IMF Finalizes 4th Review of Comoros Credit Program

• The IMF Executive Board completed today the fourth review under the Extended Credit Facility Arrangement with the Union of the Comoros. Approval of the fourth review enables an immediate disbursement of SDR 3.56 million (about US$ 4.87 million).
• Program performance remains broadly on track despite setbacks in 2024 linked to a lengthy political transition and external shocks. The authorities have reaffirmed their commitment to the ECF-supported reform agenda and are determined to demonstrate stronger program ownership in the period ahead.
• Economic conditions remain broadly stable, supported by adequate external buffers and continued program engagement, despite persistent inflationary pressures. Implementation of the ECF-supported program is helping to safeguard macroeconomic stability, advance critical structural reforms, and mobilize concessional financing to address Comoros's significant development and financing needs.

Washington, DC: The Executive Board of the International Monetary Fund (IMF) completed today the fourth review under the Union of the Comoros' Extended Credit Facility (ECF) arrangement. The Executive Board's decision allows for an immediate disbursement of SDR 3.56 million (about US$ 4.87 million), bringing the total disbursements so far under the arrangement to about $23.7 million. The 4-year ECF arrangement was approved on June 1, 2023 (See Press Release No. 23/194) with an access of SDR 32.04 million (about US$ 43 million).

In completing the review, the Executive Board also approved the authorities' requests for (i) waivers of nonobservance of the quantitative performance criteria (QPCs) on tax revenue and the domestic primary balance at end of 2024 and the continuous QPC on the non-accumulation of external arrears and (ii) modifications to the end of December 2025 QPCs on tax revenue and domestic primary balance to reflect corrective actions for missing these QPCs at end-2024.

While there is considerable progress towards the achievement of program objectives, significant and continued effort is required to maintain the reform momentum. The authorities have reiterated their strong commitment to the ECF-supported program and despite recent setbacks. Two of five QPCs were met as of end of December 2024 and 8 of the 11 structural benchmarks (SBs) expected between end of November 2024 and end of May 2025 were also met.

Comoros' economic reform program supported by the ECF arrangement seeks to reduce fragility and increase economic resilience by building fiscal buffers, reducing debt vulnerabilities, strengthening the financial sector, and enhancing governance. Key policy priorities for the program remain unchanged and include: (i) mobilizing domestic revenue through reforms to strengthen tax and customs administration and streamline tax exemptions; (ii) stabilizing the financial sector including through the restructuring of the state-owned postal bank SNPSF and enhancing the Central Bank's banking supervision and resolution capacities; and (iii) strengthening governance through PFM and anti-corruption reforms.

Economic conditions remain broadly stable, though risks persist. Growth is estimated at 3.3 percent in 2024 and projected to rise to 3.8 percent in 2025, supported by public investment and recovering private sector credit. Inflation averaged 5 percent in 2024 and reached 7.3 percent (y/y) in March 2025, driven by food price pressures linked to cyclone-related supply disruptions and strong seasonal demand. As a result, average inflation for 2025 has been revised upward from 1.8 to 3.8 percent. Fiscal consolidation was weaker than expected in 2024 largely due to revenue shortfalls, but a stronger adjustment is planned for 2025, supported by corrective measures. The external position remains stable, with the current account deficit estimated at 2.2 percent of GDP and international reserves covering 7.4 months of imports in 2024. Reserves are projected to exceed 8.5 months over the program period.

Following the Executive Board's discussion, Mr. Nigel Clarke, Deputy Managing Director, and Acting Chair, issued the following statement:

"The Comorian authorities remain committed to their reform agenda under the Extended Credit Facility-supported program, despite setbacks in 2024 linked to a lengthy political transition and external shocks. While the external position remains stable—supported by continued reserve accumulation—economic momentum softened amid elevated food inflation and cyclone-related supply shocks. These challenges highlight Comoros's structural vulnerabilities as a small, fragile island state with limited fiscal space, weak diversification, and exposure to external and climate risks.

"Fiscal policy continues to focus on a medium-term consolidation agenda to safeguard debt sustainability. Although 2024 fiscal outturns were weaker than expected driven largely by underperformance in tax revenue, the authorities are addressing the revenue shortfalls through corrective measures aimed at strengthening customs enforcement, improving taxpayer compliance, and recovering tax arrears.

"Monetary policy remains focused on preserving external stability through the euro peg, alongside gradual improvements in liquidity management. While inflation remains elevated, the BCC stands ready to tighten its stance if inflation or reserve pressures persist. The central bank has expanded liquidity absorption capacity and begun publishing its operations calendar, with further reforms planned. Progress in financial supervision, resolution planning, and recapitalization—and sound operationalization of the new postal bank (BPC)—will be key to reinforcing financial sector resilience.

"Governance and institutional reforms are progressing, though unevenly. Key achievements include operationalizing the Anti-Corruption Chamber, enhancing fiscal transparency, and adopting budget management regulations. Nonetheless, challenges persist in liquidity forecasting and cash management, accuracy in budget execution reporting, and reform implementation capacity. Strengthening the Treasury Committee, improving SOE oversight, and sustaining the PFM reform strategy remain essential to bolstering fiscal credibility.

"Program implementation has regained momentum following a slowdown in late 2024. Continued engagement with the IMF and donor partners will be essential to safeguard macroeconomic stability, advance reforms, catalyze grants and concessional financing, and address capacity gaps."