October 13, 2011 / 11:10 AM / in 6 years

INTERVIEW-Comoros targets over 3 pct growth in 2012 - c.bank chief

* Sees 2012 inflation at 3.5 to 4 pct

* Banking sector, tourism to attract investments

* Gulf states providing financial assistance

By Martina Fuchs

DUBAI, Oct 13 (Reuters) - Comoros’ economy may grow more than 3 percent in 2012, aided by the expansion of the fledgling banking sector and investments in tourism, its central bank governor said on Thursday.

“In 2011, we have a projection of 2.6 percent of real growth,” Central Bank Governor Mze Abdou Mohamed Chanfiou told Reuters by telephone from the capital Moroni.

The economy of the Comoros, a group of four islands between Madagascar and southern Africa, relies heavily on agriculture and fishing. It is the world’s largest producer of the essence ylang ylang, used in aromatherapy, and also exports vanilla and cloves.

“Next year, we are targeting economic growth of more than 3 percent... We are seeing a gradual improvement of economic growth,” he said. Growth plunged to 0.8 percent in 2007 and 0.4 percent in 2008, but rebounded in 2009 following the global financial crisis.

In August, the International Monetary Fund predicted the economy would expand by a little over 2 percent this year, driven by an uptick in agricultural production.

The country is a member of the Arab League and African Union with a population estimated at around 800,000, and its name derives from the Arabic word “qamar” meaning “moon”.

Comoros has had a turbulent history with some 20 coups or coup attempts since declaring independence from France in 1975.

“Since 2003, we have entered a period of political stability,” Mohamed Chanfiou said. “We have a rolling system of presidency and it is now possible to elect a president.”

Its economy is estimated at 212.7 billion Comorian francs (432.3 million euros) in nominal terms this year by the IMF and is projected to reach 280.8 billion Comorian francs in 2015.

Potential investors putting the country on their frontier markets radar could come from Arab countries, the Gulf states and the East African region.

A pick-up in foreign investments due to the opening up of the banking sector and tourism are helping the economy, he said.

“In the last three years, the authorities and the central bank have decided to open the banking sector to competition. We have seen the establishment of two commercial banks and their opening up to foreign investments,” Mohamed Chanfiou said.

Exim Bank, a subsidiary of its Tanzanian parent, and the Federal Bank of Commerce were launched in 2008 and 2009.

“The Comoros are a touristic country. We need important investments, especially to increase and improve the infrastructure for tourism,” he said, adding that a direct air link was needed to Gulf Arab countries.


Moderate upward pressure on consumer prices is expected to persist next year.

“In 2012, we expect an inflation of around 3.5 to 4 percent maximum... In 2011, around 3.7 percent and 4 percent, as we have seen higher costs of petrol products which will impact prices in the second half,” he said. Inflation was 3.8 percent in 2010.

The Comorian franc was pegged to the euro with the common currency’s creation in 1999. The exchange rate is fixed at 491.9677 francs to 1 euro.

“The crisis in the euro zone is linked to the sovereign debt of states. Our economy is little exposed, our banks have no exposure to European banks,” Mohamed Chanfiou said. “There is no fear of instability in the banking sector.”

Last year, the IMF and World Bank found Comoros was eligible for relief on its debt under the Heavily Indebted Poor Countries initiative and the Multilateral Debt Relief Initiative.

“Gulf Arab countries are among our big friends. They have always continued to support and provide financial assistance,” Mohamed Chanfiou said.

Total financial aid amounted to almost 30 billion Comorian francs (61 million euros) in 2010, and will be around 25 billion francs in 2011 of which Gulf Arab countries will contribute between 10 and 15 billion francs, he said.

Mohamed Chanfiou also said the country was not currently planning to issue a sovereign bond.

1 euro = 491.9677 Comorian francs editing by Ron Askew

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