Comoros: IMF Executive Board Completes Fifth Review Under ECF Arrangement and Approves US$2.4 Million Disbursement
The Executive Board of the International Monetary Fund (IMF) on June 6, 2013 completed the fifth review of the economic performance of the Union of the Comoros under a program supported by the Extended Credit Facility (ECF) arrangement. The Board’s decision enables the disbursement of an amount equivalent to SDR 1.5575 million (about US$2.4 million), bringing the total disbursements under the arrangement to an amount equivalent to SDR12.015 million (about US$18.3 million). The Executive Board’s decision was taken on a lapse of time basis.1 In completing the review, the Board also approved a modification to the performance criterion related to the contracting of nonconcessional debt under the arrangement.
The current arrangement under the ECF was approved in September 2009 (see Press Release No. 09/315). At the conclusion of the fourth review in December 2012 the Executive Board of the IMF also agreed that Comoros had reached the completion point under the enhanced Heavily Indebted Poor Countries (HIPC) Initiative (see Press Release No. 12/492).
Economic growth strengthened to 3 percent in 2012 and end-year inflation fell to 1 percent following a marked easing in import prices. Official grants and remittance receipts were strong, and international reserve holdings reached the equivalent of 7 months of imports. Further progress was made in fiscal consolidation, due to stronger revenue mobilization and improved control over spending—particularly the wage bill—while increasing spending on improving transportation infrastructure and key social programs. As a result the primary fiscal balance posted a surplus of 3 percent of GDP.
Program performance remained satisfactory through end-March 2013. All end-December 2012 quantitative performance criteria and indicative targets were met, with wide margins in some cases. Four out of five structural benchmarks through end-March 2013 were also met. In particular, the government issued a call for expressions of interest from potential strategic partners for the state-owned telecommunications company (Comores Telecom); adopted terms of reference for a study of the medium-term budget and expenditure frameworks; appointed the board of directors of the new general tax administration; and established a strategy to reform the oil importing company (SCH) with the assistance of development partners. The implementation of new civil service organizational frameworks has been delayed. The Executive Board also approved a change in the performance criterion on the contraction of new non-concessional debt make room for an investment loan in the electricity sector.
The ECF-supported program for 2013 builds on the government’s strategy to enhance growth while addressing social development priorities. The authorities’ strategy to use resources raised from debt service savings arising from broad debt relief under the HIPC Initiative to raise social spending should facilitate achieving these goals. Efforts will be made to further enhance the efficiency of tax and customs administrations and to better control recurrent expenditures. Reforms to strengthen the financial sector and improve banking supervision will continue. Restructuring the energy sector will be key to supporting growth and it is important that all stakeholders are involved in the design and implementation of this process.
1 The Executive Board takes decision under its lapse of time procedures when it is agreed by the Board that a proposal can be considered without convening formal discussions.
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