São Paulo – Comoros needs to cut down on spending to avoid a heavily unbalanced budget. Expenditure on wages and external debts should be reduced and the government also needs to accelerate inclusive growth and to generate more domestic revenues. The evaluation is from the International Monetary Fund (IMF), which has sent a mission to the Arab country from October 20th to this Tuesday (4th), when a press release with the conclusions of the staff was issued.
“Comoros faces many challenges. In the near term, the government must strive to find a better balance between the resources available and expenditures so that it can avoid the incurrence of arrears, particularly on wages and external debt, and make allocations to some important initiatives. Urgent action is also needed to improve the reliability of the energy supply, a key constraint to growth,” said Harry Trines, head of the IMF mission to Comoros.
According to the head of the mission, the real economic growth of the African country should be between 3% and 3.5% in 2014, while current account deficit should increase by 10% this year. He also points out that the main issue preventing the country from both balancing its accounts and undertaking more projects with public investment is the low level of domestic revenues.
“Therefore, the most urgent task for the authorities is to strengthen domestic revenue mobilization. In this regard, the mission urged the authorities to focus their efforts on strengthening revenue administration, including through a freeze on new exemptions, better management of the large tax payers list, and improving general tax compliance,” Trines pointed out.
The IMF mission chief also stressed the country’s effort in promoting a new strategy for sustainable development to replace a poverty reduction strategy. Trines, however, pointed out that the government should be attentive to develop initiatives based on available financing, and the country should improve the attractiveness of the local economy as an investment and tourist destination.
At the end of the press release, Trines also noted the need to improve Comoros’ economic data gathering. “The lack of high quality and timely economic data makes assessment of economic performance, as well as the formulation of economic projections, difficult,” he evaluated.
According to the press release, the fund is working closely with Comoros government in providing policy and technical assistance, in addition to training in areas such as the development of an effective macroeconomic and budgetary framework and cash management. The fund is also planning to offer technical assistance for tax policy, balance of payments and national accounts statistics, as well as banking supervision.
*Translated by Rodrigo Mendonça
