{
  "title": "Public Information Notice: IMF Concludes Article IV Consultation with Comoros",
  "publication": "IMF News, September 5, 2000",
  "sourceUrl": "https://www.imf.org/en/news/articles/2015/09/28/04/53/pn0073",
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  "summary": "Public Information Notices (PINs) form part of the IMF's efforts to promote transparency of the IMF's views and analysis of economic developments and policies.",
  "publishDate": "2000-09-05",
  "sections": [
    {
      "heading": "Background",
      "content": "- Article IV consultations with Comoros resumed after a two-year suspension; consultations could not be held in 1998-1999 because of disruptions in government services and continuing political turmoil, including the conflict with the separatist movement on the island of Anjouan.\n- On July 12, 2000, the Executive Board concluded the Article IV consultation with Comoros.\n- While the conflict with Anjouan had not been resolved and Anjouan remained outside the control of the Federal Government, government services were reported to be functioning normally.\n- The Comoros is a member of the French Franc Zone and under its fixed exchange rate regime inflation was kept at 3-4 percent per year in 1998-1999."
    },
    {
      "heading": "Economic performance and recent developments",
      "content": "- Real GDP: estimated declines of 0.5 percent in 1998 and 1.4 percent in 1999.\n- Living standards in Grande Comore were partly protected by increasing transfers from the Comorian community living overseas.\n- Fiscal situation:\n  - High ratio of expenditure on wages and salaries to domestic revenues: 53 percent in 1999.\n  - Deficit after grants declined from 4.2 percent of GDP in 1998 to 0.7 percent of GDP in 1999, largely because of a fall in foreign-financed capital expenditure.\n  - Deficits in 1998 and 1999 were mainly financed by accumulation of arrears on wages and foreign interest; Comoros also incurred further large arrears on repayment of foreign debt.\n  - Government cleared debt service arrears to the World Bank, enabling the World Bank to resume lending operations in early 2000.\n- Monetary and financial:\n  - Broad money and credit to the economy increased by only about 4 percent during the last two years (refers to the 1998-1999 period).\n  - On January 1, 2000, the Central Bank of the Comoros introduced a flexible interest rate policy, linking rates for the single commercial bank to those prevailing in the Euro zone.\n- External sector:\n  - Current balance of payments (including grants) improved from a deficit of 6 percent of GDP in 1997 to virtual balance in 1999, driven by a 37 percent increase in private transfers from the Comorian community abroad which more than offset a sharp decline in official grants.\n  - Gross official reserves decreased from 6.6 months of imports of goods and nonfactor services in 1997 to 6.1 months at end-1999."
    },
    {
      "heading": "Executive Board Assessment — key findings",
      "content": "- Directors expressed concern that economic performance continued to deteriorate and that prospects remained clouded by the political crisis with the separatist movement on Anjouan.\n- Contributing factors to the decline included a deteriorating external environment and weaknesses in the implementation of macroeconomic and structural policies.\n- Directors welcomed recent measures by the authorities to raise government revenues and strengthen economic management but stressed that more significant efforts were needed to:\n  - Stabilize the fiscal position.\n  - Make progress in privatizing state-owned corporations.\n- Tax administration:\n  - Some progress in strengthening tax administration noted.\n  - Further measures needed, including reduction of tax exemptions.\n- Public employment and wages:\n  - Efforts to reduce the workforce in recent years had not been successful; overstaffing must be addressed to remove fiscal fragility.\n  - Reduction in staffing levels is the best long-term solution; in the short run a reduction in wages—or at least a freeze, coupled with more regular salary payment—would help ease tensions.\n  - Directors welcomed the authorities’ readiness to take actions along this line.\n- Debt and arrears:\n  - Welcome for settlement of arrears to the World Bank and resumption of Bank projects.\n  - Urged authorities to initiate dialogue with multilateral and bilateral creditors in the face of mounting arrears in debt service payments.\n  - Considered greater efforts to mobilize domestic resources and significant external support, including debt rescheduling, would be needed to settle all remaining arrears.\n- Structural reforms and competitiveness:\n  - Given the exchange rate regime, return to sustained growth requires determined implementation of structural reforms to improve efficiency and competitiveness.\n  - Authorities urged to accelerate privatization, strengthen competition via further gradual trade liberalization, and modify regulatory and legal framework including commercial and labor codes.\n  - Reinforcement of rural credit networks within the regulatory framework of the banking sector could help channel savings into productive investments.\n- Statistics and technical assistance:\n  - Statistical database remains very weak.\n  - Authorities recommended to give high priority to improving collection and methodology of core macroeconomic statistics.\n  - Directors encouraged Comoros to request needed technical assistance given limited resources and capacity."
    },
    {
      "heading": "Policy recommendations and priorities",
      "content": "- Stabilize the fiscal position through:\n  - Continued revenue strengthening and tighter fiscal management.\n  - Addressing overstaffing in the public sector; consider wage freeze or reduction combined with more regular salary payments.\n  - Strengthening fiscal management and monitoring.\n- Improve tax administration, including reduction of tax exemptions.\n- Engage creditors to address arrears and seek debt rescheduling where necessary.\n- Accelerate privatization of state-owned enterprises and promote competition through trade liberalization and legal/regulatory reforms (commercial and labor codes).\n- Strengthen rural credit networks within banking-sector regulatory framework to support productive investment.\n- Prioritize improvement of statistical systems and request technical assistance to enhance macroeconomic monitoring."
    },
    {
      "heading": "Comoros: Selected Economic Indicators (as presented)",
      "content": "(Annual percentage change, unless otherwise indicated)\n- Real GDP at market prices: 1995 -3.9; 1996 -.01; 1997 0.5; 1998 -0.5; 1999 -1.4; 2000 Proj.\n- Consumer price index (annual average): 1995 8.0; 1996 2.0; 1997 3.0; 1998 3.5; 1999 4.5\n- Domestic credit (money and credit): 1995 17.5; 1996 -17.4; 1997 8.3; 1998 19.6; 1999 -1.9; 2000 20\n- Broad money: 1995 -3.7; 1996 12.2; 1997 0.1; 1998 -3.6; 1999 8.1; 2000 4.0\n- Exports f.o.b. (in terms of Comorian Francs): 1995 -5.7; 1996 -42.5; 1997 7.9; 1998 0.9; 1999 40.5; 2000 -7.7\n- Imports f.o.b. (in terms of Comorian Francs): 1995 7.4; 1996 -6.2; 1997 -11.1; 1998 6.8; 1999 4.8\n(In percent of GDP)\n- Revenues: 1995 14.3; 1996 13.3; 1997 15.1; 1998 11.9; 1999 13.7; 2000 15.5\n- Expenditures: 1995 34.0; 1996 28.5; 1997 27.2; 1998 24.1; 1999 22.1; 2000 23.7\n- Overall balance (including grants; commitment basis): 1995 -7.9; 1996 -6.3; 1997 -2.4; 1998 -4.2; 1999 -.07\n- Current account balance: 1995 -9.6; 1996 -9.4; 1997 2.7; 1998 -2.8; 1999 (not shown); 2000 (not shown)\n- Total external debt outstanding (excluding arrears): 1995 94.4; 1996 98.1; 1997 94.3; 1998 94.5; 1999 98.0; 2000 95.4\n- Gross international reserves (in months of imports of goods and nonfactor services): 1995 5.1; 1996 6.5; 1997 5.5; 1998 5.7; 1999 6.1\n\nSource: Public Information Notice, IMF, September 5, 2000.\n\n---\n\n\n References\n\n- Union of the Comoros and the IMF\n- Public Information Notices\n- Article IV\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2015/09/28/04/53/pn0073"
    }
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    "Published: September 5, 2000",
    "Article IV consultations with Comoros resumed after a two-year suspension; consultations could not be held in 1998-1999 because of disruptions in government services and continuing political turmoil, including the conflict with the separatist movement on the island of Anjouan.",
    "On July 12, 2000, the Executive Board concluded the Article IV consultation with Comoros.",
    "While the conflict with Anjouan had not been resolved and Anjouan remained outside the control of the Federal Government, government services were reported to be functioning normally.",
    "The Comoros is a member of the French Franc Zone and under its fixed exchange rate regime inflation was kept at 3-4 percent per year in 1998-1999.",
    "Real GDP: estimated declines of 0.5 percent in 1998 and 1.4 percent in 1999.",
    "Living standards in Grande Comore were partly protected by increasing transfers from the Comorian community living overseas.",
    "Fiscal situation:",
    "Monetary and financial:",
    "External sector:",
    "Directors expressed concern that economic performance continued to deteriorate and that prospects remained clouded by the political crisis with the separatist movement on Anjouan.",
    "Contributing factors to the decline included a deteriorating external environment and weaknesses in the implementation of macroeconomic and structural policies.",
    "Directors welcomed recent measures by the authorities to raise government revenues and strengthen economic management but stressed that more significant efforts were needed to:",
    "Tax administration:",
    "Public employment and wages:",
    "Debt and arrears:",
    "Structural reforms and competitiveness:",
    "Statistics and technical assistance:",
    "Stabilize the fiscal position through:",
    "Improve tax administration, including reduction of tax exemptions.",
    "Engage creditors to address arrears and seek debt rescheduling where necessary.",
    "Accelerate privatization of state-owned enterprises and promote competition through trade liberalization and legal/regulatory reforms (commercial and labor codes).",
    "Strengthen rural credit networks within banking-sector regulatory framework to support productive investment.",
    "Prioritize improvement of statistical systems and request technical assistance to enhance macroeconomic monitoring.",
    "Real GDP at market prices: 1995 -3.9; 1996 -.01; 1997 0.5; 1998 -0.5; 1999 -1.4; 2000 Proj.",
    "Consumer price index (annual average): 1995 8.0; 1996 2.0; 1997 3.0; 1998 3.5; 1999 4.5",
    "Domestic credit (money and credit): 1995 17.5; 1996 -17.4; 1997 8.3; 1998 19.6; 1999 -1.9; 2000 20",
    "Broad money: 1995 -3.7; 1996 12.2; 1997 0.1; 1998 -3.6; 1999 8.1; 2000 4.0",
    "Exports f.o.b. (in terms of Comorian Francs): 1995 -5.7; 1996 -42.5; 1997 7.9; 1998 0.9; 1999 40.5; 2000 -7.7",
    "Imports f.o.b. (in terms of Comorian Francs): 1995 7.4; 1996 -6.2; 1997 -11.1; 1998 6.8; 1999 4.8",
    "Revenues: 1995 14.3; 1996 13.3; 1997 15.1; 1998 11.9; 1999 13.7; 2000 15.5",
    "Expenditures: 1995 34.0; 1996 28.5; 1997 27.2; 1998 24.1; 1999 22.1; 2000 23.7",
    "Overall balance (including grants; commitment basis): 1995 -7.9; 1996 -6.3; 1997 -2.4; 1998 -4.2; 1999 -.07",
    "Current account balance: 1995 -9.6; 1996 -9.4; 1997 2.7; 1998 -2.8; 1999 (not shown); 2000 (not shown)",
    "Total external debt outstanding (excluding arrears): 1995 94.4; 1996 98.1; 1997 94.3; 1998 94.5; 1999 98.0; 2000 95.4",
    "Gross international reserves (in months of imports of goods and nonfactor services): 1995 5.1; 1996 6.5; 1997 5.5; 1998 5.7; 1999 6.1",
    "[Union of the Comoros and the IMF](http://www.imf.org/external/country/COM/index.htm)",
    "[Public Information Notices](https://www.imf.org/en/news/searchnews)",
    "[Article IV](https://www.imf.org/external/pubs/ft/aa/aa04.htm)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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