Journal Issue

Union of the Comoros: Staff Report for the 2014 Article IV Consultation—Informational Annex

International Monetary Fund. African Dept.
Published Date:
February 2015
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Relations with the Fund

(As of December 31, 2014)

Membership Status: Joined September 21, 1976 Article VIII

General Resources Account: SDR Millions % Quota

Fund holdings of currency8.3393.59
Reserve position in Fund0.586.50

SDR Department:

SDR Millions% Allocation
Net cumulative allocation8.50100.00

Outstanding Purchases and Loans:

SDR Millions% Allocation
ECF Arrangements12.83144.15
Latest Financial Arrangements:
Approval DateExpiration DateAmount ApprovedAmount Drawn
Type(SDR millions)(SDR millions)
ECFSep. 21, 2009Dec. 31, 201313.5710.46
SAFJun. 21, 1991Jun. 20, 19943.152.25
Projected Obligations to Fund(SDR millions; based on existing use of resources and present holdings of SDRs):
Implementation of HIPC Initiative:Enhanced framework
I. Commitment of HIPC assistance
Decision point dateJuly 2010
Assistance committed
by all creditors (US$ Million in NPV terms)144.80
Of which: IMF assistance (US$ million)4.27
(SDR equivalent in millions)2.89
Completion point dateDecember 2012
II. Total disbursement of IMF assistance (SDR Million)
Assistance disbursed to the member2.89
Interim assistance
Completion point balance2.89
Additional disbursement of interest income0.07
Total disbursements2.97

Summary of Safeguards Assessment. The update safeguards assessment of the Banque Centrale des Comores (BCC) in 2010 found that despite capacity constraints the central bank had taken steps to strengthen its safeguards framework. Recommendations made to establish an independent internal audit function and obtain assistance to adopt international standards for financial reporting remain outstanding. The BCC has published its 2012 audited financial statements, and staff has received the financial statements and management letter for the 2013 financial year.

Implementation of Multilateral Debt Relief Initiative (MDRI): Not applicable.

Exchange Rate Arrangements: The currency of the Union of the Comoros is the Comorian franc, which is pegged to the Euro at €1 = CF 492. The Comoros has accepted the obligations of Article VIII, Sections 2(a), 3, and 4, and maintains an exchange system that is free of restrictions on the making of payments and transfers for current international transactions.

Article IV Consultation: The last Article IV consultation was concluded on December 17, 2012 (Country Report No. 13/32). Directors commended the Comorian authorities for their strong implementation of reforms under the ECF arrangement and for reaching the completion point under the enhanced HIPC Initiative. Welcoming the improved fiscal performance, they encouraged the authorities to continue strengthening mobilization and to keep spending in line with public resources mobilization capacity. They underscored the need for budget discipline and reliance on grants and highly concessional loans, as Comoros remained at high risk of debt distress owing notably to a narrow export base. Directors commended the authorities for rekindling their structural reforms agenda to invigorate growth, accelerate poverty reduction, and reduce vulnerability to external shocks.

Recent Technical Assistance
FADMar. 2011Modernization of fiscal administration
FADOct. 2011Public expenditure management
FAD, AFSJune 2012Budget execution, public expenditure management
FADOct. 2012Revenue administration
FAD, AFSJan. 2013Budget execution, public expenditure management
AFSJan. 2013Cash Management and Banking Arrangements
FAD, AFSJune. 2013Audit of payroll system
AFSOct. 2013Cash Management and Internal Control
AFSOct. 2013Development of Medium Term Macro Fiscal Framework
FAD, AFSOct. 2013PFM Strategy and Action Plan
FAD, AFSDec. 2013Revenue administration
AFSMar-Apr. 2014Establishment of the Treasury Single Account
AFSMay 2014Strengthening the medium Term Macro Fiscal Framework
FADJune-Jul. 2014Budget Preparation and Presentation
AFSNov. 2014Budget preparation, Medium term Macro Fiscal Framework, Treasury Single Account.
MCMNov. 2012Banking supervision
MCMDec. 2013Banking Supervision
MCM, AFSJan. 2014Implementation of Risk-Based Supervision
AFSFeb.2014TOR for the new Integrated Management System of the State’s Financial Information
MCMApril 2014Banking Supervision and Regulation
MCMApril 2014Introduction of Government Securities and Assessment of Monetary Instruments.
MCMNov. 2014Banking Supervision and Regulation
MCMNov. 2014Banking Supervision
STAMar–Apr. 2012General Data Dissemination System
STA, AFSJuly 2013National Accounts
STAMar. 2014Balance of Payments Statistics
STA, AFSSept. 2014National Accounts

Resident Representative: A resident representative post was (re)established in May 2012. The current resident representative is Mr. Michel Bua. In the 2000s, the IMF’s field operations in the country were managed by the resident office in Madagascar.

Joint World Bank-IMF Work Program, 2014–2015

TITLEProductsProvisional timing of missionExpected delivery date
A. Mutual information on relevant work programs
1. Additional Funding for Social Safety Net Project.March 2015
2. Budget Support OperationAppraisal 3/13/15April 2015
3. Public Expenditure Review Policy Notes Series.June. 2015
4. Youth Employment ProjectAugust 2015
5. Statistics Capacity TA.August 2015
Bank work program in next 12 months6. FIRST Project – Financial Sector Development Strategy.October 2015
7. Private Sector Development JIT TA – Value Chains, Bus Environment.October 2015
8. Technical Assistance through ABGE project – Financial & Public Sector Management.June 2016
9. Regional Telecom ProjectMid-Term Review June 2015June 2018
IMF work program in next 12 months2014 Article IV ConsultationNovember 2014January 2015 : Board meeting
B. Requests for work program inputs
Fund request to BankUpdate on Bank’s assistance in the area of PFM reforms and PRSP implementation and energy sector reformsContinuous
Bank request to FundSharing macro-framework updates; policy notes produced in the area of monetary and fiscal policy, and AFRITAC reports on PFM support.Continuous
Comoros: Recent World Bank Operations
ProjectType of FundingAmount Approved (in mln. of US$)Date ApprovedDescription
Coastal Resources Co-management for Sustainable LivelihoodTF2.734/5/2011Grant to increase access to revenues and to basic social services in the fishing community of the recipient’s territory.
Development Policy grant 2IDA Grant5.011/29/2012Budgetary financing to support the implementation of core reforms in Comoros’ Poverty Reduction and Growth Strategy.
Emergency Response Project (Additional Financing)IDA Grant3.03/28/2013The objective of the project is to increase access to short-term employment and to basic and social services in areas affected by the crises, both global and internally-generated.
Electricity Sector Recovery projectIDA Grant5.06/9/2013To implement the MAMWE recovery plan with focus on Commercial aspects reforms.
Support to Statistical DevelopmentTF0.3587/9/2013The TFSCB Grant supports the development of Comoros national statistical system, especially the National
Direction of Statistics (DNS), and the production and dissemination of timely, reliable, and relevant data.
Regional Telecom ProjectIDA Grant229/10/2013To support the Recipient’s efforts to lower prices for international capacity and extend the geographic reach of broadband networks
Economic Governance TA ProjectIDA Grant3.511/12/2013Grant to increase the efficiency, accountability and transparency of public financial management and to improve the management of civil service human resources and wages.
Economic Governance Reform GrantIDA Grant3.84/29/2014Grant to improve economic management and transparency, and enhance competition and improve performance in key infrastructure sectors (Information and Communications Technologies (ICT) and electricity).
Social Safety Net Project (pipeline)IDA Grant6.03/17/2015Provide poor communities with access to safety net and nutrition services.
South West Indian Ocean Fisheries Governance (pipeline)IDA Grant1.24/30/2015Grant to boost regional cooperation and integration in the fisheries sector.

Relations with the African Development Bank Group

A. Bank Group’s Support in Comoros

The African Development Bank Group (AfDB) started its operations in Comoros in 1977 and has since then approved seventeen (17) operations and one (2) economic and sector work (ESW). Cumulative Bank Group commitments net of cancellation amounted to UA 78.26 million as of November 2014. These operations targeted the public sector and were mainly financed from ADF resources (87.6 percent). One (1) port infrastructure project was financed through the ADB window for a net UA 9.67 million representing 12.4 percent of total net commitments. In addition, the AfDB approved three (3) emergency operations to assist in mitigating the adverse impact of the food crisis in 2008 (UA 1.5 million) and support victims of floods in 2009 and most recently in 2012 (UA 1.28 million). Since 2009, in addition to the ADF, Comoros are eligible for Pillars I and III of the Fragile States Facilities (FSF), on which they have received additional resources of UA 21.46 million. On the Pillar I, Comoros received UA 10 million in ADF 12 and UA 10 million in ADF 13 e), respectively addressed to support Energy Sector in the ADF 12 and Road sector in the ADF 13. The resources on Pillar III have supported the statistical capacity building in the PRCI (UA 595.000), the preparation of SCA2D (UA 241.000), and recently the assistance to private sector (UA 625.000).

1. Overall, AfDB operations in Comoros have been mainly directed toward supporting economic-related infrastructure, support to public finances and improvement of rural livelihoods. They have primarily concerned Energy sector (45 percent), multi-sector (21 percent), water and sanitation (34 percent).

B. Strategic Orientation

2. The Bank Group concretely re-engaged in Comoros in 2010 following the resolution of the Anjouan crisis and the lifting of sanctions in February 2009 after clearance of its arrears with the Bank. A two-year Interim Country Strategy Paper (I-CSP) 2009-2010 focusing on economic and financial governance and water and sanitation was approved in April 2009. In December 2011, the Board of the AfDB approved a new Country Strategy Paper (CSP) for 2011–2015 based on a single pillar focusing on the energy sector in support of economic diversification. The new CSP draws on the Growth and Poverty Reduction Strategy Paper for 2010–2014 and spans over two ADF cycles – ADF 12 and ADF 13. Under ADF 12, the indicative country allocation will amount to UA 15.6 million, including UA 10 million from the Fragile States Facility (FSF). These resources will primarily aim to finance (i) an energy sector project (UA 13.6 million) and (ii) a budget support operation (UA 2 million) whose main objective will be to leverage the level of available domestic resources and assist the country in reaching HIPC Completion Point by end 2012. It will also provide Comoros with additional resources to support economic and social development and manage transition during the post-HIPC phase. Under ADF 13, the country allocation is amounted to UA 25 million, of which 10 from FSF. After the midterm review of the CSP, the total FSF resources are mobilized to finance budgetary support (UA 4 million), the Institutional capacity building project- PRCI II (UA 5 million) and the assistance to CGP (UA 1 million).

3. As of November 2014, the Bank’s ongoing portfolio in resources amounts to UA 21.9415 million comprising five operations: (i) the Institutional Capacities Strengthening Project (ICSP) whose objective is to strengthen national capacities in PFM, debt management and macroeconomic statistics and (ii) the Drinking Water and Sanitation Project (DWSP) and (iii) the assistance to CGP to finalize the preparation of SCA2D, (iv) Energy Sector Support Project, and (v) the budgetary support to Energy sector. A Midterm review of CSP combined to Country Portfolio Performance Review (CPPR) is approved by the Bank in November 2014.

C. Non Lending Activities

4. Along with other developing partners, the AfDB aims to provide Comoros’s authorities with policy advice and decision tools on key strategic directions with the objective of leveraging and sustaining economic growth over the medium-long term. In this respect, the first phase of a study on the sources of growth in Comoros was completed in December 2010 and provided a series of preliminary key recommendations on ways of boosting growth and improving the economic and business climate. A second ESW concerning Fragility study is achieved in April 2014, to support the finalization of SCA2D..

D. Summary of AfDB Current Lending Portfolio

ProjectSectorEffectivenessClosing DateAmount
Millions of Units of AccountMillions of U.S. Dollars
Institutional Capacities Support ProjectMultisector11/19/200906/30/20155.868.66
Drinking Water and Sanitation ProjectPublic Utilities02/12/201006/30/20159.8414.55
Energy SectorMultisector01/23/201306/30/20142.002.96
Assistance to CGP-Finalization of SCA2DMultisector11/21/201312/31/20150.2410.356
Budgetary Support to Energy SectorPublic utilities11/12/201406/30/20164.005.91
Source: AfDB, 2013
Source: AfDB, 2013

E. IMF-African Development Bank Collaboration

5. Collaboration between the IMF and Africa Development Bank teams has been largely through exchanges, sharing of information and joint missions. More opportunities for collaboration will be explored.

Statistical Issues Appendix

As of December 31, 2014

I. Assessment of Data Adequacy for Surveillance1
General: Data provision has serious shortcomings that significantly hamper surveillance. The statistical database has deficiencies in all sectors largely due to inadequate staffing and funding, as well as lack of integration of island-based data. Some progress was made with collecting income-distribution statistics and social welfare indicators when the Interim Poverty Reduction Strategy Paper (I-PRSP) was being prepared in 2003–04. Since then, coverage has remained limited, hampering the monitoring of progress towards the Millennium Developing Goals (MDGs).
In January 2014 a new Statistics Act was signed by the President, providing the Directorate General of Statistics and Planning (DGSP) a status of autonomous agency to manage an own budget. It is expected that the administrative structure of the agency will be in place next year. From October 2014, an external consultant assists the agency in organizational and administrative issues. In mid-2014, the statistical function were transferred to the Institut National de la Statistique et des Etudes Economiques et Demographiques (INSEED). The institute is under the supervision of the Ministry of Finance.
National accounts. Despite recent improvements, the national accounts compilation system remains weak and unstable, in particular to provide regular and timely data, and thus impart a high degree of uncertainty to economic analysis. The national accounts compilation is hampered mainly because of inadequate funding, especially for collection of data. National accounts staff need further training.
As part of a project on Statistical Capacity Building, the African Development Bank (AfDB) assigned an international Expert from May 2011 to January 2012, who helped DGSP to introduce new base year and implement new compilation techniques. The new benchmark GDP for 2007 was introduced in 2012, and a follow up mission in June 2013 assisted DGSP with the compilation of the accounts for 2008.
In the absence of regular basic source data, the GDP estimates are prepared on crude assumptions and extrapolations, in particular as regards measurement of national account aggregates in volume terms. There is no regular survey conducted on agriculture. The estimates are based on the results of the 2004 census in agriculture and expert views. Little information could be retrieved on household final consumption. More data should be available as soon as the on-going survey on employment, informal sector, and household consumption survey (1.2.3 survey) is completed. It is expected that the GDP time series for the period 2000-2014 will be available by June 2015 (2000 to 2006 by the end of 2014, accounts up to 2012 in March 2015).
Price Statistics. In spite of the improvements made, the accuracy and reliability of the consumer price index (CPI) is still uncertain, mainly due to the old weighting system, based on a survey from 1999. The AfDB assigned an international Expert from May 2011 to January 2012, who helped the NSI to design a new CPI. Baskets of products, expenditure weights, collection locations as well as calculation techniques were revised. An IT tool was implemented and the responsible official was trained in managing the whole compilation process. The new CPI covers all the three islands (vs. one only for the current one); it takes into account more products (500 vs. 128), and is based on sounder methods. The expenditure weights are not updated, still awaiting the results of the household expenditure survey. However, the new methodology is not yet fully implemented due to
lack of funding and staffing. Starting in October 2014, the statistics office will recruit consultants to help in the analysis of the survey results and to adopt the new weighting system for CPI.
Government finance statistics. The data for the Consolidated Government Fiscal Operations table (TOFE) are based largely on the classifications and definitions of the 1986 Government Finance Statistics Manual. The fiscal data currently covers “government sector” defined as the government of the Union of the Comoros and the autonomous island governments. Local governments, the central bank, and any government-owned entity with independent legal status are excluded from the definition of government. Owing to the reporting requirements under the Extended Credit Facility, Comoros currently does not compile fiscal statistics based on the GFSM 2001 presentation. Debt data are also not aligned with either the GFSM 2001 or the IMF’s Public Sector Debt Statistics Guide (2011). The authorities are encouraged to adopt current international statistical standards for fiscal data compilation and analysis.
Monetary and financial statistics. The Central Bank of Comoros (BCC) produces adequate monetary statistics on its own accounts, for the commercial banks, the development bank, the deposits collected by the Société nationale des postes et des services financiers (chèques postaux and saving passbooks), and for two microfinance networks. The BCC reports monetary data in the IMF’s recommended Standardized Report Form format. The Franc Zone arrangement has established accounting and prudential standards that prevent data disruptions. A major shortcoming is the absence of data on the large amount of Euro cash in circulation, handicapping surveillance. Comoros does not report Financial Soundness Indicators to the IMF’s Statistics Department.
Financial sector surveillance: Comoros does not produce Financial Soundness Indicators (FSIs) yet. An FSI technical assistance mission is scheduled in FY 2015.
External sector statistics. The BCC compiles balance of payments statistics along the lines of the methods recommended in IMF’s Balance of Payments Manual, 5thedition. The external sector statistics TA mission conducted in March 2014 found that the measurement of goods is impaired by insufficient details in customs statistics and that data collection from non financial enterprises is largely empirical. The BCC relies heavily on estimates for key BOP components. The mission focused on steps to improve the accuracy of trade statistics for BOP, discussed methodological issues as well as assisted the authorities to come up with a system of data reporting to STA.
II. Data Standards and Quality
From 2013, Comoros is participating in the General Data Dissemination System. In this context, the DGSP provided information on various dimensions of the quality of its consumer price index (CPI) and annual national accounts (ANA).No data ROSC is available.
III. Reporting to STA
Comoros does not report government finance statistics to STA for publication in the International Financial Statistics (IFS) or in the Government Finance Statistics Yearbook, nor does it report balance of payments statistics in the IFS. Among national accounts data, only GDP is reported for publication in the IFS. The BCC reports monetary and financial statistics to the IMF using Standardized Report Forms (SRFs). The current presentation and content of monetary statistics accords largely with the methodology in the IMF’s Monetary and Financial Statistics Manual 2000.
Table of Common Indicators Required for Surveillance As of December 31, 2014
IndicatorsDate of latest observationDate receivedFrequency of Data7Frequency of Reporting7Frequency of publication7
Exchange RatesCurrentCurrentDDM
International Reserve Assets and Reserve Liabilities of the Monetary Authorities1November 2014December 2014MMM
Reserve/Base MoneyNovember 2014December 2014MQQ
Broad MoneyNovember 2014December 2014MQQ
Central Bank Balance SheetNovember 2014December 2014MQQ
Consolidated Balance Sheet of the Banking SystemOctober 2014December 2014
Interest Rates2October 2014December 2014CCM
Consumer Price IndexOctober 2014November 2014MII
Revenue, Expenditure, Balance and Composition of Financing3 — General Government4 — Union government and three island governmentsSeptember 2014November 2014QII
Revenue, Expenditure, Balance and Composition of Financing3—Central GovernmentCentral government data for the Union government only would be of limited relevance without data for the three island governments and are not produced separately
Stocks of Central Government and Central Government-Guaranteed Debt5September 2014November 2014AII
External Current Account Balance2013November 2014AII
Exports and Imports of Goods and ServicesJune 2014November 2014AII
GDP/GNP2013November 2014AII
Gross External DebtSeptember 2014November 2014AII
International Investment Position6NANA

Any reserve assets that are pledged or otherwise encumbered should be specified separately. Also, data should comprise short-term liabilities linked to a foreign currency but settled by other means as well as the notional values of financial derivatives to pay and to receive foreign currency, including those linked to a foreign currency but settled by other means.

Both market-based and officially-determined, including discount rates, money market rates, rates on treasury bills, notes and bonds.

Foreign, domestic bank, and domestic nonbank financing.

The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments.

Including currency and maturity composition.

Includes external gross financial asset and liability positions vis-a-vis nonresidents.

Daily (D), Weekly (W), Monthly (M), Quarterly (Q), Annually (A); Irregular (I); reported when there are changes (C).

Any reserve assets that are pledged or otherwise encumbered should be specified separately. Also, data should comprise short-term liabilities linked to a foreign currency but settled by other means as well as the notional values of financial derivatives to pay and to receive foreign currency, including those linked to a foreign currency but settled by other means.

Both market-based and officially-determined, including discount rates, money market rates, rates on treasury bills, notes and bonds.

Foreign, domestic bank, and domestic nonbank financing.

The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments.

Including currency and maturity composition.

Includes external gross financial asset and liability positions vis-a-vis nonresidents.

Daily (D), Weekly (W), Monthly (M), Quarterly (Q), Annually (A); Irregular (I); reported when there are changes (C).

Case C

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