This paper discusses Union of Comoros’ Request for Disbursement Under the Rapid Credit Facility (RCF) and Purchase Under the Rapid Financing Instrument (RFI). Reflecting the large budgetary and external financing gaps arising from emergency assistance and reconstruction needs, the authorities are seeking financial assistance under the RCF and RFI exogenous shock windows. Comoros’ qualification is based on urgent balance of payments needs following a severe natural disaster. The authorities shared staff’s main policy recommendations. Efforts to address the cyclone’s impact will need to focus on mobilizing external financing, creating fiscal space by containing the wage bill, and spending mobilized resources in a well-targeted and timely manner. The authorities plan to address financial sector weaknesses, including by finding a solution for the critical situation of the postal bank, closely monitoring nonperforming loans, and addressing obstacles in the judicial system to facilitate the use of collateral and promote lending.
A poverty profile for the Comoros has been established based on the latest poverty data (EIM 2004). The data indicate that monetary poverty is still widespread in the Comoros. For the overall country, the incidence of poverty at the household level was estimated at 36.9 percent in 2004. Three socioeconomic groups account for nearly two-thirds of national poverty: farmers' households (30.2 percent), unprotected wage earners' households (15.8 percent), and households headed by an inactive person (19.6 percent).
This paper examines Comoros’ weak domestic revenue and volatile windfall revenues. Weak revenue mobilization and the reliance on volatile one-off windfall gains remains a significant development challenge for Comoros. Weak revenue mobilization not only makes it more difficult for Comoros to finance its significant development needs, but also increases the budget’s reliance on uncertain and volatile one-off revenue streams. Sustainably improving revenue mobilization based on realistic and attainable budgetary targets, is key for financing Comoros’ medium to long-term development goals without endangering debt sustainability. Broadening the tax base and thereby increasing the tax ratio to develop more predictable budgetary financing sources will aid execution of Comoros’ ambitious investment program that underpins the country’s development strategy.
Five priority programs were identified to help stabilize the economy and lay the groundwork for equitable growth. The government's priority with this core strategy is to enhance macroeconomic management, government operations, and effective fiscal management to promote domestic and international trade, make the Comorian economy more competitive, guarantee a low-cost energy supply, improve basic economic infrastructures and communication services, and finally to make investments to improve access to drinking water and a more healthy environment. The PEFA report prepared in 2008 entailed a comprehensive fiscal analysis.
This note highlights the unique economic characteristics and constraints facing small developing states. It provides operational guidance on Fund engagement with such countries, including on how small country size might influence the use of Fund facilities and instruments, program design, capacity building activities, and collaboration with other institutions and donors. The guidance note draws on the March 2013 Board papers on small states and the associated Executive Board discussion. The findings of the paper and implications for Fund engagement with small states were presented to small states authorities during the 2013 Annual Meetings, as well as in regional IMF conferences with small states in the Bahamas (September 2013) and Vanuatu (November 2013).