- Management of the International Monetary Fund (IMF) has approved the second and final review of Comoros' 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 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).
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).
