IMF Executive Board Approves US$21.5 Million PRGF Arrangement for the Union of the Comoros

The Executive Board of the International Monetary Fund (IMF) today approved a three-year, SDR 13.57 million (about US$21.5 million) arrangement under the Poverty Reduction and Growth Facility (PRGF) for the Union of the Comoros to support the authorities’ economic program aimed at promoting sustained strong growth to achieve deeper gains in poverty alleviation and faster progress towards the Millennium Development Goals (MDGs). The decision will enable the Comoros to draw the equivalent of SDR 4.23 million (about US$6.70 million) from the IMF immediately.

At the conclusion of the Executive Board’s discussion, Mr. Takatoshi Kato, Deputy Managing Director and Acting Chair, made the following statement:

“ Comoros’ performance under the EPCA-supported program was satisfactory, despite the difficult domestic and external circumstances. The authorities’ have recently adopted a medium-term reform agenda aimed at boosting private-sector led growth to enhance the effectiveness of their poverty reduction strategy. In this context, the government has introduced far-reaching institutional reforms that should, inter alia, strengthen cohesion in budget management and economic policy making.

” Comoros’ reform agenda seeks to consolidate recent gains in macroeconomic stability and promote the development of a business-friendly economic environment, which would create jobs and reduce poverty. An important focus will be on strengthening the fiscal position through implementation of strong revenue measures and better control of the wage bill. In this context, the authorities are adhering to the inter-island revenue-sharing mechanism; and Parliament has approved a stability-oriented supplementary budget for 2009 that is consistent with the fiscal program under the program. Achieving the 2009 fiscal targets will provide confidence regarding government determination to improve public expenditure management and put the budget on a sustainable path.

“ To strengthen debt sustainability, the authorities will limit their fiscal deficits to levels that can be covered by identified external assistance, mostly in form of grants. They will also ensure steadfast implementation of reforms, which is essential to securing HIPC and MDRI debt relief.

” The authorities are determined to stay the course with efforts to tackle structural impediments to growth. With support from donors, they are finalizing reform strategies for the state-owned telecommunications (Comores Telecom), hydrocarbons (SCH), and electricity (MA-MWE) companies. The authorities are also maintaining a flexible-pricing mechanism for fuel products to make energy supply more reliable. Efforts to enhance the efficiency of the public administration and set optimal staffing levels for the civil service will also feature prominently in the structural reform agenda. Other reforms seek to streamline business licensing requirements, enhance investor protection, strengthen the judiciary, and promote financial intermediation and financial sector soundness“, added Mr. Kato.