Union of the Comoros: Sixth Review Under the Three-Year Arrangement Under the Extended Credit Facility and Request for Waiver of a Performance Criterion

EXECUTIVE SUMMARY Comoros is in the last year of a multi-year economic and structural adjustmentprogram and has made significant progress in stabilizing the economy. Furtherprogress has also been made on the structural front. The program has and continues toreceive the support of a broad range of stakeholders. Macroeconomic developments are broadly as expected under the ECFarrangement. Economic growth is expected to strengthen to 3.5 percent of GDP in2013 and average inflation is expected to be less than 3 percent. While official transfersand remittances have remained strong, international reserve holdings are expected todecline somewhat, mainly due to strong imports that more than offset a sizeableincrease in exports. Performance under the ECF-supported program through end-June was broadlysatisfactory. All but one of the performance criteria and all indicative targets for end-June were met. Most structural benchmarks were also met. However, fiscal performanceweakened in the third quarter of 2013. Increases in capital spending, mainly on roadconstruction in anticipation of receipts that did not materialize, caused the end-September indicative targets on net credit to the government and the domestic primarybalance to be missed. However, additional fiscal measures taken subsequently shouldallow stabilization gains to be broadly preserved. The authorities are requesting a waiver for the non-observance of theperformance criterion on net credit to the government at end-June 2013. Staffsupports this request and recommends completion of the sixth and final review underthe ECF arrangement.