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Economic Situation of the Union of Comoros

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Challenges

The economy of the Union of Comoros is facing significant challenges that hinder its growth and development. Some of these challenges include:

  • Poverty: A major obstacle to economic progress in Comoros.
  • Low Growth: The country’s GDP growth rate has been sluggish, making it difficult to achieve sustainable development.
  • Vulnerability to External Shocks: Comoros is susceptible to external shocks, including those related to climate change.

Economic Developments

The economy of Comoros experienced some positive developments in 2022 and 2023. These include:

Real GDP Growth

  • Real GDP grew by 2.6 percent in 2022, indicating a moderate increase in economic activity.

Inflation

  • Inflation declined significantly from 20.6 percent in December 2022 to 1.0 percent in September 2023.
  • This decline is a positive indicator of the economy’s stability.

Domestic Credit Growth

  • Domestic credit growth decelerated from 29.8 percent in January to 15.4 percent in September, indicating a slowdown in credit expansion.
  • The Central Bank of Comoros (BCC) lowered the reserve requirement ratio from 15 to 12.5 percent.

Recent Developments

The economy of Comoros has experienced some positive developments recently. These include:

Tax Revenue Growth

  • Tax revenue rose by 33 percent in the first half of 2023, driven by increases in excises and taxes on goods and services.
  • This growth is a significant improvement in government revenue.

Stabilizing Commodity Prices

  • Stabilizing commodity prices reduced losses at key state-owned enterprises (SOEs).
  • This development has helped to stabilize the economy.

International Reserves

  • International reserves declined in the first half of 2023, primarily due to an increase in imports.
  • This decline is a concern for the country’s economic stability.

Programs and Arrangements

The Union of Comoros has accessed several programs and arrangements to support its economic development. These include:

IMF Extended Credit Facility (ECF)

  • The IMF approved a four-year arrangement under the ECF in June 2023.
  • This program aims to support the country’s economic reform efforts.

World Bank Development Policy Financing (DPF)

  • The World Bank’s Executive Board also approved a US$20 million DPF for Comoros.
  • This financing will support the country’s development priorities.