IMF Staff Country Reports

This paper discusses Union of The Comoros’ Second Review under the Staff-Monitored Program (SMP). The implementation of the SMP, which supported the government’s reform program during 2021–2022, was broadly satisfactory, with most quantitative targets and structural benchmarks being met on time. The reported number of coronavirus disease 2019-related cases has remained relatively low. State-owned enterprises (SOEs) incurred substantial losses in 2022 as administered prices were slow to adjust to the surge in global commodity prices, implying lower fiscal revenue, higher public debt, and wider financing gaps over the medium term. Comoros was already facing a high risk of debt distress and substantial financing gaps due to large projects financed by nonconcessional debt and the restructuring of the insolvent state-owned postal bank (SNPSF). The recent deterioration in macroeconomic conditions has further heightened debt sustainability risks. Strong remittances and a resumption of tourism have helped cushion the shock while maintaining an adequate level of foreign reserves. The fallout from the war in Ukraine, however, has set back the expected fiscal gains, underscoring the need for continued fiscal consolidation efforts. IMF welcomes the authorities’ commitment to continuing engagement with the IMF country and technical assistance teams as they push forward the remaining structural benchmark and tackle other structural reforms.