IMF Executive Board Approves US$43 Million Extended Credit Facility Arrangement for the Union of the Comoros
June 1, 2023
- The IMF Executive Board approves SDR 32.04 million (about US$43 million) 4-year ECF arrangement for Comoros. This decision will enable an immediate disbursement equivalent to SDR 3.56 million (about US$4.73 million).
- The ECF-supported program will help preserve Comoros’ macroeconomic stability and implement the authorities’ plans for fiscal consolidation, financial sector stabilization, and governance and anti-corruption reforms.
- Program measures aim to reduce economic and institutional fragilities and create fiscal space for needed investments in human and physical capital. Continued support from Comoros’ international partners, both in terms of financing and capacity development, will be critical for the success of the program.
Washington, DC: The Executive Board of the International Monetary Fund (IMF) today approved a 4-year arrangement under the Extended Credit Facility (ECF) of SDR 32.04 million (about US$43 million) for the Union of the Comoros. The Executive Board’s decision allows for an immediate disbursement of SDR 3.56 million (about US$4.73 million).
The ECF arrangement follows the completion of the Staff-Monitored Program in April 2023 and represents the first financing engagement with the IMF since 2013. The ECF arrangement is expected to catalyze additional bilateral and multilateral financial support for Comoros’ reform program.
Successive external shocks in recent years have exacerbated already fragile economic conditions in Comoros. The surge in global commodity prices and transportation costs during 2022 severely impacted households’ purchasing powers in this import-dependent island economy and substantially worsened the fiscal outlook. These shocks have coincided with increased fiscal and debt service needs, as well as the expiration of pandemic-era support and retrenchment in international aid, which have significantly tightened financing constraints.
The ECF arrangement helps preserve the reform momentum started under the SMP and aims to address sources of fragility in Comoros, including low domestic revenue, an under-capitalized banking sector, and governance weaknesses. Key policy commitments include (i) mobilizing domestic revenue supported by reforms to strengthen tax and customs administration and streamline tax exemptions; (ii) completing the restructuring of the state-owned postal bank SNPSF and enhancing the Central Bank’s banking supervision and resolution capacities; and (iii) strengthening governance through public financial management and anti-corruption reforms.
At the conclusion of the Executive Board’s discussion, Ms. Antoinette Sayeh, Deputy Managing Director, and Acting Chair, made the following statement:
“Comoros has experienced several shocks, including a natural disaster, in recent years. The multiplicity of these shocks has adversely affected economic growth and fiscal sustainability while hampering the government’s ability to implement needed reforms. The country faces significant development challenges stemming from low fiscal revenue, insufficient public investment in human and physical capital, and vulnerability to shocks. Institutional fragility is manifest in weak governance and limited policy implementation capacity.
To address long-term structural issues, the Comorian authorities have embarked on a reform program supported by the IMF and other international partners. This Extended Credit Facility (ECF) arrangement, which builds on progress under the recently completed Staff-Monitored Program, is the first Upper Credit Tranche-quality arrangement with the IMF in ten years.
Under the ECF program, the authorities aim to tackle long-term structural weaknesses such as inadequate fiscal revenue, an undercapitalized banking system, and corruption vulnerabilities, which are obstacles to the government’s ability to invest in human and physical capital and the private sector’s ability to thrive. Fiscal consolidation to reduce debt sustainability risks and create space for development spending will be underpinned by fiscal structural reforms to mobilize domestic revenue. To improve financial sector stability, the authorities are committed to strengthening banking supervision and resolution capacities while restructuring the postal bank Société Nationale des Postes et des Services Financiers (SNPSF) to limit fiscal contingent liabilities going forward. Continued efforts to strengthen governance and accountability, including the adoption of the revised anti-corruption law, will be key to improve the overall business climate.
Strong and timely support from donors, complemented by IMF disbursements, is critical. Given the sizeable financing needs over the coming years, the authorities need to intensify their effort to mobilize financial support, including through good progress in the reform implementation. The reform program and financing supported by the ECF will continue to play a catalytic role.”
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Union of Comoros: Selected Economic and Financial Indicators, 2020-28
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2020 |
2021 |
2022 |
2023 |
2024 |
2025 |
2026 |
2027 |
2028 |
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Est.1 |
Proj.1 |
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(Annual percentage change, unless otherwise indicated) |
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National income and prices |
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Real GDP |
-0.2 |
2.1 |
2.6 |
3.0 |
3.5 |
4.0 |
4.3 |
4.5 |
4.3 |
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|
GDP deflator |
0.8 |
-0.3 |
5.3 |
4.3 |
1.8 |
2.1 |
2.0 |
1.9 |
1.9 |
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|
Consumer price index (annual average) |
0.8 |
0.0 |
12.4 |
10.3 |
2.0 |
2.1 |
2.0 |
1.9 |
1.9 |
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Consumer price index (end period) |
-4.8 |
7.1 |
20.6 |
0.4 |
2.2 |
2.2 |
1.9 |
1.9 |
1.9 |
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Money and credit |
||||||||||||||
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Net foreign assets |
30.3 |
11.5 |
-9.3 |
20.0 |
13.1 |
4.3 |
4.3 |
4.0 |
1.7 |
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Domestic credit |
-8.7 |
22.1 |
12.7 |
12.2 |
2.3 |
0.2 |
14.0 |
8.1 |
2.5 |
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Credit to the private sector |
-2.8 |
9.7 |
15.0 |
11.1 |
8.1 |
9.3 |
9.7 |
9.7 |
9.4 |
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Broad money |
11.5 |
20.1 |
8.1 |
9.2 |
7.3 |
5.8 |
5.7 |
7.3 |
5.8 |
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Velocity (GDP/end-year broad money) |
3.2 |
2.7 |
2.7 |
2.7 |
2.6 |
2.6 |
2.7 |
2.6 |
2.6 |
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|
External sector |
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Exports, f.o.b. |
-48.3 |
62.4 |
76.7 |
-20.0 |
8.2 |
8.7 |
9.1 |
13.2 |
8.3 |
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Imports, f.o.b. |
-2.5 |
2.4 |
16.6 |
17.4 |
4.5 |
3.8 |
6.7 |
6.7 |
6.3 |
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Export volume |
-36.7 |
75.4 |
38.3 |
-17.4 |
5.1 |
6.5 |
7.2 |
11.2 |
5.7 |
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Import volume |
7.9 |
-5.8 |
-10.1 |
3.0 |
3.7 |
5.6 |
3.2 |
3.1 |
2.9 |
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Terms of trade |
-0.1 |
-15.1 |
-4.4 |
22.1 |
2.8 |
1.7 |
2.8 |
2.5 |
1.8 |
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(In percent of GDP, unless otherwise indicated) |
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Investment and savings |
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Gross fixed capital formation |
15.6 |
15.7 |
16.7 |
17.3 |
17.6 |
17.7 |
17.9 |
18.0 |
18.1 |
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Public |
5.5 |
5.4 |
5.0 |
7.1 |
6.8 |
5.8 |
5.1 |
5.1 |
5.2 |
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Private |
10.0 |
10.3 |
11.7 |
10.2 |
10.7 |
11.9 |
12.8 |
12.9 |
12.9 |
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Gross national savings |
13.6 |
15.2 |
14.3 |
12.1 |
12.5 |
13.2 |
13.4 |
13.7 |
13.8 |
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Public |
1.6 |
-0.3 |
-0.8 |
0.2 |
1.5 |
1.8 |
1.4 |
1.6 |
1.7 |
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Private |
12.0 |
15.5 |
15.1 |
11.9 |
10.9 |
11.4 |
12.1 |
12.1 |
12.1 |
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External Savings |
1.9 |
0.5 |
2.4 |
5.2 |
5.1 |
4.5 |
4.5 |
4.3 |
4.3 |
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Total revenue and grants |
18.3 |
17.0 |
14.2 |
17.0 |
14.8 |
15.1 |
16.0 |
16.4 |
16.2 |
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Total revenue |
9.2 |
10.3 |
9.8 |
9.7 |
9.9 |
10.3 |
10.7 |
11.0 |
11.3 |
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Tax Revenue |
7.7 |
8.6 |
7.7 |
8.0 |
8.3 |
8.7 |
9.0 |
9.3 |
9.6 |
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Non-tax Revenue |
1.5 |
1.7 |
2.1 |
1.7 |
1.6 |
1.7 |
1.7 |
1.7 |
1.70 |
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Total grants |
9.0 |
6.8 |
4.5 |
7.3 |
5.0 |
4.8 |
5.3 |
5.3 |
4.9 |
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Total expenditure and net lending |
18.8 |
19.8 |
18.2 |
21.8 |
19.4 |
18.2 |
17.6 |
17.7 |
18.0 |
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Current expenditure |
10.7 |
12.8 |
11.2 |
12.5 |
10.3 |
10.5 |
10.6 |
10.8 |
10.9 |
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Capital expenditure |
7.8 |
7.0 |
6.9 |
9.3 |
9.1 |
7.7 |
7.0 |
7.0 |
7.1 |
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Domestic primary balance 2 |
-1.4 |
-3.4 |
-1.9 |
-2.4 |
-1.8 |
-1.1 |
-0.2 |
0.0 |
-0.1 |
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Overall balance (cash basis) |
-0.8 |
-2.8 |
-3.6 |
-4.9 |
-4.6 |
-3.1 |
-1.7 |
-1.4 |
-1.7 |
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Excluding grants |
-9.8 |
-9.6 |
-8.1 |
-12.1 |
-9.6 |
-7.9 |
-7.0 |
-6.7 |
-6.7 |
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Net Financing |
1.0 |
2.7 |
3.6 |
4.2 |
3.1 |
1.4 |
0.0 |
0.0 |
0.4 |
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Foreign |
1.0 |
1.6 |
2.5 |
5.0 |
4.2 |
2.2 |
0.2 |
0.1 |
0.5 |
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Domestic |
0.0 |
1.2 |
1.1 |
-0.9 |
-1.2 |
-0.8 |
-0.2 |
-0.2 |
-0.1 |
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Of which: Net acquisition of assets |
0.0 |
-0.1 |
-0.4 |
-0.5 |
-0.3 |
-0.6 |
-0.1 |
-0.1 |
0.0 |
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Financing gap/errors and omissions 3 |
-0.2 |
0.1 |
0.0 |
0.7 |
1.5 |
1.6 |
1.6 |
1.4 |
1.3 |
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(+ = underfinancing) |
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External sector |
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Exports of goods and services |
5.5 |
9.9 |
13.3 |
11.9 |
12.1 |
12.3 |
12.6 |
13.0 |
13.2 |
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Imports of goods and services |
28.2 |
32.5 |
37.3 |
37.7 |
36.5 |
35.3 |
34.9 |
34.5 |
34.2 |
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Current account balance |
-1.9 |
-0.5 |
-2.4 |
-5.2 |
-5.1 |
-4.5 |
-4.5 |
-4.3 |
-4.3 |
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Excl. official and private transfers |
-22.2 |
-22.1 |
-23.7 |
-25.4 |
-23.8 |
-22.8 |
-22.1 |
-21.3 |
-20.8 |
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Private remittances, net 4 |
16.9 |
19.8 |
20.6 |
17.4 |
16.6 |
16.4 |
16.3 |
15.7 |
15.3 |
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External debt |
21.8 |
25.8 |
27.1 |
33.6 |
37.4 |
39.0 |
38.5 |
37.9 |
37.7 |
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External public and publicly guaranteed debt |
21.8 |
24.7 |
27.1 |
33.7 |
37.4 |
39.0 |
38.5 |
37.9 |
37.7 |
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External debt, in percent of exports of goods and services |
418.2 |
123.8 |
86.5 |
82.2 |
66.4 |
48.0 |
42.1 |
37.0 |
26.2 |
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External debt service 5 |
2.6 |
2.0 |
2.1 |
3.6 |
4.5 |
5.8 |
5.7 |
5.5 |
5.3 |
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Overall balance of payments (in millions of U.S.$) |
56.9 |
62.4 |
-24.0 |
51.1 |
42.1 |
15.9 |
14.6 |
13.4 |
6.5 |
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Official grants and loans |
10.3 |
8.6 |
7.1 |
12.8 |
10.0 |
8.5 |
7.1 |
7.0 |
6.9 |
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Gross international reserves6 |
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In millions of U.S. dollars |
292.2 |
329.3 |
281.8 |
325.8 |
359.3 |
370.7 |
382.2 |
390.8 |
391.6 |
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In months of imports of goods & services |
8.4 |
8.6 |
6.7 |
7.6 |
8.2 |
8.1 |
8.0 |
7.8 |
7.4 |
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Gross international reserves, including fiscal gap |
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In millions of U.S. dollars |
292.2 |
329.3 |
281.8 |
341.8 |
403.4 |
442.1 |
480.4 |
512.4 |
535.9 |
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In months of imports of goods & services |
8.4 |
8.6 |
6.7 |
8.0 |
9.2 |
9.7 |
10.0 |
10.3 |
10.2 |
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Exchange rate CF/US$ (period average) |
431.1 |
415.7 |
466.8 |
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Memorandum items: |
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Public external debt (in Percent of GDP) 7 |
21.8 |
25.8 |
27.1 |
33.6 |
37.4 |
39.0 |
38.5 |
37.9 |
37.7 |
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Public debt (in Percent of GDP) |
33.7 |
40.7 |
43.8 |
45.1 |
44.4 |
43.6 |
43.3 |
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GDP (nominal, in billions of CF) |
524.9 |
534.3 |
577.3 |
620.1 |
653.6 |
694.0 |
738.7 |
786.6 |
836.0 |
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GDP per capita (nominal, in US Dollars) |
1,357 |
1,395 |
1,294 |
1,352 |
1,363 |
1,390 |
1,420 |
1,448 |
1,467 |
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1 From 2017, includes budgeted-for revenues and expenses related to fuel subsidies of SOEs. 2 Domestic revenues minus current primary expenditures and domestically financed capital expenditures, excluding the World Bank-financed spending to combat the COVID epidemic and epidemic and the cost of restructuring SNPSF. 3 For 2022-23, includes unmet financing needs for restructuring SNPSF. 4 From 2015, net private official transfers include estimates made by the Central Bank of Comoros of debit items other than wire transfers. 5 In percent of government revenue. 6 End of period. From 2021, includes new SDR allocation of $24 million. 7 Coverage of debt: The central government, the central bank and government-guaranteed debt. Definition of external debt is Residency-based. |
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