Washington, DC –
the Executive Board of the International Monetary Fund (IMF) today approved a
disbursement under the
Rapid Credit Facility (RCF)
equivalent to SDR2.97 million (about US$4.05 million, 16.7 percent of
quota) and a purchase under the
Rapid Financing Instrument (RFI)
equivalent to SDR5.93 million (about US$8.08 million, 33.3 percent of
quota) to meet Comoros’ urgent balance of payment needs stemming from the
COVID-19 pandemic.
Comoros has also benefited from the IMF Executive Board decision of April
13, 2020 to provide debt service relief to all countries eligible for
support from the International Development Association (IDA) in the form of
grant assistance under the Catastrophe Containment and Relief Trust (CCRT).
As a result, the country will receive relief from the CCRT on debt service
falling due to the IMF in the next 6 months (about US$1.2 million). This
relief could be extended for up to 2 years, subject to the availability of
resources under the CCRT.
The COVID-19 shock comes less than a year after Cyclone Kenneth and is
affecting Comoros severely. Remittances receipts have slowed and visitor
arrivals have stopped, weighing on activity in the services sector.
Projections indicate a substantial growth decline, an external financing
need of 5.2 percent of GDP, and a fiscal financing need of 4.7 percent of
GDP.
The IMF continues to monitor Comoros’ situation closely and stands ready to
provide policy advice and further support as needed.
Following the Executive Board’s discussion of the Union of Comoros, Mr.
Mitsuhiro Furusawa, Deputy Managing Director and Acting Chair, issued the
following statement:
“The COVID-19 shock comes on the heels of two difficult years for Comoros,
and less than a year after Cyclone Kenneth. While the authorities have so
far not reported an outbreak of the COVID-19 pandemic in Comoros, the
pandemic is already having a severe economic impact as remittances receipts
have slowed, visitor arrivals have stopped, and several banks have seen
liquidity strains.
“The pandemic is generating large external and fiscal financing needs.
Financing under the Rapid Credit Facility (RCF) and the Rapid Financing
Instrument (RFI), as well as debt relief provided earlier this month under
the Catastrophe Containment and Relief Trust, will help cover important
parts of these needs. Timely support by donors and development partners
will be critical for filling the remainder.
“The Comoros’ authorities should use fiscal policy to cushion the adverse
effects of the COVID-19 shock and bring the fiscal position back in line
with medium-term paths once the crisis has passed. In particular, in
addition to expanding very substantially healthcare spending to meet the
population’s pandemic-related needs, the authorities should consider giving
targeted and temporary support to the most vulnerable.
“Monetary policy should focus on maintaining the exchange rate peg. At the
same time, the authorities should use all tools at their disposal to
safeguard the stability of the banking system, including by providing
liquidity to banks facing liquidity pressures and addressing loan servicing
difficulties.
“Finally, it will be important for the authorities to ensure robust
reporting on the use of the funds disbursed under the RCF and RFI.”
More information
IMF Lending Tracker (emergency financing request approved by the IMF
Executive Board)
https://www.imf.org/en/Topics/imf-and-covid19/COVID-Lending-Tracker
IMF Executive Board calendar
https://www.imf.org/external/NP/SEC/bc/eng/index.aspx
