Economic co-operation key to growth - IMF

Continued mistrust among island governments in the Comoros is hampering economic growth, the International Monetary Fund (IMF) noted in a report released this week. An IMF mission visited the Indian Ocean archipelago in November 2004 to assess a request for a 12-month staff monitored programme (SMP) to put the country's public finances back on a sound footing. In recent years the fragile economy has struggled to keep its head above water, as donors and investors shied away from the constant potential for political instability. Comoros has endured more than 19 coups or attempted coups since gaining independence from France in 1975. An agreement in December 2001 made the islands of Moheli, Anjouan and Grande Comore more autonomous, which has brought relative political calm, but the IMF warned that greater inter-island cooperation was needed to ensure improved macroeconomic growth. "In spite of the substantial progress achieved recently, the authorities of the Union [government] and of each of the islands will have to overcome the remaining mistrust, and demonstrate adequate and persistent cooperation on macroeconomic management, in particular on revenue sharing and spending competencies," the IMF commented. The global financial institution noted that economic performance in 2004 was once again lacklustre, mainly due to a collapse in vanilla prices and a worldwide rise in the cost of oil. International vanilla prices fell from an average of US $251 per kilogram in 2003 to about US $50 per kilogram at present. In its economic outlook for 2005, the IMF forecast GDP growth at 3 percent, slightly above the population growth rate, with inflation remaining subdued at around 4 percent. There were also concerns raised over outstanding external debt, which stood at US $290 million, accounting for 76 percent of the country's GDP, and 470 percent of goods and services exports. The IMF recommended authorities embark on "credible home-grown" economic reforms, with a special focus on improving agriculture, fisheries and tourism. It was expected that attention to these sectors could lead to gradual economic recovery, with growth reaching around 5 percent by 2008, which would be in line with the target set by the country's poverty reduction strategy. Ambitious structural reforms, including the privatisation of petroleum distribution and telecommunication companies, would further strengthen economic efficiency, the IMF staff team noted, but emphasised that the government would have to break with past practices and implement a budget with "steadfast adherence".