Abstract
The federal government has made progress in reducing fiscal imbalances and improving public services. The authorities sharply reduced expenditures on goods and services and transfers, and improved management of the payroll generated a 5 percent reduction in the wage bill compared with 1999. Executive Directors welcomed the staff-monitored program (SMP)'s emphasis on improving fiscal sustainability, and they strongly supported a continuation of the tight public sector wage policy, and endorsed the authorities' plans to reduce employment in the public sector as part of a civil service reform program.
July 18, 2001
This statement reports on the meeting of “Friends of the Comoros” that was held in Paris on July 5, 2001, and on information that became available since the issuance of the Board papers.
1. The first (informal) donor meeting after the Comoros political problems in recent years was very well attended. The donors were supportive of the political reconciliation process and the governments emergency reconciliation and reconstruction program, pledging a total of US$11.5 million in additional assistance for July 2001-June 2002, including US$6.8 million from the World Bank. Most of the aid concerned project assistance, and the total amount was slightly less than the US$12.8 million the government sought. However, the total does not include substantial assistance expected from a US$10 million Comoros Fund that is being established by the Arab League. While some re-prioritizing of expenditure may be needed, the financing gap including the emergency expenditure program for July 2001-June 2002, appears to be covered.
2. The government also made further progress with regard to regularizing its relations with external creditors. Of the two largest bilateral creditors, the Comoros received a rescheduling proposal from the Kuwait Fund for Economic Development of Arab Countries during the donor conference, which the authorities are evaluating, and discussions with the Saudi Fund for Development are expected to start in the coming months. Successful implementation of rescheduling agreements with these creditors would eliminate almost one-third of the external debt payments arrears and allow renewed access to substantial concessionary financing.
3. The government is preparing the revised budget for 2001, including the results of the donor meeting, for issuance by end-July. This may involve the shifting into 2002 of some of the expenditure under the emergency program previously planned for 2001. In addition, the authorities decided to include a number of revenue measures, originally intended to be implemented on July 1, in the package of the revised budget, in order to allow more time for their preparation. Monthly wages were paid regularly through end-June 2001, and the federal government has started making transfers to Anjouan to improve the functioning of the administration on that island.
This information does not change the thrust of the staff appraisal as provided in EBS/01/110.