Press Release No. 09/412

Press Release: Statement by the IMF Staff Mission at the Conclusion of a Visit to the Union of the Comoros

November 16, 2009

An International Monetary Fund (IMF) staff team visited the Union of Comoros during November 7-14, 2009 to carry out an initial assessment of performance under the Poverty Reduction and Growth Facility (PRGF)-supported program and to discuss the draft budget for 2010, as well as preparations for the country’s preliminary Heavily Indebted Poor Countries (HIPC) Initiative decision point document. Comoros’ three-year, SDR 13.57 million (about US$21.5 million) arrangement was approved by the IMF Board on September 21, 2009 (see Press Release No. 09/315). The mission met with His Excellency Mr. Ikililou Dohinine, Vice-President and Minister of Finance; the Honorable Mzé Abdou Mohamed Chanfiou, Deputy Governor of the Central Bank; as well as representatives of the private sector and the donor community.

At the end of the mission, Mr. Mbuyamu Matungulu, the IMF’s mission chief for the Union of Comoros, issued the following statement today in Moroni:

"The gradual return of political stability and resumption of aid are having a positive impact on reform implementation and economic conditions in Comoros. Credit to the private sector is growing strongly; vanilla exports have recovered from the effects of last year’s forest fires; and imports continue a rising trend initiated last year, including for petroleum products and construction materials. Overall, while still weak, real GDP growth is likely to reach 1 percent for 2009, while pressures on domestic prices continue to ease and end-year inflation is expected to be contained to 2.3 percent. Reflecting these developments, and with worker remittances in stagnation, the external current account deficit is projected to reach 9.5 percent of GDP in 2009, compared with a 11.3 percent of GDP in 2008. In the fiscal area, revenue collection is fairing better than expected. With budget support from donors above target, the government is able to begin settling recently audited arrears to domestic suppliers and to civil service workers.

“The mission welcomes the government’s review of reform strategy options for Comoros Telecoms and Comoros Hydrocarbons. An early implementation of reforms in these areas will be essential to the success of the government’s growth and poverty reduction strategy.

"Looking ahead, the 2010 budget will need to continue ongoing fiscal consolidation efforts and support the economic recovery and poverty reduction strategy. Provided that domestic revenue mobilization continues, a domestic primary budget deficit of 1.5 percent of GDP would allow for a significant increase in spending for education and health over 2009. It will be important to mobilize all potential financing sources to cover the 2010 fiscal gap, including donor budget support and debt restructuring. In this context, the mission welcomes the authorities’ participation in Paris Club debt restructuring negotiations on November 19.

"The mission is grateful for the very open and frank discussions with the authorities of Comoros, and for their hospitality".