Front Matter Page

IMF Country Report No. 18/190

UNION OF THE COMOROS

SELECTED ISSUES

June 2018

This paper on the Union of the Comoros was prepared by a staff team of the International Monetary Fund as background documentation for the periodic consultation with the member country. It is based on the information available at the time it was completed on May 30, 2018.

Copies of this report are available to the public from

International Monetary Fund • Publication Services

PO Box 92780 • Washington, D.C. 20090

Telephone: (202) 623-7430 • Fax: (202) 623-7201

E-mail: publications@imf.org Web: http://www.imf.org

Price: $18.00 per printed copy

International Monetary Fund

Washington, D.C.

© 2018 International Monetary Fund

Front Matter Page

UNION OF THE COMOROS

SELECTED ISSUES

May 25, 2018

Approved By

African Department

Contents

• WEAK DOMESTIC REVENUE AND VOLATILE WINDFALL REVENUES

• A. Introduction

• B. Fiscal Policy Implementation in Comoros—Stylized Facts

• C. Policy Recommendation for Suatainably Improving Revenue Mobilization in Comoros

• D. Conclusion

• Reference

• FIGURES

• 1. Fiscal Policy Implementation in Comoros

• 2. Revenue Structure in 2017

• 3. Tax Revenue in Small States (2008-2017)

• 4. Tax Structure in Small States (2015-2017)

• 5. Improving Revenue Mobilization in the Context of Volatile Revenues

• 6. Compensation of Public Employees (2013-2017)

• 7. Tax Revenues in Liberia

• 8. Tax Reform in Georgia

• 9. Foreign Direct Investment (FDI) in Georgia 13

• TABLES

• 1. Comparison with Small States of Average Tax Structure 2008-2017

• 2. Key Tax System Indicators in Georgia

• INFORMALITY AND GENDER INEQUALITY IN COMOROS

• A. Introduction

• B. Informal Employement in Comoros and SSA

• C. Gender, Informal Employment and Income Inequality: Preliminary Findings

• D. The Role of Informal Production Units in Comoros

• E. Conclusions and Policy Recommendations

• References

• FIGURES

• 1. Labor Force, Female

• 2. Share of Informal Employment in Total Employment

• 3. Share of Informal Employment in Non-Agriculture

• 4. Male to Female Ratio in Formal and Informal Employment

• 5. Male to Female Ratio in Formal and Informal Employment Non-Agriculture

• 6. Female Participation in Labor Force

• 7. Gender Inequality and Income Inequality

• 8. Employment in Comoros, 2013

• 9. Informal Production Units (IPU) Creation by the Chief Gender

• 10. Geographical and Sectoral Repartition of IPUs in Comoros

• 11. Reasons for IPU Non-Compliance in Comoros

• 12. Impact of Reducing Inequality in Comoros 24

• TABLE

• 1. Compliance with Regulations

• MODERNIZING THE MONETARY POLICY FRAMEWORK IN COMOROS

• A. Introduction

• B. The Existing Monetary Policy Framework.

• C. The Proposal to Modernize the Monetary Policy Framework

• D. Sequencing Reforms and Preconditions for BCC Bill Issuance

• E. Conclusions

• References

• FIGURES

• 1. Required Deposits and Excess Deposits

• 2. Private Sector Credit Growth Compared to Other Monetary Aggregates

• 3. Excess Reserves in Percent of GDP

• TABLE

• 1. Implementation Steps for Modernization of the Monetary Policy Framework

• FINANCIAL SECTOR RISKS AND MONETARY POLICY EFFECTIVENESS

• A. Background and Macroeconomic Context

• B. Stylized Facts—Financial Sector Fragility and Risks

• C. Financial Sector Health and Monetary Policy

• D. Conclusions and Policy Recommendations

• FIGURES

• 1. Macroeconomic Developments

• 2. Financial Sector Developments

• 3. Selected Financial Soundness Indicators

• 4. Non-Performing Loans and Provisions

• 5. Lending and Non-Performing Loans by Industry Category

• 6. Cross-Country Comparison of Selected Financial Soundness Indicators 2016

• 7. Fianncial System and Interest Rates

• TABLE

• 1. FSI Heatmap 2017

• ANNEX I

• 1. Interest Rates in the Comorian Economy