Third Review Under the Three-Year Arrangement Under the Extended Credit Facility, Requests for Waiver of Nonobservance of a Performance Criterion, Modification of a Performance Criterion, Extension of the Arrangement, Rephasing of Disbursements, and Financing Assurances Review—Informational Annex
Author:
International Monetary Fund. African Dept.
Search for other papers by International Monetary Fund. African Dept. in
Current site
Google Scholar
Close

Comoros remains in debt distress, pending the achievement of the completion point under the Highly Indebted Poor Country (HIPC) Initiative. The outlook for 2012 is broadly consistent with expectations under the Extended Credit Facility (ECF) arrangement. The IMF Executive Board has approved a three-year ECF arrangement to support Comoros’ medium-term economic recovery efforts. The government has continued pursuing a prudent external debt management policy. Achievement of the government’s fiscal objectives requires close adherence to the fiscal program to enhance the efficiency of tax and customs administration and to expand the tax base.

Abstract

Comoros remains in debt distress, pending the achievement of the completion point under the Highly Indebted Poor Country (HIPC) Initiative. The outlook for 2012 is broadly consistent with expectations under the Extended Credit Facility (ECF) arrangement. The IMF Executive Board has approved a three-year ECF arrangement to support Comoros’ medium-term economic recovery efforts. The government has continued pursuing a prudent external debt management policy. Achievement of the government’s fiscal objectives requires close adherence to the fiscal program to enhance the efficiency of tax and customs administration and to expand the tax base.

I. Relations with the Fund

(As of March 31, 2012)

I. Membership Status: Joined September 21, 1976 Article VIII

II. General Resources Account:

article image

III. SDR Department:

article image

IV. Outstanding Purchases and Loans:

article image

V. Latest Financial Arrangements:

article image

VI. Projected Obligations to Fund (SDR millions; based on existing use of resources and present holdings of SDRs):

article image

VII. Implementation of HIPC Initiative: Enhanced framework

article image

VIII. Summary of Safeguards Assessment. An update of the August 2007 safeguards assessment of the Banque Centrale des Comores (BCC) was completed in April 2010. The safeguards assessment found that despite capacity constraints the central bank has taken steps to strengthen its safeguards framework; it recommended that efforts to implement International Financial Reporting Standards (IFRS) should be intensified and the financial controller should review data submitted to the Fund for each program test date, starting in December 2009.

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

X. Exchange Rate Arrangements: The currency 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.

XI. Article IV Consultation: The last Article IV consultation was concluded on January 21, 2011 (Country Report No. 11/72). Directors commended the Comorian authorities for their broadly satisfactory policies in a challenging political and economic environment. They welcomed the improved fiscal performance in the first half of 2010. Expressing concern at slippages later in the year, Directors welcomed the corrective steps taken and urged the authorities to implement expeditiously planned revenue and expenditure measures to strengthen the fiscal position. Directors underscored that achieving a higher growth path will require far reaching structural reforms to bolster competitiveness and increase the economy’s ability to intermediate remittances and aid inflows. In particular, they stressed the need to improve the business environment and the management of public utilities.

XII. Recent Technical Assistance

article image
article image

XIII. Resident Representative: A resident representative post established in September 1991 was closed in December 1995; in the 2000s, the IMF’s field operations in the country were managed by the resident office in Madagascar. The Comoros post was reestablished in May 2012.

II. Joint World Bank-IMF Work Program, 2012–13

article image

III. Relations with the African Development Bank Group

A. Bank Group’s Support in Comoros

1. The African Development Bank Group (AfDB) started operations in Comoros in 1977 and has since approved fifteen (15) operations and one economic and sector work (ESW). Cumulative Bank Group commitments net of cancellation amounted to UA [58.88] million as of April 30, 2012. These operations targeted the public sector and were mainly financed from ADF resources (83.6 percent). One (1) port infrastructure project was financed through the ADB window for a net UA 9.67 million representing 16.4 percent of total net commitments. In addition, the AfDB approved two (2) emergency operations to assist in mitigating the adverse impact of the food crisis (UA 1.5 million) (2008) and to support victims of floods ((UA 0.64 million) (2009). A UA 0.6 million supplementary grant was also allocated to the Institutional Capacity Strengthening Project (ICBP) in November 2010. In 2009, Comoros benefited from a UA 2.5 million support from the Fragile States Facility (FSF) for capacity building, namely for the PRSP finalization, training of civil servants, revision of the fiscal code, fiscal reorganization, preparation of the Public Finances Management (PFM) strategy and action plan and capacity building to the Planning Commission (CGP and to the water and sanitation department. Overall, the AfDB operations in Comoros have been directed toward supporting economic-related infrastructure, budget support and rural livelihoods and primarily concerned transport (40 percent), multi-sector (26 percent), water and sanitation (17 percent), agriculture (11 percent) and education (6 percent).

B. Strategic Orientation

2. The Bank Group re-engagement in Comoros is recent. Following the resolution of the Anjouan crisis in 2007 and the lifting of sanctions in February 2009 after clearance of its arrears with the Bank under the Bank’s Post-Conflict Countries Facility (PCCF), a two-year Interim Country Strategy Paper 2009–2010 (I-CSP) focusing on economic and financial governance and water and sanitation was approved in April 2009. In December 2011, the Boards of AfDB approved a new Country Strategy Paper (CSP) for 2011–2015 based on a single pillar focusing on the energy sector in support to economic diversification. The new CSP draws on the Growth and Poverty Reduction Strategy Paper for 2010–2014 and will span 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 Fragility (FSF). These resources will primarily aim to finance (i) an energy sector project (UA 13.6 million) and (ii) a budget support (UA 2 million) whose main objective will be to assist the country in reaching HIPC Completion Point by end 2012.

3. As of 30 April 2012, the Bank’s ongoing portfolio in Comoros amounts to UA 16.5 Million comprising two 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). A Country Portfolio Performance Review (CPPR) was conducted in May 2011 followed by a Country Portfolio Improvement Plan (CPIP) mission in March 2012.

C. Non Lending Activities

4. Along with other developing partners, AfDB aims to provide Comoros authorities with policy advice 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. It provided a series of preliminary key recommendations on ways of improving the economic and business climate. The new CSP 2011–2015 includes a series of economic and sector works (ESW) covering strategic themes such as growth, competitiveness and employment as well as private sector and commodity value chains.

D. Summary of AfDB Current Lending Portfolio

article image
Source: AfDB, 2012

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 would be explored.

IV. Statistical Issues

article image
article image

Technical Assistance Missions in Statistics

(1986–present)

article image

Forthcoming technical assistance

None.

Table of Common Indicators Required for Surveillance As of March 31, 2010

article image

Any reserve assets that are pledged of 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).

  • Collapse
  • Expand
Union of the Comoros: Third Review Under the Three-Year Arrangement Under the Extended Credit Facility, Requests for Waiver of Nonobservance of a Performance Criterion, Modification of a Performance Criterion, Extension of the Arrangement, Rephasing of Disbursements, and Financing Assurances Review
Author:
International Monetary Fund. African Dept.