Washington, DC:
The Management of the International Monetary Fund (IMF) has approved the
completion of the second and final review of the Staff-Monitored Program
(SMP)
.
Policies under the SMP, approved on July 21, 2021, aimed to (i) contain and
recover from the pandemic; and (ii) start implementing reforms to overcome
fragility, boost inclusive growth, and limit risks.
The COVID-19 pandemic and the war in Ukraine have severely affected
Comoros, exacerbating already weak macroeconomic conditions. While
benefiting from substantial aid from the diaspora and development partners
during the pandemic, Comoros’ economic activity stagnated in 2020-2021. 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.
Despite challenging circumstances, the authorities met six of the seven
end-December 2021 quantitative targets, while the cash transfers to the
poor were delayed by COVID-19-related logistical issues. All three
end-December 2021 structural benchmarks were met, and one of the three
end-February 2022 structural benchmarks were met on time. The benchmarks on
the amendments to the 2008 anti-corruption law and the restructuring of the
postal bank SNPSF (Société Nationale des Postes et Services Financiers)
were however not completed as scheduled, in part reflecting the complexity
of the reforms 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 the postal bank SNPSF.
Under the SMP, the authorities raised the number of active taxpayers,
created a framework for reporting procurement information, adopted an
action plan for broadening the Treasury Single Account (TSA), and
commissioned an audit of domestic arrears. It will be critical for the
authorities to build on these reform efforts to consolidate gains.
Comoros’ top priorities remain to raise fiscal revenue to support
investment in human and physical capital, stabilize the financial sector to
improve credit allocation and minimize fiscal risks, and strengthen
governance to reduce corruption vulnerabilities. Given high risk of debt
distress, efforts to mobilize grants and external concessional loans for
development financing will be important to contain debt sustainability
risks. The completion of the SMP has helped the authorities establish a
track record of policy implementation and paved the way towards a
discussion on a financing arrangement under the Extended Credit Facility
(ECF).
More information on ECF:
Extended Credit Facility
