Financial Crime World

Banking Compliance Issues Haunt Comoros’ Economic Growth

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The Union of the Comoros faces significant challenges in achieving inclusive growth and sustainability due to widespread banking compliance issues that hinder public financial management, domestic resource mobilization, and efficient public health spending. According to a Public Expenditure Review (PER) launched by the World Bank, improving public financial management could generate up to 1.8% of GDP in fiscal space, which could be used to finance expenditures that improve public service delivery, such as healthcare.

Economic Challenges

The Comorian economy has struggled with modest growth and fiscal issues, resulting in per capita GDP growth averaging just 0.4% over the past decade. The country’s economic activity is undiversified, driven primarily by consumption fueled by remittances and tourism receipts from the diaspora. Limited fiscal space to address development needs has led to:

  • Low human capital
  • Poor quality infrastructure
  • Hampered efforts to increase productivity and private sector development

Recommendations for Reform

The PER identifies key reforms that could yield fiscal and efficiency gains, including:

  • Increased public expenditure efficiency through better public investment management
  • Specific public financial management reforms
  • Reforms in the health sector and disaster risk management

These reforms could help increase fiscal performance by up to 1.76% of GDP, according to the report’s authors.

Government Response

The Comorian government has welcomed the review, saying it provides useful guidance for policy-making. The World Bank has worked closely with the government to prepare the analysis and is committed to supporting efforts to achieve more inclusive growth for Comoros.

Next Steps

The report highlights key issues that need immediate attention to improve public health and overall economic well-being in the country. With its release, Comoros takes a crucial step towards addressing its banking compliance issues and achieving sustainable economic growth.