IMF Management Completes the Second Review of the Staff-Monitored Program with the Union of the Comoros
IMF News, April 20, 2023
Source details
- Canonical URL
- IMF Management Completes the Second Review of the Staff-Monitored Program with the Union of the Comoros
Other formats
Bibliographic details
- Published: April 20, 2023
Macroeconomic context and outlook
- The COVID-19 pandemic and the war in Ukraine have severely affected Comoros, exacerbating already weak macroeconomic conditions.
- Comoros’ economic activity stagnated in 2020-2021 despite substantial aid from the diaspora and development partners during the pandemic.
- The expected recovery in 2022 was interrupted by Russia’s war in Ukraine and its spillovers on global commodity prices, with inflation reaching record double-digit levels in 2022 and a considerably worsened fiscal outlook.
- Effects of the shocks are expected to recede in 2023, with growth expected at 3 percent, although considerable uncertainty remains in the global outlook.
Staff-Monitored Program (SMP) implementation and findings
- Management of the IMF approved the second and final review of Comoros’ SMP.
- The SMP was approved on July 21, 2021.
- Implementation of the SMP (covering 2021-2022) was broadly satisfactory, with most quantitative targets and structural benchmarks met on time.
- Despite challenging circumstances, the authorities met six of the seven end-December 2021 quantitative targets.
- Cash transfers to the poor were delayed due to COVID-19-related logistical issues.
- All three end-December 2021 structural benchmarks were met.
- One of the three end-February 2022 structural benchmarks was met on time.
- The benchmarks on amendments to the 2008 anti-corruption law and the restructuring of the postal bank SNPSF (Société Nationale des Postes et Services Financiers) were not completed as scheduled, partly reflecting reform complexity and capacity constraints.
- The draft anti-corruption law has since been aligned with requirements under the SMP, and the authorities are making progress on the restructuring of SNPSF.
Reforms and institutional actions under the SMP
- Raised the number of active taxpayers.
- Created a framework for reporting procurement information.
- Adopted an action plan for broadening the Treasury Single Account (TSA).
- Commissioned an audit of domestic arrears.
Key policy priorities and recommendations
- Raise fiscal revenue to support investment in human and physical capital.
- Stabilize the financial sector to improve credit allocation and minimize fiscal risks.
- Strengthen governance to reduce corruption vulnerabilities.
- Given high risk of debt distress, mobilize grants and external concessional loans for development financing to contain debt sustainability risks.
Outcomes and next steps
- Completion of the SMP helped the authorities establish a track record of policy implementation.
- The SMP completion paved the way towards a discussion on a financing arrangement under the Extended Credit Facility (ECF).
Press Release No. 23/125 — April 20, 2023