Country Report Comoros June 2011

Outlook for 2011-12: Policy trends

The government is likely to try to build on the recent improvements in political stability (assuming these are sustained) to attract foreign direct investment (FDI), particularly in tourism, infrastructure, agriculture and fishing. A national investment promotion agency has been established and generous fiscal incentives are being offered under an investment code introduced in 2007. These include a ten-year exemption from corporate tax on investments worth over Cfr100m (US$290,000). The government also plans to establish a one-stop business licensing window, which may help to lighten the regulatory burden on investors. Complementary reforms are required to improve the efficiency of public institutions that interface with the private sector, including state-owned utility companies and the judiciary, but progress in achieving this will be slow. Efforts to find private-sector partners for the water, electricity and telecommunications utilities are likely to continue, but significant improvements are not expected over the forecast period. Shortfalls in the supply of skilled workers are likely to persist and capacity in the civil service is likely to remain weak. Macroeconomic management is expected to remain largely satisfactory, underpinned by the country's membership of the Franc Zone (which anchors inflation) and the support received under its extended credit facility (2009-12) with the IMF. Macroeconomic stability is also likely to be boosted by the interim debt relief that Comoros is receiving under the IMF and World Bank's heavily indebted poor countries (HIPC) initiative. This is likely to be followed by full HIPC debt relief in mid-2012.

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