São Paulo – The International Monetary Fund (IMF) expects the Comoros to see weak growth in 2015. The North African country is in the midst of a serious energy crisis, falling behind in public sector wages, and facing balance of payments and maintenance of international reserves issues. So says a review carried out by an IMF mission led by Harry Trines, from July 1st to 16th, whose results have been released this Monday (22nd).
“The economic situation in Comoros has worsened. The crisis in the electricity sector with persistent shortages and extended outages has adversely affected economic activity,” Trines said, according to an IMF press release.
“The slower-than-expected implementation of the public investment program (PIP) has also contributed to the slowdown in growth. The difficult fiscal situation has been compounded by increases in the wage bill and the government has been falling ever further behind with the payment of public sector wages and salaries since mid-2014,” he claimed.
According to the press release, inflation in the Comoros appears to have remained moderate, even though the Fund says no precise data are available, since price data have not been collected since November 2014.
“However, the appreciation of the dollar against the euro has, because of the high dependence on and limited substitutability of imports, led to an intensification of pressures on the balance of payments and international reserves,” says Trines.
The energy crisis the country is experiencing is also affecting growth forecasts. “The immediate outlook for the Comorian economy remains difficult. While the purchase of new generators should improve electricity supply, the crisis in the electricity sector is far from being fully resolved. Furthermore, the public investment program continues to encounter delays in financing and execution. Against this background, the IMF mission estimates that growth will remain weak in 2015,” the IMF executive says.
According to Trines, “Key challenges in the period ahead are mobilizing additional revenue and containing lower priority spending in order to close the projected fiscal financing gap for 2015, including eliminating arrears on public sector wages and salaries and on external debt service.”
He says the “government has already identified measures that go a long way toward closing the gap and which could be presented to parliament in a supplementary budget for 2015. Trines also says the government has called on the IMF for help addressing the difficult economic situation via a rapid credit facility (RCF), which the Fund awards to developing countries in arrears.
The IMF press release also states that the “mission will return to Moroni in September in order to assess progress in implementing the government’s strategy for balancing the budget and to assist the authorities in formulating a budget framework for 2016.”
*Translated by Gabriel Pomerancblum
