Updated: February 28, 2021
The International Monetary Fund (IMF) said on Friday the economy of Comoros was expected to rebound, despite a devastating cyclone in April and difficulties at several state-owned enterprises.
Growth was expected to rebound between 4 and 4 and half percent in 2020 while inflation should come down to below 2 percent.
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An IMF team led by Hans Weisfeld visited Comoros between December 11 and December 20, 2019 to conduct consultations and discuss options for engagement with the Comoros authorities in 2020.
“Discussions focused on a mid-term strategy to lift the country out of fragility and boost inclusive growth, Weisfeld said in an after-mission statement released in Washington D.C.
IMF cited cyclone Kenneth which hit Comoros in April this year to describe the challenging economic development in Comoros in 2019.
“Growth for the year as a whole is projected to fall to about 1.9 percent, while inflation remains contains,” Weisfeld said, adding that “fiscal revenue as share of GDP fell as well, driven by the impact of cyclone on the economy and difficulties at several state-owned enterprises”.
“Growth of credit to the private sector remained weak, due in part to the fact that the operating environment for banks remains challenging”.
IMF predicted that in 2020 as the impact of the cyclone eases, growth was expected to rebound at between 4 and 4 and half percent while inflation should then come down to below 2 percent.
Despite the good news, IMF predicted that the difficulties in several state-owned enterprises would likely continue to weigh on fiscal revenue.
IMF mission made several recommendations to the authorities in Comoros, including addressing both institutional and economic aspects of fragility.
These key reform actions should include strengthening the civil service, enhancing governance, and reinforcing the judicial system to enable it to better protect property rights and help private parties enforce contracts.
“Addressing economic fragility includes creating fiscal space; using this space to raise investment in both physical and human capital, including through higher social spending and lessening vulnerability to shocks such as natural disasters, to which Comoros is highly exposed,” Weisfeld said, adding that it will be essential to raise fiscal revenue, “for example reducing tax exemptions and registering more taxpayers”.