Country Report Comoros March 2011

Outlook for 2011-12: Fiscal policy

The government will continue to face pressure to improve public finance management and restore fiscal discipline as conditions for reaching HIPC completion. It will be aided by interim debt relief, which will reduce its interest payments. It is also likely to make some progress (with the IMF's assistance) in improving public finance management. However, progress in reforming parastatals and curtailing the public-sector wage bill is likely to be slow. Improvements in fiscal performance will also be restricted by the small domestic revenue base-domestic revenue amounted to an estimated 14.5% of GDP in 2010-which largely reflects the high degree of informalisation. Overall, the Economist Intelligence Unit expects that fiscal discipline will be gradually restored, but the efficiency of public spending will remain weak. The fiscal deficit is forecast to moderate from an estimated 1.7% of GDP in 2010 to 1.5% of GDP in 2011 and 1.1% of GDP in 2012. Modest but chronic fiscal deficits have boosted external public debt as a ratio of GDP to roughly 50%, and the IMF has pronounced Comoros at risk of debt distress. Comoros should receive full HIPC debt relief in mid-2012, which would restore its debt sustainability towards the end of the forecast period.

© 2011 The Economist lntelligence Unit Ltd. All rights reserved
Whilst every effort has been taken to verify the accuracy of this information, The Economist lntelligence Unit Ltd. cannot accept any responsibility or liability for reliance by any person on this information
IMPRINT