Outlook for 2011-12

Following months of acrimony over the electoral calendar, political stability has improved, but risks remain. The elections for federal president and the islands' governors have taken place in line with a deal brokered by the African Union. Ikililou Dhoinine-the candidate backed by the current president, Ahmed Abdallah Sambi, and his Baobab coalition-has been elected president. Disputes over the timing of the transfer of power are now unlikely. However, further unrest could occur in Mohéli-Comoros's most marginalised island-to which the presidency is due to rotate for the first time since independence. Mr Sambi is unpopular in Mohéli and his ally's victory in an election marred by irregularities may well be seen as an attempt to circumvent a genuine transfer of power to Mohéli. Inter-island disputes are expected to persist, although their severity may decline. Economic policy will continue to be supported by the extended credit facility (2009-12) with the IMF. The authorities will try to build on recent improvements in political stability to boost foreign direct investment, but progress is expected to be very slow. Economic growth is forecast to rise to 2.5% in 2011 and 3% in 2012, largely supported by debt relief and strong remittances.

The political scene

The government has cracked down on speculation that tensions may emerge over the handover of power. By choosing the last possible date to leave office, Mr Sambi may have reinforced suspicions that he will try to wield power from behind the scenes. A diplomatic spat between Comoros and France over Mayotte's change of status to an overseas department has been resolved.

Economic policy

The IMF has reiterated its concern that the public wage bill is unsustainable. Remittances, which account for roughly 25% of GDP, will remain vital to sustaining living standards, although they will have little impact on investment, largely because of a dearth of investment opportunities.

The domestic economy

Inflation accelerated in early 2011 because of high oil prices but will continue to be anchored by the country's membership of the Franc Zone. Comoros was one of four countries highlighted at an "Investment Showcase" at a UN conference. Two foreign investors have faced stiff local opposition to their investment plans.

Foreign trade and payments

A new fisheries protocol with the European Union allows for more fishing vessels but a lower annual reference tonnage.