Press Release No. 15/290

Press Release: IMF Staff Completes Review Mission to the Union of the Comoros

June 22, 2015

A mission from the International Monetary Fund (IMF) led by Harry Trines visited Moroni during June 1-16. The mission met with His Excellency Dr. Ikililou Dhoinine, President of the Union, Vice President and Minister of Finance Mohamed Ali Soilihi, as well as other government officials, and representatives of the private sector, civil society, and donors.

At the conclusion of the mission, Mr. Trines, issued the following statement:

“The economic situation in Comoros has worsened. The crisis in the electricity sector with persistent shortages and extended outages has adversely affected economic activity and tax revenue. The slower-than-expected implementation of the public investment program (PIP) has also contributed to the slowdown in growth. The difficult fiscal situation has been compounded by increases in the wage bill and the government has been falling ever further behind with the payment of public sector wages and salaries since mid-2014.

“The mission has revised downward its estimate of economic growth in 2014. Inflation appears to have remained moderate, although this is difficult to substantiate and quantify as no price data have been collected since November 2014. However, the appreciation of the dollar against the euro has, because of the high dependence on and limited substitutability of imports, led to an intensification of pressures on the balance of payments and international reserves.

“The immediate outlook for the Comorian economy remains difficult. While the purchase of new generators should improve electricity supply, the crisis in the electricity sector is far from being fully resolved. Furthermore, the public investment program continues to encounter delays in financing and execution. Against this background, the IMF mission estimates that growth will remain weak in 2015.

“Key challenges in the period ahead are mobilizing additional revenue and containing lower priority spending in order to close the projected fiscal financing gap for 2015, including eliminating arrears on public sector wages and salaries and on external debt service. The government has already identified measures that go a long way toward closing the gap and which could be presented to parliament in a supplementary budget for 2015. The authorities also requested support from the IMF in tackling the difficult economic situation in the form of a disbursement under the RCF, combined with a staff- monitored program.

“The mission will return to Moroni in September in order to assess progress in implementing the government’s strategy for balancing the budget and to assist the authorities in formulating a budget framework for 2016 and a strategy for structural reforms going forward. If all goes according to plan, the RCF disbursement could be considered by the Executive Board of the IMF in late October.

“The mission wishes to thank the authorities for their excellent cooperation and excellent hospitality.”