deadline: End-December 2005
    - Progress: Preparatory work ongoing
- Legal environment
  - Adoption by parliament of the final version of the organic law on the distribution of the competencies.
    - Deadline: End-February 2005
    - Progress: Implemented
- Structural privatizations
  - Privatize the Comorian Hydrocarbons Company.
    - Deadline: End-December 2005
    - Progress: Preparatory work ongoing
  - Privatize Comoros Telecom.
    - Deadline: End-December 2006
    - Progress: Preparatory work ongoing

### Comoros: Relations with the Fund (As of September 30, 2005)
- I. Membership
  - Status: Joined 09/21/76; Article VIII
- II. General Resources Account: SDR Millions % Quota
  - Quota 8.90 100.00
  - Fund holdings of currency 8.36 93.91
  - Reserve position in Fund 0.54 6.11
- III. SDR Department: SDR Millions % Allocation
  - Net cumulative allocation 0.72 100.00
  - Holdings 0.00 0.34
- IV. Outstanding Purchases and Loans: None SDR Millions % Quota
  - 0.00 0.00
- V. Latest Financial Arrangements
  - SAF Approval Date 06/21/91 Expiration Date 06/20/94 Amount Approved (SDR millions) 3.15 Amount Drawn (SDR millions) 2.25
- VI. Projected Obligations to Fund (SDR millions; based on existing use of resources and present holdings of SDRs)
  - Forthcoming 2005 2006 2007 2008 2009
    - Principal Charges/interest 0.00 0.02 0.02 0.02 0.02
    - Total 0.00 0.02 0.02 0.02 0.02
- VII. Implementation of HIPC Initiative: Not applicable
- VIII. Exchange Rate Arrangements
  - The currency of the Comoros is the Comorian franc, which is pegged to the Euro at €1 = CF 492. The Comoros has accepted the obligations of Article VIII, Sections 2(a), 3, and 4, and maintains an exchange system that is free of restrictions on the making of payments and transfers for current international transactions.
- IX. Article IV Consultation
  - The Comoros is on the standard 12-month cycle. The 2005 Article IV consultation was concluded on July 18, 2005 (Country Report No. 05/299).
- X. Recent Technical Assistance (Department — Dates — Subject)
  - MFD July 2003 Mission to review the role of the central bank in banking supervision and to evaluate technical assistance needs
  - MFD Sep.- Oct. 2003 Mission to review the envisaged resumption of activities by the Comoros Development Bank, the possible opening of a postal bank, and the supervision of microfinance institutions
  - MFD Feb. 2004 AML/CFT
  - MFD Feb. 2004 Internal audit
  - MFD March 2004 / Oct. 2004 / March 2005 Bank supervision
  - FAD Aug. 2005 Tax policy
- XI. Resident Representative
  - A resident representative post established in September 1991 was closed in December 1995.

### Comoros: Relations with the World Bank Group (As of October 6, 2005)
- Historical lending and active portfolio
  - The World Bank Executive Board has approved 19 IDA credits totaling US$132.5 million to support Comoros since 1976.
  - The active portfolio consists of one project: Social Services Project (SSP), a four-year operation in the amount of US$13.3 million. The SSP became effective on September 29, 2004 and seeks to maintain basic service delivery and address urgent health and water sector needs.
- Strategy and cooperation
  - The Transitional Support Strategy Update (TSSU) presented in March 2004 covers 18 to 24 months with two key objectives: (i) maintaining basic social services; and (ii) supporting the process of national reconciliation and facilitating the transition to a viable institutional structure.
  - The World Bank, together with the IMF and UNDP, assisted the government in launching the PRSP process in March 2002. A first draft of the interim PRSP was completed in July 2002 and validated in May 2003. The process stalled due to political uncertainty; renewed momentum followed the national reconciliation agreement in December 2003. A Joint Staff Assessment (JSA) of the IPRSP is to take place in FY06.
  - The Bank has worked closely with the Fund since the national reconciliation agreement in December 2003 to support transition, improve economic management, and strengthen institutions responsible for revenue collection and budget execution.
- IFC and MIGA
  - The IFC does not have any activity in Comoros, and the country has not yet joined the MIGA. The Government has requested technical advice from the IFC regarding privatization of the oil and telecom companies.
- Active Portfolio table (As of September 30, 2005; In millions of U.S. dollars)
  - Active credits: Services Support Project FY2004 Approved 13.3 Committed 3.8 Disbursed
  - Total active: 13.3 3.8
  - Note: Disbursed amount more than approved and committed amounts because of exchange rate depreciation of USD to SDR.
- IDA Loans and Debt Service CY 1997–CY 2005 (In millions of U.S. dollars)
  - IDA net Disbursements: 4.8 2.8 (0.5) 1.3 10.7 11.1 7.3 1.3 1.1
  - Gross Disbursements: 5.2 3.1 02.1 1.5 12.1 8.6 3.2 2.5
  - Repayments: 0.4 0.2 0.5 0.7 0.8 1.1 1.2 1.8 1.4
  - Interest payments: 0.5 0.3 0.6 0.7 0.5 0.6 0.7 0.9 0.5
  - Note: 1/ Under IDA suspension of disbursements because of arrears.

*Italic source attribution: IMF staff report content as provided in the supplied PDF extract.*

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_Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2006/_cr06192.pdf_