Abstract
Selected Issues
Weak Domestic Revenue and Volatile Windfall Revenues1
For many years now, Comoros’ significant fiscal challenges have included weak revenues, a reliance on volatile one-off revenues, an increasing lack of budgetary realism leading to poor and declining budget execution rates. This chapter analyses Comoros’ fiscal challenges through the lens of weak domestic revenues that have increased reliance on volatile windfall revenues and served as a handbrake on achieving Comoros’ development goals through limiting investment budget execution. Based on cross-country experience, concrete solutions and guidance for improving domestic revenues are presented.
A. Introduction
1. Fiscal policy implementation continues to be very challenging in Comoros, with unrealistic budgeting in the context of Comoros’ development ambitions further undermining budgetary credibility (Figure 1). In March 2017, the Comorian authorities announced an ambitious goal to become an emerging market economy by 2030. This development goal was to be supported by a budget that foresaw a near-doubling of revenues and a more-than-doubling of capital expenditures. Despite a substantial improvement in revenue levels in 2017, in the order of 2.5 percentage points of GDP, both revenue and expenditure execution worsened in 2017 vis-à-vis still-unrealistic supplementary budget targets.2 This was due to the fact that (i) the supplementary budget revenue and expenditure targets, although lower than those foreseen by the initial budget law, remained highly unrealistic in view of Comoros’ fragile budget execution capacity, and (ii) cash revenues were insufficient to meet cash expenditure needs, even though investment expenditures had been curtailed to adjust for the revenue shortfall. The latter gap between cash revenues and expenses was met by external financial flows in the order of about 5 percent of GDP (budget support and grants, drawing on the counterpart of SDR holdings3 and borrowing from an external financial institution). But the lack of budgetary realism further eroded budgetary credibility in 2017, making donor support more difficult, thus undermining foreign-financed project execution.
Fiscal Policy Implementation in Comoros
Citation: IMF Staff Country Reports 2018, 190; 10.5089/9781484363775.002.A001
Sources: Comoros authorities; and IMF staff calculations.Fiscal Policy Implementation in Comoros
Citation: IMF Staff Country Reports 2018, 190; 10.5089/9781484363775.002.A001
Sources: Comoros authorities; and IMF staff calculations.Fiscal Policy Implementation in Comoros
Citation: IMF Staff Country Reports 2018, 190; 10.5089/9781484363775.002.A001
Sources: Comoros authorities; and IMF staff calculations.2. Boosting revenue mobilization in Comoros is important, as it tends to be a more growth-friendly means of assuring viability of the public finances, compared to cutting public spending, and would also provide space to attend to Comoros’ significant development needs. Fiscal multiplier analysis for a sample of 35 SSA countries over the period 1990-2016 suggests that changes in government revenue had limited effects on growth. In contrast, unanticipated shocks to public investment and consumption expenditures tended to have large and significant effects on economic growth in SSA (SSA REO 2018). Improving revenue mobilization is thus an appropriate means for assuring the medium-term viability of the public finances, while attending also to Comoros’ large development needs and addressing recent declines in living standards.
3. Against this background, this paper addresses two key issues. First, the chapter highlights some key stylized facts regarding fiscal policy implementation in Comoros, and updates previous work on Fiscal Trends in Comoros (see Country Report 16/394). Second, we draw on cross-country experience to develop policy recommendations for improving revenue mobilization in Comoros. The latter is an essential element for financing the authorities’ ambitious development strategy which, despite recent improvements, remains an important challenge faced by the Comorian authorities.
B. Fiscal Policy Implementation in Comoros—Stylized Facts
4. Unlike in other countries, the budgetary framework in Comoros is largely disconnected from economic assumptions. In many countries, external economic factors (world growth, exchange rate, commodity prices) significantly impact tax revenue volatility. In Comoros however, the impact of these factors on revenue forecasts and execution is limited. There is a strong correlation between imports and customs revenues (the main source of tax revenues, Figure 2), however imports are highly dependent on volatile external financial flows (e.g. remittances and foreign-financed capital expenditures).
Revenue Structure in 2017
(percent of total)
Citation: IMF Staff Country Reports 2018, 190; 10.5089/9781484363775.002.A001
Sources: Comoros authorities; and IMF staff calculations.Revenue Structure in 2017
(percent of total)
Citation: IMF Staff Country Reports 2018, 190; 10.5089/9781484363775.002.A001
Sources: Comoros authorities; and IMF staff calculations.Revenue Structure in 2017
(percent of total)
Citation: IMF Staff Country Reports 2018, 190; 10.5089/9781484363775.002.A001
Sources: Comoros authorities; and IMF staff calculations.5. Although revenues were much improved in 2017, historically speaking Comoros’ tax revenue to GDP ratio has remained well below the average small-states’ performance (2008-2017).4 Tax revenues increased by an impressive 2.5 percentage points of GDP in 2017. But Comoros’ average performance over the period 2008 – 2017 was well below that off all small states bar one (Figure 3). Comoros is also a below-average performer on individual components of taxation. Moreover, A tax revenue structure comparison (Table 1) over the period 2015-2017 indicates that Comoros records lower levels than the small states average in all categories. The largest gap between the small states average and Comoros’ performance is in ‘taxes on income, profits, and capital gains’, with a gap of 3.8 percentage points of GDP.
Tax Revenues in Small States (2008-2017)
(period average, in percent of GDP)
Citation: IMF Staff Country Reports 2018, 190; 10.5089/9781484363775.002.A001
Sources: World Economic Outlook and IMF staff calculations.Tax Revenues in Small States (2008-2017)
(period average, in percent of GDP)
Citation: IMF Staff Country Reports 2018, 190; 10.5089/9781484363775.002.A001
Sources: World Economic Outlook and IMF staff calculations.Tax Revenues in Small States (2008-2017)
(period average, in percent of GDP)
Citation: IMF Staff Country Reports 2018, 190; 10.5089/9781484363775.002.A001
Sources: World Economic Outlook and IMF staff calculations.Comoros: Comparison with Small States of Average Tax Structure, 2008 – 2017
(in percent of GDP)
Comoros: Comparison with Small States of Average Tax Structure, 2008 – 2017
(in percent of GDP)
| Small - States Average | Seychelles | Cabo Verde | Mauritius | Comoros | |
|---|---|---|---|---|---|
| Taxes on goods and services | 8.5 | 16.1 | 9.3 | 11.8 | 7.7 |
| Taxes on income, profits, and capital gains | 6.6 | 10.8 | 6.3 | 6.1 | 2.8 |
| Taxes on international trade and transactions | 4.6 | 1.7 | 4.1 | 0.3 | 1.6 |
| Taxes, not elsewhere classified | 1.4 | 3.3 | 0.4 | 1.6 | 0.1 |
Comoros: Comparison with Small States of Average Tax Structure, 2008 – 2017
(in percent of GDP)
| Small - States Average | Seychelles | Cabo Verde | Mauritius | Comoros | |
|---|---|---|---|---|---|
| Taxes on goods and services | 8.5 | 16.1 | 9.3 | 11.8 | 7.7 |
| Taxes on income, profits, and capital gains | 6.6 | 10.8 | 6.3 | 6.1 | 2.8 |
| Taxes on international trade and transactions | 4.6 | 1.7 | 4.1 | 0.3 | 1.6 |
| Taxes, not elsewhere classified | 1.4 | 3.3 | 0.4 | 1.6 | 0.1 |
6. The highly-concentrated nature of taxation revenue in Comoros places a higher tax burden on existing taxpayers in the revenue base (Figure 4). In Comoros, tax revenues are more highly concentrated in taxes on goods and services (62.5 percent of taxation revenues, versus the small states average of 40.3 percent). Also, in Comoros, corporate taxes are dominated by state-owned enterprise (SOE) contributions, particularly that of the public telecoms utility (more than 65 percent of total corporate taxes over the last eight years). Civil servants contributed 60 percent of all income taxes over the same period. In contrast, Comorian informal production units, which made up 79.2 percent of employment in Comoros in 2013, operate almost completely outside the taxation system with a tax ID number compliance share lower than 6 percent. improving the low rate of tax compliance could contribute significantly to improving the tax base in Comoros (see Selected Issues chapter on Informality and Gender Inequality in Comoros).
Tax Structure in Small States (2015-2017)
(Period average, in percent of GDP)
Citation: IMF Staff Country Reports 2018, 190; 10.5089/9781484363775.002.A001
Sources: World Economic Outlook and IMF staff calculations.Tax Structure in Small States (2015-2017)
(Period average, in percent of GDP)
Citation: IMF Staff Country Reports 2018, 190; 10.5089/9781484363775.002.A001
Sources: World Economic Outlook and IMF staff calculations.Tax Structure in Small States (2015-2017)
(Period average, in percent of GDP)
Citation: IMF Staff Country Reports 2018, 190; 10.5089/9781484363775.002.A001
Sources: World Economic Outlook and IMF staff calculations.7. Comoros’ relatively volatile tax revenue level has not increased much over time, especially compared to other regions, due partly to Comoros’ low development level and a complex tax system (Figure 5). Comoros’ tax ratio has tended to exhibit greater volatility than the SSA average. While the tax revenue level is what may be expected from a country at Comoros’ development level, the relatively complex tax system makes paying taxes more difficult, hindering revenue mobilization efforts. Therefore, recent increases in Comoros’ tax ratio have not been as marked as in comparator countries.
Improving Revenue Mobilization in the Context of Volatile Revenues
Citation: IMF Staff Country Reports 2018, 190; 10.5089/9781484363775.002.A001
Sources: World Bank, World Development Indicators; WEO, and IMF staff calculations.Note: EMDEs refers to Emerging Markets and Developing Economies.Improving Revenue Mobilization in the Context of Volatile Revenues
Citation: IMF Staff Country Reports 2018, 190; 10.5089/9781484363775.002.A001
Sources: World Bank, World Development Indicators; WEO, and IMF staff calculations.Note: EMDEs refers to Emerging Markets and Developing Economies.Improving Revenue Mobilization in the Context of Volatile Revenues
Citation: IMF Staff Country Reports 2018, 190; 10.5089/9781484363775.002.A001
Sources: World Bank, World Development Indicators; WEO, and IMF staff calculations.Note: EMDEs refers to Emerging Markets and Developing Economies.8. One-off windfall gains may be a welcome boon to the public finances, but raise difficulties for effective budgeting. In recent years, Comoros benefited from sizable one-off windfall gains. These included bilateral budget support (e.g. 7.5 percent of GDP from Saudi Arabia at end-2015, and 3 percent of GDP from Saudi Arabia and the Emirate of Sharjah in 2017), as well as revenue from the Economic Citizenship program. But these revenue streams may prove to be a double-edged sword. On the one hand, they may, if used wisely, provide welcome fiscal relief. However, on the other hand, they are highly volatile, more so than on average in small states.5 To the extent to which Comoros relies on these uncertain revenue flows affects budgetary credibility, increases the volatility of revenues and grants, and renders effective short-to medium term budgetary planning difficult.
9. In Comoros, the wage bill takes up a large share of domestic revenues, leaving few resources left over to attend to development needs. The wage bill in Comoros, measured as a percentage of domestic revenues, averaged 71.7 percent between 2013 and 2017. This was the fifth-highest of all small states during the same period. Either the low level of tax revenues and/or the size of the public wage bill may explain these results. In Comoros, the low level of tax revenue mobilization appears to be the main culprit, with the average public wage bill in percent of GDP over 2013 to 2017 remaining lower than the small states’ average (8.7 percent of GDP vs 11.2 percent of GDP).
C. Policy Recommendations for Sustainably Improving Revenue Mobilization in Comoros
10. Evidence from historical experience in SSA, empirical estimates, as well as comparator country case studies, illustrate how Comoros can sustainably improve revenue mobilization to finance its development strategy. Although individual country context matters, there is potential in many countries in SSA to raise tax revenues by about one percent of GDP per year over the medium term in a sustainable and business-friendly manner (Gaspar and Selassie 2017). Comoros’ tax potential, measured as the difference between the tax frontier6 and the actual tax ratio, points to a feasible potential increase of about 3 percentage points of GDP in tax revenues, mostly from improvements in transparency and government effectiveness, as well as increasing the productivity of low-yielding direct taxes. Ensuring success in revenue mobilization efforts also requires attention to many factors related to policy design, institutional development, and political support for reform, with economic and political stability also preconditions for reform success (SSA REO 2018). Historical experience also suggests several clear principles for achieving these goals, while deeper analysis of comparator country case studies – Liberia and Georgia – illustrate these principles in action (Akitoby 2018).
11. Several principles for raising tax revenues stand out from historical experience. First, successful reform efforts take time, with successful reform episodes lasting an average of 2 to 7 years. Second, a complete overhaul of fundamental tax administration institutions is often needed. Third, both a clear reform mandate and the sincere engagement of all stakeholders (including civil society and at the highest political levels) are essential. Fourth, tax system simplicity, including reducing both the number of taxes and exemptions, is key, Fifth, reinforcing compliance with existing taxes and introducing new indirect taxes (e.g. Value Added Tax) is important.
12. Liberia’s main revenue mobilization reform episode, lasting from 2006 to 2010.After a prolonged internal conflict, Liberia adopted a broad and ambitious reform agenda. This included introducing taxation system building blocks from scratch; voiding or suspending certain tax exemptions which narrowed the tax base; instituting taxes on turnover or import values (e.g. a broad-based goods and services tax and excises, particularly on alcoholic beverages and cigarettes, as well as customs tariffs) underpinned by simple tax legislation; publishing the financial accounts of revenue-generating agencies to address mismanagement of public funds; and computerizing the tax and customs administrations (Akitoby 2017). Over a period of three years, this reform agenda achieved non-resource revenue increases of about 2.6 percentage points each year. This was despite challenges such as low capacity and delays in implementing structural reforms related to eliminating tax exemptions.
13. Supported by Fund TA, substantial revenue mobilization reforms continued beyond 2010. These reform efforts focused on strengthening the revenue administration organization; defining the organizational structure, administrative and operational frameworks; building a comprehensive risk strategy for large taxpayers, and building the capacity of the Liberia Revenue Authority (LRA), which was established in 2014, to service taxpayers (see IMF 2017 for further details).
14. Despite challenges, Liberia achieved impressive revenue gains through the above reform agenda (Figure 7), although serious macroeconomic shocks affected revenue performance and masked reform impact. During the period 2006-2010, the above reform agenda achieved non-resource revenue increases of about 2.6 percentage points each year. This was despite challenges such as low capacity and delays in implementing structural reforms related to eliminating tax exemptions. But the impact of some revenue mobilization reforms, particularly in the post-2010 period, was masked by serious macroeconomic shocks. For example, the height of the Ebola crisis coincided with the LRA launch in July 2014, while commodity price (iron ore) shocks have also affected revenue performance in recent years.
Compensation of Public Employees (2013-2017)
(in percent of tax revenue)
Citation: IMF Staff Country Reports 2018, 190; 10.5089/9781484363775.002.A001
Sources: World Economic Outlook and IMF Staffs calculations.Compensation of Public Employees (2013-2017)
(in percent of tax revenue)
Citation: IMF Staff Country Reports 2018, 190; 10.5089/9781484363775.002.A001
Sources: World Economic Outlook and IMF Staffs calculations.Compensation of Public Employees (2013-2017)
(in percent of tax revenue)
Citation: IMF Staff Country Reports 2018, 190; 10.5089/9781484363775.002.A001
Sources: World Economic Outlook and IMF Staffs calculations.
Tax Revenues in Liberia
Citation: IMF Staff Country Reports 2018, 190; 10.5089/9781484363775.002.A001
Sources: Liberian authorities; and IMF staff calculations.Tax Revenues in Liberia
Citation: IMF Staff Country Reports 2018, 190; 10.5089/9781484363775.002.A001
Sources: Liberian authorities; and IMF staff calculations.Tax Revenues in Liberia
Citation: IMF Staff Country Reports 2018, 190; 10.5089/9781484363775.002.A001
Sources: Liberian authorities; and IMF staff calculations.15. Following the 2003 Rose Revolution, Georgia embarked on a sweeping multiphase tax reform program that curbed tax fraud and evasion, reduced smuggling, and drastically overhauled tax and customs legislations (Figure 8 and Table 2). The reform was multidimensional and included (i) a significant reduction of the formal tax burden (elimination of 16 type of taxes, lowering the rates and simplifying their accounting by streamlining deductions); (ii) restraining ineffective government intervention in private businesses and moving to e-based relations with the taxpayers, including electronic invoicing; (iii) a one-time amnesty on undeclared taxes and tax arrears, with enforcement of fair tax administration practices where voluntary compliance was simplified, while penalties for noncompliance became rather harsh; and (iv) modernizating the Georgian Revenue Service (GRS) structure and establishing it as a legal entity of public law or separate agency, uniting the tax and customs agencies, under the aegis of the Ministry of Finance. This format allowed the GRS to perform state functions and earn revenue from consulting and other services to the taxpayers, the proceeds of which were used for employee bonuses. Higher employee salaries served as an incentive for better work and a shield against corruption. The fight against corruption was fully fledged and the financial police was created.
Tax Reform in Georgia
Citation: IMF Staff Country Reports 2018, 190; 10.5089/9781484363775.002.A001
Source: Ministry of Finance of Georgia.Sources: Georgia authorities; and IMF staff calculations.Tax Reform in Georgia
Citation: IMF Staff Country Reports 2018, 190; 10.5089/9781484363775.002.A001
Source: Ministry of Finance of Georgia.Sources: Georgia authorities; and IMF staff calculations.Tax Reform in Georgia
Citation: IMF Staff Country Reports 2018, 190; 10.5089/9781484363775.002.A001
Source: Ministry of Finance of Georgia.Sources: Georgia authorities; and IMF staff calculations.Comoros: Key System Indicators in Georgia
Comoros: Key System Indicators in Georgia
| First phase | Second phase | Third phase | ||||||
|---|---|---|---|---|---|---|---|---|
| 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | |
| Number of taxes | 21 | 7 | 7 | 7 | 6 | 6 | 6 | 6 |
| VAT rate (%) | 20 | 20 | 18 | 18 | 18 | 18 | 18 | 18 |
| Income tax (%) | 12-20 | 12 | 12 |  | 25 | 20 | 20 | 20 |
| Social securitiy contribution (%) | 33 | 20 | 20 | |||||
| Corporate profit tax (%) | 20 | 20 | 20 | 20 | 15 | 15 | 15 | 15 |
| Dividend & interest income tax (%) | 10 | 10 | 10 | 10 | 10 | 5 | 5 | 5 |
Comoros: Key System Indicators in Georgia
| First phase | Second phase | Third phase | ||||||
|---|---|---|---|---|---|---|---|---|
| 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | |
| Number of taxes | 21 | 7 | 7 | 7 | 6 | 6 | 6 | 6 |
| VAT rate (%) | 20 | 20 | 18 | 18 | 18 | 18 | 18 | 18 |
| Income tax (%) | 12-20 | 12 | 12 | | 25 | 20 | 20 | 20 |
| Social securitiy contribution (%) | 33 | 20 | 20 | |||||
| Corporate profit tax (%) | 20 | 20 | 20 | 20 | 15 | 15 | 15 | 15 |
| Dividend & interest income tax (%) | 10 | 10 | 10 | 10 | 10 | 5 | 5 | 5 |
16. The second reform wave focused on improving institutional capacity, scaling up investment, and introducing comprehensive IT solutions for tax and customs administration. Measures included a unified taxpayer database and e-services, such as individual taxpayer electronic pages, where the taxpayers can monitor online their tax payments, status and taxes due and interact with the GRS from their offices. The tax system was further simplified and tax rates were lowered. For example, sine 2008 personal income tax rates were combined with the social contribution into a single tax rate of 20 percent.7 Taxes on corporate dividends and interest earnings were reduced from 10 to 5 percent in 2009 (Table 2). The final phase involved harmonizing the tax law with international best practices. Different taxation regimes were also introduced to accommodate different taxpayers’ needs, particularly SMEs. In addition, the GRS further improved tax collection by streamlining and automating most processes, introducing risk-based audit management and vastly expanding e-services. As result, tax compliance costs significantly decreased and tax efficiency further improved (World Bank 2012).
17. Better tax administration and simplified business regulations resulted in a rapid and sustainable growth of tax revenues in Georgia. Taxpayer registration more than doubled from 2005 to 2008 (OECD 2015), with tax form simplification and the rapid build-up of the e-filing system resulting in a drastic increase in tax compliance. This was reflected in a more-than-doubling of the tax revenue to GDP ratio, to 25.2 percent of GDP as at end of 2011 (Figure 8).
18. Tax reforms in Georgia largely succeeded because of successful complementary efforts to reinstate good governance through stamping out public corruption, which also benefitted perceptions of the business environment. The government’s political will, determination and quick action were critical to the success of the reforms. Perceptions of Georgia’s business environment significantly improved as a result of the government’s multipronged approach, with Foreign Direct Investment (FDI) increasing significantly between 2003 and 2008 (Figure 9). Also reflecting this, Georgia achieved dramatic improvements in their Doing Business ranking, moving from 111th place in 2005 to 12th place in 2011 (and 9th place in 2018). However, the blunt action that accompanied the sweeping reform program left many sidelined and ultimately resulted in the growing anti-government tension that ended the reform era in 2012.
Foreign Direct Investment (FDI) in Georgia)
Citation: IMF Staff Country Reports 2018, 190; 10.5089/9781484363775.002.A001
Source: Georgia authorities; and IMF staff calculations.Foreign Direct Investment (FDI) in Georgia)
Citation: IMF Staff Country Reports 2018, 190; 10.5089/9781484363775.002.A001
Source: Georgia authorities; and IMF staff calculations.Foreign Direct Investment (FDI) in Georgia)
Citation: IMF Staff Country Reports 2018, 190; 10.5089/9781484363775.002.A001
Source: Georgia authorities; and IMF staff calculations.D. Conclusion
19. 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 increases the budget’s reliance on uncertain and volatile one-off revenue streams. In turn, these tendencies, combined with unrealistic budgetary goals, hamper budgetary execution and adversely affect budget execution.
20. 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. At the same time, this will help improve investment expenditure execution and limit the recourse to potentially unsustainable external borrowing.
21. Current reform efforts to sustainably increase revenues are heading in the right direction, but significant increases in Comoros’ tax ratio remain realistically feasible through further following the example of comparator country experience for effective reform implementation. In 2017, the increased effort on tax and customs led to the highest annual tax revenue increase in the last fifteen years (2.6 percentage points of GDP), with the tax ratio reaching 15.5 percent of GDP. Deepening these efforts, by further improvement in both Customs and tax administration and adopting a medium-term revenue strategy to strengthen the basic building blocks of effective tax administration and broaden the tax base could lead to a sizeable increase of tax revenues. Such reforms could focus on recovering the stock of tax arrears; recovering unpaid corporate taxes; intensifying the tax audit program; following up on income tax non-declaration, and maintaining the reversal of costly tax expenditures, such as Customs exemptions. Enlarging the tax base could be achieved by facilitating the formalization process for informal production units through enhancing the quality of tax administration services; reducing the cost of formality and compliance by adopting an adequate and friendly legislative framework with micro-and-small enterprises; and introducing indirect taxes to reduce the proportion of direct taxes in the overall tax take. At the same time, the productivity of existing direct taxes (personal income taxes and corporate income taxes)—which by regional standards are not very efficient in Comoros—could be increased to yield significant increases in the tax ratio.
References
Akitoby, B. (2018). Raising Revenue Five Country Cases Illustrate how Best to Improve Tax Collection, Finance & Development, March 2018, Vol. 55, No. 1.
Gaspar, V., & Selassie, A. A. (2017). Taxes, Debt and Development: A One-Percent Rule to Raise Revenues in Africa. IMF blog. Advance online version available at https://blogs.imf.org/2017/12/05/taxes-debt-and-development-a-one-percent-rule-to-raise-revenues-in-africa.
IMF (2017), ‘Multi-Country Report: Building Fiscal Capacity in Fragile States – Case Studies’, IMF Country Report 17/153, Washington DC, June.
OECD (2015). “Examples of Successful DRM Reforms and the Role of International Co-operation,” Discussion Paper, Eschborn, Germany.
Sub-Saharan Africa Regional Economic Outlook (2018). Domestic Revenue Mobilization and Private Investment, World Economic and Financial Surveys, International Monetary Fund, Washington DC, April.
World Bank. (2012). Fighting Corruption in Public Services: Chronicling Georgia’s Reforms, Washington DC, United States.
Prepared by Ibrahim Ahamada, Mounir Bari, Mokhtar Benlamine, Michel Bua and Cameron McLoughlin. This chapter has benefited from comments from several IMF colleagues.
Relative to the 2016 outturn, the 2017 supplementary budget law, passed in October of that year, envisioned a one-and-a-half-fold increase in revenues, to KMF 64.4bn (23 percent of GDP); a two-and-a-half-fold increase in domestically-financed investment expenditure, to KMF 18.4bn (6.5 percent of GDP); and a doubling in foreign-financed investment expenditures, to KMF 39.3bn (13.9 percent of GDP). Expenditure execution was worse than that of revenues, implying an unbudgeted-for overall cash surplus for the year (0.4 percent of GDP, versus a budgeted-for cash deficit of 1.3 percent of GDP).
In Comoros, the central bank (BCC) acts as the fiscal agency for the government in relation to the country’s SDR allocation. The Comorian government utilized its SDR allocation for budgetary purposes through credit from the BCC to the central government (the counterpart to the SDR allocation). On the BCC balance sheet, it was reflected as an increase in Treasury’s liabilities to the central bank and on the asset side of the BCC as a claim on the Treasury.
Small States are defined as countries with population under 1.5 million.
Between 2013 and 2017, the standard deviation of external grants received by Comoros was 6.7 percent (the second-highest of all small states), compared with an average 1.8 percent for all small states.
Tax frontier is defined as the maximum theoretical level of tax revenues (measured in percent of GDP) that a country can achieve given certain underlying structural conditions, such as the level of development, the trade openness, the sectoral structure, income distribution, and governance.
The social tax was merged with the income tax as the pension fund was merged with the budget at the same time. The social tax provided funding for the pension fund.
