IMF Wraps Up Comoros Credit Review, 2025 Consultation

Washington, DC: The Executive Board of the International Monetary Fund (IMF) completed the fifth review under the Union of the Comoros' Extended Credit Facility (ECF) arrangement and concluded the 2025 Article IV consultation. [1] The authorities have consented to the publication of the Staff Report prepared for this consultation. [2] 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 $28.62 million. The 4-year ECF arrangement was approved on June 1, 2023 with an access of SDR 32.04 million (about US$ 43 million).

In completing the review, the Executive Board also approved the authorities' request for waivers of nonobservance of the quantitative performance criteria (QPCs) on the domestic primary balance at end-June 2025 and the continuous QPC on the non-accumulation of external arrears.

While there has been considerable progress toward achieving program objectives, including recent corrective actions and efforts to remain current on external debt service, sustained implementation efforts will be required to maintain reform momentum through the end of the program in 2027. Despite recent setbacks, the authorities have reiterated their strong commitment to the ECF-supported program. Program performance has been broadly satisfactory: three of five QPCs were met at end-June 2025, and 13 of the 15 structural benchmarks (SBs) scheduled between end-June and end-December 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, although risks persist. Growth is estimated at 3.8 percent in 2025 and projected to rise to 4.1 percent in 2026, supported by public investment and a gradual pickup in domestic credit. Inflation continued to decline in 2025, reaching 1.9 percent year-on-year in October, down from a peak of 7.3 percent in March, reflecting lower import prices and improved domestic supply conditions. As a result, average inflation for 2025 has been revised downward from 3.8 to 3.5 percent. Fiscal consolidation was weaker than expected in the first half of the year, largely due to unplanned transfer spending. However, a stronger adjustment has been programed for the final quarter of 2025 and for 2026, supported by corrective measures, including high-quality tax policy actions. The external position remains stable, with the current account deficit estimated at around 3.0 percent of GDP and international reserves projected to cover more than 8 months of imports in 2025 and to remain adequate over the medium term.

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

"The economic recovery gained further momentum in 2025, amid gradual disinflation, while the external position remained stable, with ample reserve buffers. Program performance has been broadly satisfactory and the outlook remains positive. Nonetheless, downside risks remain significant, reflecting Comoros's persistent fragility and elevated global uncertainty. The Comorian authorities remain committed to their reform agenda under the Extended Credit Facility–supported program, which aims to strengthen resilience and generate higher and more inclusive growth. Continued engagement with the IMF and development partners, together with sustained reform implementation, will remain essential to support these goals.

"Fiscal policy remains centered on revenue-led consolidation to reduce debt vulnerabilities, while creating space for priority spending. The authorities are committed to implementing corrective measures to address the modest fiscal slippage in 2025, centered on a credible package of tax measures to return the fiscal consolidation to its programmed path. Measures to address arrears, along with public financial management reforms to strengthen budget credibility and transparency and improve debt management, are important.

"Monetary policy continues to be anchored by the euro peg, supporting price and external stability. Transitioning to fixed-rate, full-allotment liquidity operations would strengthen monetary transmission and better anchor expectations. Strengthening financial sector supervision and regulation, resolution planning, banks' balance sheets, along with fully operationalizing the postal bank (BPC), will be key to enhancing financial stability.

"The authorities remain committed to strengthening governance, transparency, and accountability, improving the business environment, and addressing climate-related risks. Important measures include operationalizing the asset declaration framework, closing gaps in the AML/CFT regime, and improving transparency in public procurement contracts. Continued improvements in state-owned enterprise governance and customs administration remain important to reduce fiscal risks and strengthen public sector oversight. Enhanced social protection, including through pension reform, would help to address poverty and food insecurity."

Executive Board Assessment [3]

Executive Directors agreed with the thrust of the staff appraisal. They welcomed that the recovery has gained momentum and that program performance has been broadly adequate, with progress on reform implementation. Noting the significant downside risks to the outlook, Directors underscored the need for prudent macroeconomic policies and sustained reform momentum to avoid further policy slippages, strengthen resilience, address debt sustainability, and generate higher and more inclusive growth. Implementing well‑targeted capacity development from the Fund and other development partners remains crucial.

Pointing to the mixed program performance, Directors welcomed the authorities' commitment to address fiscal slippages and implement fiscal consolidation to reduce debt vulnerabilities and create space for priority spending. They welcomed the focus on robust revenue mobilization and urged the authorities to leverage ongoing Fund capacity development to swiftly implement the planned measures. Directors underscored the need for deeper public financial management reforms to strengthen budget credibility and transparency and to improve debt management. They stressed that measures to address and prevent the recurrence of arrears remain important.

Directors emphasized that monetary policy should remain firmly anchored on maintaining price stability and preserving the exchange rate peg. They underscored that strengthening the operational framework would help to improve liquidity management and monetary transmission and better anchor expectations. In this regard, Directors considered that transitioning toward a fixed‑rate, full‑allotment operating framework would be beneficial. They urged the authorities to further strengthen financial sector supervisory and regulatory frameworks, and underscored the need to finalize bank recapitalization plans and the restructuring of the postal bank. In addition, measures to strengthen bank balance sheets and enhance the resolution framework are critical to safeguard financial stability. Directors welcomed progress toward establishing a domestic government securities market and recommended that all prerequisites be met before its launch.

Directors emphasized the criticality of reforms to improve governance, transparency, and the business environment, and address climate‑related risks. They welcomed ongoing efforts to operationalize the asset declaration framework, strengthen the AML/CFT framework, and enhance transparency in public procurement. Directors also emphasized the importance of further improving state‑owned enterprise governance and customs administration. Noting the high poverty and food insecurity, Directors underscored the need to enhance social protection, including through pension reform. They stressed that strengthening statistical capacity is essential for effective policy implementation and program monitoring.

It is expected that the next Article IV consultation with the Union of the Comoros will be held in accordance with the Executive Board decision on consultation cycles for members with Fund arrangements.

[1] Under Article IV of the IMF's Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country's economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board.

[2] Under the IMF's Articles of Agreement, publication of documents that pertain to member countries is voluntary and requires the member consent. The staff report will be shortly published on the www.imf.org/comoros page.

[3] At the conclusion of the discussion, the Managing Director, as Chair of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country's authorities. An explanation of any qualifiers used in summings up can be found here: http://www.IMF.org/external/np/sec/misc/qualifiers.htm .