São Paulo – The Gross Domestic Product (GDP) of the Comoro Islands was up 2.5% in 2012, according to an estimate from the International Monetary Fund (IMF). The IMF released an overview of the country’s economic status this Tuesday (15th) in which it ascribes the performance to bullish exports, increased remittances of funds by expatriates, and greater external aid. The IMF technicians also acknowledge that the government has stayed committed to fiscal consolidation projects.
According to the IMF, the Comoros have implemented measures which limited the budget deficit to 1.4% of the GDP. In order to meet that target, the government cut spending, cancelled a wage increase to civil servants in 2010 which was deemed abusive, sought to increase tax collection, paid delayed wages, conducted a public sector census, and last November it launched a proposal to attract investment into its government-owned telecom company.
Apart from those measures, the Comoro Islands have benefited from an increase in clove exports and in remittances from overseas. These gains caused the country’s current account deficit to drop from 9% in 2011 to 6.9% in 2012.
“Over the medium term, economic growth is expected to rise to an annual average of 4 percent, underpinned by increased and more reliable availability of electricity; investment in infrastructure and tourism; and improvements in the business environment,” according to the IMF press release.
Inflation, which should have dropped down to 5% in 2012, remained higher due to unstable commodities prices, and the depreciation of the euro against the US dollar. In 2013, the IMF forecasts that the inflation rate should be 3.6%.
According to the Fund, the Comoro Islands are still dependent on donations and loans, even though its economy is growing. The institution also claims that the country has a narrow export base, and that local authorities need to maintain budget discipline in order to prevent crises. Challenges yet to be faced include reducing poverty and vulnerability to external crises.
The IMF also advised the Comoros to seek strategic partners that will work in tandem with the government-owned telecom and electric power companies, and improving the business environment so as to attract more foreign investors.
*Translated by Gabriel Pomerancblum
