Press Release No. 24/422

IMF Reaches Staff-Level Agreement on the Third Review of the Extended Credit Facility with the Union of the Comoros

November 15, 2024

• The Comorian authorities and IMF staff have reached a staff-level agreement on economic policies and reforms for the third review under the 4-year ECF-supported program. The review, subject to approval by the IMF Executive Board, would release SDR 3.56 million (about US$4.7 million) in financing.
• Program performance has been broadly on track amid a political transition and a more challenging external financing environment. Macroeconomic conditions have remained stable despite inflationary pressures and signs of softening economic activity.
• The new administration, under President Azali Assoumani, has reaffirmed its commitment to the reform program supported by the ECF. Continued implementation of the policy reform agenda remains essential to safeguarding macroeconomic stability and debt sustainability.

Washington DC: An International Monetary Fund (IMF) team, led by Ms. Suchanan Tambunlertchai, held meetings in Moroni from October 2 – 15 and in Washington D.C. from October 21 – 25, to discuss progress on economic and financial policies and reforms in the context of the third review of the 4-year Extended Credit Facility (ECF)-supported program. The Comorian authorities and the team have reached a staff-level agreement, subject to approval by the IMF’s Management and Executive Board. Completing the review will make available SDR 3.56 million (about US$4.7 million) to Comoros, bringing total disbursements so far under the arrangement to about $18.8 million.

Today, Ms. Tambunlertchai issued the following statement:

“Performance under the ECF-supported program has been broadly on track amid a political transition and a more challenging financing environment. Three out of five quantitative end-June 2024 targets were met. The tax revenue target was missed by a small margin, reflecting in part the public health-related and weather shocks during the first half of the year. The missed target on the non-accumulation of new external arrears reflects liquidity and cash management challenges, which emphasizes the continued need to address Public Financial Management (PFM) gaps. The authorities are working to ensure the clearance of all external arrears prior to the Executive Board meeting, tentatively scheduled in December 2024. Progress on structural reforms has continued notwithstanding delays in some areas.     

“Economic activity is showing signs of softening, with declining imports and credit to the private sector. Headline inflation rose to 8.1 percent (y/y) in August, driven largely by rising prices of imported food products such as rice and meats. Despite the tax revenue shortfall, the pace of fiscal consolidation has been stronger than expected, mainly due to under-execution of investment spending. The lower imports have improved the trade deficit in the first half of the year to around 10 percent of GDP, compared to 13 percent during same period in 2023. The external position remains stable, with continued reserves accumulation at end-June. While financial sector vulnerabilities persist, the level of nonperforming loans (NPLs) has stabilized, and the authorities are continuing to strengthen the supervision and regulatory frameworks. The restructuring of the postal bank SNPSF (Société Nationale des Postes et Services Financiers) is in its final stages.

“Discussions with the authorities centered on maintaining momentum in structural reforms - particularly domestic revenue mobilization -, deeper PFM reforms, and governance. The mission also discussed next steps in strengthening Comoros’ anti-corruption framework and the implementation of the new law on state-owned enterprises (SOEs) aimed at improving the governance structures in SOEs and limiting fiscal risks.   

“Comoros still faces fragilities of a small island state and adherence to the ECF-supported program will safeguard macroeconomic stability and advance needed structural reforms while catalyzing additional financial support for the country’s large financing needs. The authorities have reaffirmed their strong commitment to the reforms supported under the program.      

“The mission team met with Secretary General of the Government Nour El Fath Azali, Minister of Finance Ibrahim Mohamed Abdourazak, Central Bank Governor Younoussa Imani, General Commissioner of Planning Najda Said Abdallah, and other senior government officials. The team also met with commercial banks, the Chamber of Commerce, the donor community, and other stakeholders. The IMF team is grateful to the authorities and all other counterparts for the excellent cooperation, as well as the candid and constructive discussions.”