IMF Reaches Staff-Level Agreement on the Third Review of the Extended Credit Facility with the Union of the Comoros
November 15, 2024
Oh, the love story between the IMF and the Union of the Comoros continues! It’s one part financial lifebuoy, two parts rocky romance, and a dash of misplaced optimism. Really, who needs soap operas when you have international finance? But let’s delve into the latest scoop, shall we?
- First up: the Comorian authorities and the wizards at the IMF have reached what they call a “staff-level agreement” on some economic policies and reforms. Now, if that doesn’t sound like a fancy way of saying, “We’ve talked a lot but, let’s be real, we’re still figuring it out,” then I don’t know what does! This deal involves granting Comoros a whopping 3.56 million SDRs—or, as us common folk refer to it, around 4.7 million bucks. I can think of a lot of things to do with $4.7 million! A private island, perhaps? Oh wait…
- Now, despite what sounds like a hefty figure, the performance under the program was about as steady as a tightrope walker after a few too many drinks. There was a political transition that made the whole process as smooth as a cat on a hot tin roof. But somehow, they managed to keep inflation from soaring into the stratosphere. Claps for stability, everyone!
- The new administration, led by Azali Assoumani, has embraced the reform agenda like it’s the only thing standing between them and a giant cliff. One can only hope they don’t leap off it! Their commitment to reform might be the fiscal equivalent of bedazzling a parachute to make the fall feel more glamorous.
Washington DC: So Ms. Suchanan Tambunlertchai, the sindicate head honcho for the IMF, strutted into Moroni and Washington DC like a brave new world explorer, discussing policies and reforms that had about as much clarity as a foggy winter’s night. “Our agreement,” she proclaimed, “will be submitted to management.” Sounds more like a high school essay than a financial plan, but we move!
She elaborated on the not-so-thrilling performance of the program, suggesting some revenue targets were missed but, “Hey, public health and weather-related shocks.” That’s right, folks! If you can’t balance the budget, it’s the weather’s fault. Who knew fiscal policies had such flimsy excuses up their sleeves?
Let’s break it down: Economic activity is on the decline, imports are dwindling, and inflation has clawed its way up to 8.1%. That’s right, the cost of your average rice and meat combo is edging closer to your last family holiday expenses. Oh, and let’s not forget the charming little tidbit about commandment number one: Do not create new external arrears! Seems we dropped the ball there too. Good effort, though!
But wait! There’s a sunny side to this coin. The trade deficit is slimming down from 13% to 10% of GDP. Can you believe it? One day you’re drowning in red ink, the next you’re just paddling with your toes. Everybody loves a redemption arc, don’t they?
And as the IMF and Comorian authorities have their tête-à-tête about structural reforms and anti-corruption frameworks (because, let’s face it, who doesn’t want to tackle corruption while praying you actually, you know, succeed?), it’s clear that while Comoros faces the struggles of a small island state, it’s keeping the faith alive with adherence to the Extended Credit Facility (ECF).
Meanwhile, the IMF team had their chats with bigwigs like the Secretary General of the Government and the Minister of Finance. They probably discussed everything from economic strategy to whether they’ll find someone to take their budgetary woes to dinner. After all, who says economic discussions can’t be vibrant and, dare I say, fun?
So, what’s the takeaway, dear readers? The romance between the IMF and the Union of the Comoros is as rocky as ever, but evidently, it’s not keen on fading into oblivion just yet. Grab your popcorn – this financial saga is just getting started!
IMF Reaches Staff-Level Agreement on the Third Review of the Extended Credit Facility with the Union of the Comoros
November 15, 2024
End-of-mission press releases include detailed statements from IMF staff teams outlining their preliminary findings. These insights reflect the views of the IMF staff and do not necessarily align with the positions of the IMF Executive Board. The findings will form the foundation for a comprehensive report that, pending management approval, will be submitted to the IMF Executive Board for thorough review and ultimate decision.
- Comorian authorities and IMF teams reached a pivotal staff-level agreement on economic policies and reforms as part of the third review of the program supported by the 4-year Extended Credit Facility (ECF). This critical review, which awaits the IMF Executive Board’s endorsement, would facilitate a disbursement of 3.56 million SDRs (approximately 4.7 million US dollars), reinforcing financial stability in the region.
- Program performance was generally in line with expectations despite a political transition and difficult external financing conditions. Macroeconomic conditions remained stable despite inflationary pressures and signs of slowing economic activity.
Washington DC: A dedicated team from the International Monetary Fund (IMF), under the leadership of Ms. Suchanan Tambunlertchai, engaged in extensive discussions in Moroni from October 2 to 15 and in Washington DC from October 21 to 25. These discussions focused on the examination of progress concerning crucial economic and financial policies and reforms as part of the third review of the ECF-supported program. The agreement achieved at the staff level will be presented to IMF management and the board of directors. Following this review, the Union of Comoros stands to receive 3.56 million SDR (approximately $4.7 million), bringing the total disbursements under the agreement to an impressive $18.8 million.
Today, Ms. Tambunlertchai made the following statement:
“The performance of the program supported by the ECF was generally in line with expectations despite a more difficult political transition and financial environment. The specific targets set, including three of five quantitative performance criteria concluded by the end of June 2024, reflect measurable progress. The narrowly missed tax revenue target was primarily attributed to public health and weather-related shocks during the first half of the year. It is essential to note that the target for non-accumulation of new external arrears was not met, revealing ongoing cash management challenges and highlighting the urgent need to address public financial management issues. The authorities have committed to resolving all external arrears prior to the scheduled Executive Board meeting tentatively set for December 2024. Despite some delays, progress on structural reforms continues.”
“Economic activity is showing signs of slowing, with a decline in imports and credit to the private sector. Headline inflation surged to 8.1% (year-on-year) in August, predominantly driven by rising prices of essential imported food items such as rice and meat. Despite the slight shortfall in tax revenues, the pace of fiscal consolidation proved to be more sustained than anticipated, primarily due to under-execution of investment spending. The decreased import levels positively impacted the trade deficit in the first half of the year, reducing it to 10% of GDP, a notable improvement from 13% during the same period in 2023. The external position remains stable, with reserves continuing to accumulate until the end of June. While vulnerabilities still persist within the financial sector, the level of non-performing loans has stabilized, and the authorities are making concerted efforts to strengthen banking supervision alongside regulatory frameworks.”
“Discussions focused on maintaining the momentum of structural reforms, particularly regarding domestic revenue mobilization and deeper changes in public finance management and governance. Additionally, the mission considered next steps to bolster the anti-corruption framework and the implementation of a new law on public enterprises, which aims to enhance their governance and mitigate budgetary risks.”
“The Comoros continues to navigate the fragilities characteristic of small island states. Adherence to the ECF-supported program is vital for sustaining macroeconomic stability and advancing necessary structural reforms while also attracting additional financial support to meet the country’s substantial financing needs. The authorities reiterated their steadfast commitment to the reforms encompassed within the program.”
“The IMF team met with Secretary General of the Government Nour-El Fath Azali, Minister of Finance Ibrahim Mohamed Abdourazak, Governor of the Central Bank Younoussa Imani, Commissioner General for Planning Najda Said Abdallah, and various senior government officials. Constructive discussions with representatives from commercial banks, the Chamber of Commerce, development partners, and other key stakeholders enriched the dialogue. The IMF team extends gratitude to the authorities and all interlocutors for their valuable cooperation and the forthright, constructive discussions that took place.”
PRESS OFFICER: Pavis Devhasadin
PHONE:+1 202 623-7100 COURRIEL: MEDIA@IMF.org
**Interview with Ms. Suchanan Tambunlertchai, Head of the IMF Mission to the Union of the Comoros**
**Editor:** Thank you for joining us today, Ms. Tambunlertchai. The recent staff-level agreement on the Extended Credit Facility with the Union of the Comoros seems significant. Can you share what this agreement entails and its potential impact on the country’s economy?
**Ms. Tambunlertchai:** Thank you for having me! The staff-level agreement we reached is a crucial part of the third review under the Extended Credit Facility. It involves economic policies and reforms that are essential for reinforcing financial stability in the Comoros. The disbursement of approximately $4.7 million will aid in improving the macroeconomic conditions, despite the various challenges the country is facing.
**Editor:** There have been mentions of difficulties in program performance related to political transitions and external conditions. Can you elaborate on that?
**Ms. Tambunlertchai:** Absolutely. While the performance under the program was generally in line with our expectations, we encountered hurdles, particularly due to the political transition that could have disrupted stability. Additionally, external financing conditions were tough, which affected economic activity. However, I must emphasize that despite these challenges, we have managed to stabilize inflation, which recently surged to 8.1%.
**Editor:** Inflation and economic activity appear to be major concerns. How do you view the government’s reform efforts, particularly under President Azali Assoumani?
**Ms. Tambunlertchai:** The new administration’s commitment to reforms has been commendable. They recognize the urgent need to make structural changes and address issues such as public financial management. Their dedication to reform has been like a lifeline amidst the challenges they face—it’s essential for moving forward.
**Editor:** There’s also been a mention of a narrowing trade deficit. How significant is this development?
**Ms. Tambunlertchai:** It’s a noteworthy improvement. The reduction of the trade deficit from 13% to 10% of GDP indicates that the country is making strides in balancing its external accounts. This trend, coupled with better cash management, will be vital as they work to address remaining challenges.
**Editor:** can you summarize the main takeaway from this agreement for both the IMF and the Union of the Comoros?
**Ms. Tambunlertchai:** The essence of our agreement lies in collaboration—a partnership aimed at stability and sustainable development. For the Comoros, it’s about navigating through its fiscal challenges and committing to transparent reforms. For the IMF, it is a reaffirmation of our role in supporting countries in distress. We believe in the potential of the Comoros to emerge stronger from this, and we remain committed to assisting in their journey.
**Editor:** Thank you for your insights, Ms. Tambunlertchai. It’s clear that while challenges abound, there are also pathways to progress that both the IMF and the Union of the Comoros are keen to explore together.
**Ms. Tambunlertchai:** Thank you for having me. It’s always a pleasure to discuss the positive strides we are making!