September 22, 2009 / 10:09 AM / 10 years ago

IMF unveils $21.5 mln Comoros package to support growth

ANTANANARIVO (Reuters) - The International Monetary Fund has unveiled a three-year $21.5 million package for the Comoros to help consolidate economic gains as the archipelago implements far reaching reforms.

The heavily-indebted Indian Ocean islands will target annual real gross domestic product growth of 3 to 4 percent by 2012, compared to a forecast 1 percent for this year, the IMF said on Monday.

The import dependent nation will have immediate access to $6.7 million.

“Comoros’ performance under the (Emergency Post-Conflict Assistance) programme was satisfactory, despite the difficult domestic and external circumstances,” said Takatoshi Kato, acting chair of the IMF’s executive board.

The Washington-based institution said year-on-year inflation would fall to 2.3 percent in 2009 from 7.4 percent the previous year, thanks to the falling costs of fuel and transportation.

Under the medium-term targets set by the Comoros and IMF, the country will aim to contain inflation at 3 percent by 2012.

The Comoros, sandwiched between Madagascar and southern Africa, has a turbulent history with some 20 coups, or attempted coups, since declaring independence from France in 1975.

Last year, the African Union led a military intervention to remove the self-declared rebel leader Mohamed Bocar from power on the island of Anjouan.

Since then, tensions have waned and the government has begun putting in place a raft of reforms to cut its own wage bill, increase tax revenue and bolster private sector-led growth.

Improved control of personnel expenditures should see the domestic primary budget deficit narrow to 1.6 percent of GDP this year, against 2.7 percent in 2008, the IMF said.

“Achieving the 2009 fiscal targets will provide confidence regarding government determination to improve public expenditure management and put the budget on a sustainable path,” said Kato.

To achieve its medium-term objectives, the Comoros will increase public spending by an estimated 1.7 percent of GDP and raise domestic revenue to the equivalent of at least 14 percent of GDP in 2012.

The lending body noted export growth remained subdued given persistently low world prices for Comoros’ export commodities such as vanilla and ylang ylang.

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