The Executive Board of the International Monetary Fund (IMF) today completed the third review of the Union of the Comoros’ economic performance under the program supported by the Extended Credit Facility (ECF). In completing the review, the Board approved a waiver for the nonobservance of a performance criterion on reduction of domestic arrears and the modification of this performance criterion. The Executive Board also approved an extension of the arrangement through December 31, 2013, and a rephasing of the remaining disbursements.
The completion of the review will enable an immediate disbursement of SDR 1.56 million (equivalent to US$2.37 million). The Union of the Comoros’ ECF arrangement was approved in September 2009 in an amount equivalent to SDR 13.57 million (about US$20.63 million; see Press Release No. 09/315).
Following the Executive Board discussion on the Union of the Comoros, Mr. Naoyuki Shinohara, Deputy Managing Director and Acting Chair, issued the following statement:
“Comoros’ overall performance under the ECF-supported program has significantly improved since late 2011. Against the backdrop of a favorable political environment, and enhanced donor support, the authorities have initiated corrective measures to put their ECF-supported program back on track and are committed to prudent macroeconomic policies and structural reforms. All these efforts are necessary to promote sustained strong growth, facilitate progress towards long-term debt sustainability, and reduce poverty.
“Achievement of the government’s fiscal objectives, including creating the space needed for pro-poor and pro-growth spending, will require strengthening domestic revenue collection and observing expenditure restraint. In this context, it will be important to enhance the efficiency of tax and customs administration, and expand the tax base. Efforts should also continue towards avoiding accumulation of new payments arrears.
“Prudent debt management policies remain essential to address Comoros’ unsustainable debt situation. Further progress towards reaching understandings on debt restructuring with all external creditors and implementing the HIPC Initiative Completion Point triggers will therefore be important.
“On the structural front, the authorities have stepped up technical consultations with development partners on the reform of public financial management and the restructuring of public utilities. In the financial sector, the authorities are reinforcing banking oversight and strengthening the central bank’s internal control mechanisms, all of which are essential to ensure continued sound expansion of financial intermediation.
“In light of the more supportive policy environment, an extension of the ECF arrangement to end-2013 would provide the needed additional time for addressing delays in the implementation of reforms, so as to strengthen economic competitiveness and enhance the effectiveness of the authorities’ poverty reduction strategy,” Mr. Shinohara added.