- The International Monetary Fund (IMF) has welcomed the Comoros participation in Paris Club debt restructuring negotiations to be held on 19 November, saying the country needs to consolidate its financial position to fill in the fiscal gap in the next financial year.
"Looking ahead, the 2010 budget will need to continue ongoing fiscal consolidation efforts and support the economic recovery and poverty reduction strategy. Provided that domestic revenue mobilisation continues, a domestic primary budget deficit of 1.5 percent of GDP would allow for a significant increase in spending for education and health over 2009. It will be important to mobilize all potential financing sources to cover the 2010 fiscal gap, including donor budget support and debt restructuring,” said the IMF in a statement following a visit by its mission which ended at the weekend.
The IMF mission also noted that the gradual return of political stability and resumption of aid are having a positive impact on reform implementation and economic conditions in Comoros.
“The mission welcomes the government’s review of reform strategy options for Comoros Telecoms and Comoros Hydrocarbons. An early implementation of reforms in these areas will be essential to the success of the government’s growth and poverty reduction strategy,” said Mbuyamu Matungulu, the IMF’s mission chief for the Union of Comoros, at the end of the visit.
On the economic outlook, the mission also noted that credit to the private sector was growing strongly; vanilla exports had recovered from the effects of last year’s forest fires; and imports continue a rising trend initiated last year, including for petroleum products and construction materials.
“Overall, while still weak, real GDP growth is likely to reach 1 percent for 2009, while pressures on domestic prices continue to ease and end-year inflation is expected to be contained to 2.3 percent. Reflecting these developments, and with worker remittances in stagnation, the external current account deficit is projected to reach 9.5 percent of GDP in 2009, compared with a 11.3 percent of GDP in 2008. In the fiscal area, revenue collection is fairing better than expected,” said the IMF mission.
The IMF team had visited the Union of Comoros during 7-14 November to carry out an initial assessment of performance under the Poverty Reduction and Growth Facility (PRGF)-supported programme and to discuss the draft budget for 2010, as well as preparations for the country’s preliminary Heavily Indebted Poor Countries (HIPC) Initiative decision point document. Comoros’ three-year, SDR 13.57 million (about US$21.5 million) arrangement was approved by the IMF Board on 21 September, 2009.
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