Press Release: Statement at the end of an IMF Staff Mission to the Union of the Comoros
October 18, 2011Press Release No 11/371
October 18, 2011
A mission of the International Monetary Fund (IMF) led by Mr. Mbuyamu Matungulu, Mission Chief for the Union of the Comoros, visited Moroni during October 4–18, 2011 to continue discussions of performance under the country’s economic program supported by the Extended Credit Facility (ECF).1 The mission met HE Dr. Dhoinine Ikililou, President of the Union of Comoros. It held discussions with Vice-President and Finance Minister Soilihi and with other members of the Cabinet of the Union; with the Governor of the Central Bank of the Comoros; with members of parliament as well as representatives of the private sector, civil society, and the donor community.
At the end of the mission, Mr. Matungulu made the following statement in Moroni:
“The mission welcomes the government’s efforts to better align spending with available resources, including progress toward containing the civil service wage bill. Perseverance will be crucial to durably restoring medium-term budget viability. Also commendable are the steps to improve accountability and governance in several parastatals, notably the replacement of key executives to begin addressing long-standing management failures.
“Economic activity remains constrained by pervasive structural rigidities, as well as recurrent energy shortages. Economic growth is projected at just above 2 percent for 2011, underpinned by robust agricultural production and a gradual resumption of foreign direct investment (FDI). The good harvest is also helping contain consumer price inflation to a projected 5 percent by end-year, despite international prices pressures. Driven by higher oil and other FDI-related imports, the external current account deficit is expected to widen.
“Due to slippages in the first three quarters of the year, the domestic primary fiscal deficit is likely to reach 1.5 percent of GDP in 2011, higher than anticipated under the program. In particular, domestic revenue collection is likely to fall well short of the target. The mission therefore encourages the authorities to accelerate efforts to redress the budgetary situation. On the revenue side, weaknesses in revenue administration need to be durably addressed. On the expenditure side, outstanding wage arrears need to be cleared and expenditure controls strengthened to avoid excess spending and the recurrence of arrears.
“In an effort to rekindle restructuring of the public utilities, the authorities have intensified technical discussions with relevant development partners. Completing a reliable reform road map for Comores Telecom will be an important milestone. The focus in public financial management should be to complete the civil service personnel census launched last June, securing approval of the civil service personnel organic frameworks by Parliament, and rigorously implementing the new computerized wage bill management system (GISE).
“The mission urges the authorities to take steps to strengthen domestic revenue collection, re-establish expenditure control, and resume stalled structural reforms as soon as possible with the aim of bringing the government’s economic program back on track.
“Discussions with the authorities will continue in the period ahead, and the mission looks forward to sufficient advances to permit the consideration in due course of the next ECF review by the IMF Executive Board. This will be critical to facilitating progress towards the Completion Point and comprehensive debt relief under the Heavily Indebted Poor Countries (HIPC) Initiative.
“The mission wishes to thank the authorities for their hospitality.”
1 The Extended Credit Facility (ECF) has replaced the Poverty Reduction and Growth Facility (PRGF) as the Fund’s main tool for medium-term financial support to low-income countries by providing a higher level of access to financing, more concessional terms, enhanced flexibility in program design, and more focused streamlined conditionality. Financing under the ECF currently carries a zero interest rate, with a grace period of 5½ years, and a final maturity of 10 years. The Fund reviews the level of interest rates for all concessional facilities every two years.