IMF Executive Board completes Fourth Review under the Union of the Comoros’ ECF Arrangement
December 19, 2012– The Executive Board of the International Monetary Fund (IMF) completed yesterday its fourth review of the Union of the Comoros’ economic performance under the program supported by the Extended Credit Facility (ECF). Completion of the fourth review allows the disbursement of an amount equivalent to SDR 1.5575 million (about US$2.30 million), bringing total disbursements under the arrangement to SDR 10.46 million (about US$15.44 million).
The Executive Board also agreed that the Union of the Comoros has taken the steps necessary to reach its completion point under the enhanced Heavily Indebted Poor Countries (HIPC) Initiative.
This decision on the HIPC completion point is contingent upon the Executive Board of the World Bank concluding that the Union of the Comoros has reached the completion point under the enhanced HIPC Initiative, after which a joint press release will be issued.
The three-year Extended Credit Facility (ECF) arrangement was approved in September 2009, for the equivalent of SDR 13.57 million (152.5 percent of quota).
Following the Executive Board’s discussion, Mr. Naoyuki Shinohara, Deputy Managing Director and Acting Chair, made the following statement:
“Performance under the ECF-supported program has improved commendably. Economic activity and the fiscal position are strengthening, and the Union of the Comoros has met the conditions for reaching the HIPC Initiative completion point.
“The recent gains in macroeconomic sustainability will have to be consolidated. This requires further strengthening revenue collection and keeping spending compatible with fiscal sustainability. Critical to that end will be the establishment of the new General Administration of Taxes and implementation of new ministry personnel frameworks, as well as close adherence to the automated wages management system. The efforts to promote good governance will also have to be stepped-up, including rigorous implementation of the new COMESA-based public procurement code.
“Prudent borrowing policies remain indispensable. While debt sustainability will improve following the HIPC Initiative completion point, the Union of the Comoros remains at high risk of debt distress owing notably to a narrow export base. This underscores the need for fiscal discipline and reliance on grants and highly concessional loans in meeting the country’s financing needs.
“The authorities are to be commended for rekindling the structural reform agenda to invigorate growth and accelerate poverty reduction. The focus will be on enlisting reputable strategic partners in the management of the state-owned telecommunication (Comores Telecom) and electricity (MA-MWE) companies; and on ensuring a more efficient operation of the oil-importing parastatal (SCH). The authorities will also step up removal of excessive administrative requirements to starting a company and of unreliable contract-enforcement mechanisms for the private sector. In the financial sector, the banking supervision agenda and recommendations from the 2010 safeguards assessment will continue to be rigorously implemented, and the establishment of a new credit bureau expedited.
“The Union of the Comoros’ growth and poverty reduction prospects are broadly favorable in the post-HIPC/MDRI era. Rigorous policy implementation and steady donor support will be key to securing tangible gains in living standards for the population.”
International Monetary Fund (IMF)