Press Release No. 09/232

Press Release: Statement at the Conclusion of an IMF Staff Mission to the Comoros

June 23, 2009

An International Monetary Fund (IMF) mission team visited Moroni during June 9-23, 2009, to assess the Union of Comoros’ performance under the Emergency Post-Conflict Assistance (EPCA) program and hold discussions on a new program that could be supported by the IMF under the Poverty Reduction and Growth Facility (PRGF). The mission met with HEM M. Ahmed A. M. Sambi, the President of the Union, the Governors of the three island entities, the Minister of Finance of the Union, the Governor of the Central Bank of Comoros, as well as representatives of the private sector, civil society, and the donor community.

Mr. Mbuyamu Matungulu, IMF Mission Chief for the Comoros, issued the following statement today, in Moroni:

“Performance under the EPCA-supported program has been broadly satisfactory. All quantitative indicators for end-March were met, and three of four structural benchmarks were implemented. Program implementation has been facilitated by the resolution of the Anjouan crisis last year.

“Inflation has eased as pressures on world oil and food prices subside and the budgetary position is improving, thanks to better revenue collection and efforts to restore order to spending operations. However, against a backdrop of a difficult international context, economic activity has remained subdued, and economic growth has stagnated around 1 percent in 2008/09.

“Good progress has been made in defining a medium-term macroeconomic and structural reform package that could be supported by the IMF under the PRGF. Key objectives are to re-establish fiscal stability by containing the domestic primary budget deficit below 1 percent of GDP per year, and raising total revenue to 14.3 percent of GDP by 2012. Structural reforms, including reforms of public utilities, would aim to raise economic growth to around 2 ½ percent per annum during the period 2010-12.

“The mission was therefore encouraged by recent progress in preparing reform strategies for the Comoros Hydrocarbons Company (SCH) and Comores Telecom; and in initiating preparations for a reform strategy for the electricity parastatal (MA-MWE). Looking ahead, decisive implementation of the reforms will be important to foster sustained strong growth and achieving faster poverty alleviation.

“Provided final agreement is reached to cover a residual financing gap, the IMF Executive Board could consider the authorities’ request for a PRGF in mid-September 2009”.

The PRGF is the IMF's concessional facility for low-income countries. PRGF-supported programs are based on country-owned poverty reduction strategies adopted in a participatory process involving civil society and development partners and articulated in the country's Poverty Reduction Strategy Paper. This is intended to ensure that PRGF-supported programs are consistent with a comprehensive framework for macroeconomic, structural, and social policies to foster growth and reduce poverty. PRGF loans carry an annual interest rate of 0.5 percent and are repayable over 10 years with a 5½ -year grace period on principal payments.