The Union of the Comoros: Third Review under the Extended Credit Facility Arrangement and Request for Modifications of Performance Criteria and Waivers of Nonobservance of Performance Criteria -Press Release; Staff Report; and Statement by the Executive Director for The Union of the Comoros

THIRD REVIEW UNDER THE EXTENDED CREDITFACILITY ARRANGEMENT AND REQUESTS FORMODIFICATIONS OF PERFORMANCE CRITERIA ANDWAIVERS OF NONOBSERVANCE OFPERFORMANCECRITERIA—PRESS RELEASE;STAFF REPORT;ANDSTATEMENT BY THE EXECUTIVE DIRECTOR FORTHEUNION OF THE COMOROS In the context of the2024ThirdReview under the Extended Credit Facility Arrangement,the following documents have beenreleased and are included in this package: •APress Releaseincluding a statement by the Chair of the Executive Board. •TheStaff Reportprepared by a staff team of the IMF for the Executive Board’sconsideration onDecember 13, 2024,following discussions that ended onOctober 25, 2024, with the officials ofthe Union of the Comoroson economicdevelopments and policies underpinning the IMF arrangement under theExtendedCredit Facility. Based on information available at the time of these discussions, thestaff report was completed onNovember 26, 2024. •ADebt Sustainability Analysisprepared by the staffsof the IMF and the World Bank. •AStatement by the Executive Directorforthe Union of the Comoros. TheIMF’s transparency policy allows for the deletion of market-sensitive information andpremature disclosure of the authorities’ policy intentions in published staff reports andother documents. Copies of this report are available to the public from International Monetary Fund•Publication ServicesPO Box 92780•Washington, D.C. 20090Telephone: (202) 623-7430•Fax: (202) 623-7201E-mail:publications@imf.org Web:http://www.imf.org International Monetary FundWashington, D.C. IMF Executive Board Completes the Third Review Under theExtended Credit Facility Arrangement with the Union of theComoros FOR IMMEDIATE RELEASE •The IMF Executive Board completed today the third review under the Extended CreditFacility Arrangement with the Union of the Comoros. Approval of the third review enablesan immediate disbursement of SDR 3.56 million (about US$ 4.7 million). •Program performance remains broadly on track albeit uneven, amid a political transition anda more challenging external financing environment. The authorities have reaffirmed theircommitment to the reform agenda under the ECF-supported program. •Economic conditions have remained stable despite inflationary pressures and signs ofsoftening economic activity, and adherence to the ECF-supported program will safeguardmacroeconomic stability and advance needed structural reforms while catalyzing additionalfinancial support for the country’s large financing needs. Washington, DC–December 13, 2024:The Executive Board of the International MonetaryFund (IMF) completed today the third review under the Union of the Comoros’ ExtendedCredit Facility (ECF) arrangement. The Executive Board’s decision allows for an immediatedisbursement of SDR 3.56 million (about US$ 4.7 million) bringing the total disbursements sofar under the arrangement to about $18.8 million. The 4-year ECF arrangement wasapprovedon June 1, 2023, with an access of SDR 32.04 million (about US$43 million). In completing the review, the Executive Board also approved the authorities’ requests for the(i) modification of the end-December quantitative performance criterion (QPC) on tax revenueto account for the weaker-than-expected economic activity this year; (ii) modification of theJune 2025 QPC on the primary domestic balance, to account for the amended budgetperimeter in line with good public financial management (PFM) practice, and correspondingmodification of the Technical Memorandum of Understanding (TMU); and (iii) waivers ofnonobservance of the QPC on tax revenue and the continuous QPC on the non-accumulationof external arrears, based on corrective actions taken by the authorities. While there is considerable progress towards the achievement of program objectives,significant and continued effort is required to maintain the reform momentum. The authoritieshave reiterated their commitment to the ECF-supported program, despite the recent slow-down in reform momentum and the backdrop of economic and institutional fragilities. Three offive quantitative performance criteria (QPCs) were met as of end-June 2024 and six of thenine structural benchmarks (SBs) expected between June and October were met. Two SBshave been reformulated and four have had their dates reset. Comoros’s economic reform program, supported by the ECF arrangement, seeks to reducefragility and increase economic resilience by building fiscal buffers, reducing debt vulnerabilities, and strengthening the financial sector and governance. Key policy priorities forthe program remain unchanged and include: (i) mobilizing domestic revenue through reformsto strengthen tax and customs administration and streamline tax exemptions; (ii) stabilizing thefinancial sector, including through the completion of the restructuring of the state-owned postalbank SNPSF and enhancing the Central Bank’s banking supervision and resolution capacities;and (iii) strengthening governance through PFM and anti-corru