The Economic Challenges Facing Comoros

Comoros has been grappling with several economic difficulties, including a lack of resilience against external shocks, low annual growth rates, and significant poverty levels. Furthermore, the country is vulnerable to natural disaster risks such as climate change, tropical cyclones, sea level rise, and volcanic activity.

Progress in Implementing 2020 Article IV Recommendations

While authorities have made some progress in implementing the 2020 Article IV recommendations, the pace has been uneven. Some notable achievements include:

• Broadening the tax base
• Improving budget realism
• Strengthening banking supervision

However, there is still a need for further reforms, including:

• Restructuring of the state-owned postal bank SNPSF
• Addressing corruption risks
• Improving public sector governance and transparency

Recent Economic Developments

Comoros has recently received support from international institutions. The IMF approved a four-year arrangement under the Extended Credit Facility (ECF) in June 2023, while the World Bank’s Executive Board approved a US$20 million Development Policy Financing (DPF) in September.

Economic developments have shown some improvement:

• Real GDP growth estimated at 2.6 percent in 2022
• Domestic activity rebounding in 2023
• Inflation declining from 20.6 percent in December 2022 to 1.0 percent in September

Key Challenges Ahead

Despite these improvements, there are still several areas of concern:

• Financial situation of state-owned enterprises (SOEs), which remain worrisome despite stabilizing commodity prices reducing losses
• Electricity company SONELEC continues to face large losses and operational challenges