Washington, DC - the Executive Board of the International Monetary Fund (IMF) today approved a disbursement under the Rapid Credit Facility (RCF) equivalent to SDR2.97 million (about US$4.05 million, 16.7 percent of quota) and a purchase under the Rapid Financing Instrument (RFI) equivalent to SDR5.93 million (about US$8.08 million, 33.3 percent of quota) to meet Comoros' urgent balance of payment needs stemming from the COVID-19 pandemic.
Comoros has also benefited from the IMF Executive Board decision of April 13, 2020 to provide debt service relief to all countries eligible for support from the International Development Association (IDA) in the form of grant assistance under the Catastrophe Containment and Relief Trust (CCRT). As a result, the country will receive relief from the CCRT on debt service falling due to the IMF in the next 6 months (about US$1.2 million). This relief could be extended for up to 2 years, subject to the availability of resources under the CCRT.
The COVID-19 shock comes less than a year after Cyclone Kenneth and is affecting Comoros severely. Remittances receipts have slowed and visitor arrivals have stopped, weighing on activity in the services sector. Projections indicate a substantial growth decline, an external financing need of 5.2 percent of GDP, and a fiscal financing need of 4.7 percent of GDP.
The IMF continues to monitor Comoros' situation closely and stands ready to provide policy advice and further support as needed.
Following the Executive Board's discussion of the Union of Comoros, Mr. Mitsuhiro Furusawa, Deputy Managing Director and Acting Chair, issued the following statement:
"The COVID-19 shock comes on the heels of two difficult years for Comoros, and less than a year after Cyclone Kenneth. While the authorities have so far not reported an outbreak of the COVID-19 pandemic in Comoros, the pandemic is already having a severe economic impact as remittances receipts have slowed, visitor arrivals have stopped, and several banks have seen liquidity strains.
"The pandemic is generating large external and fiscal financing needs. Financing under the Rapid Credit Facility (RCF) and the Rapid Financing Instrument (RFI), as well as debt relief provided earlier this month under the Catastrophe Containment and Relief Trust, will help cover important parts of these needs. Timely support by donors and development partners will be critical for filling the remainder.
"The Comoros' authorities should use fiscal policy to cushion the adverse effects of the COVID-19 shock and bring the fiscal position back in line with medium-term paths once the crisis has passed. In particular, in addition to expanding very substantially healthcare spending to meet the population's pandemic-related needs, the authorities should consider giving targeted and temporary support to the most vulnerable.
"Monetary policy should focus on maintaining the exchange rate peg. At the same time, the authorities should use all tools at their disposal to safeguard the stability of the banking system, including by providing liquidity to banks facing liquidity pressures and addressing loan servicing difficulties.
"Finally, it will be important for the authorities to ensure robust reporting on the use of the funds disbursed under the RCF and RFI."
IMF Lending Tracker (emergency financing request approved by the IMF Executive Board)
IMF Executive Board calendar