The economy of the Indian Ocean island of Comoros could grow by up to 3.5 percent next year if the government implements financial and fiscal reforms, the International Monetary Fund said on Tuesday.
The IMF has said the Comoros, a group of four islands between Madagascar and southern Africa, that relies chiefly on agriculture and fishing would have gross domestic product growth of 2.5 percent this year driven by construction and agriculture.
The economy was benefiting from sustained donor support, foreign direct investment, remittances, and ongoing reforms in public financial management and the public utility sectors,” the IMF said in a statement at the conclusion of a mission visit.
“Assuming continued rigorous implementation of the reform agenda, real GDP growth could accelerate to 3.5 percent in 2013, and the primary fiscal deficit could be contained at 0.9 percent of GDP,” said Mbuyamu Matungulu, the head of the IMF mission to the Comoros.
In October last year, the central bank governor said he was targeting growth of more than 3 percent aided by an expansion in the fledgling banking sector and investments in tourism.
Comoros is the world’s largest producer of the essence ylang ylang and also exports vanilla and cloves.
Despite increased price pressures this year following floods that destroyed part of the domestic food harvest, end-year inflation should be contained at 5 percent thanks to relatively stable world energy and food prices, the IMF said.
“Notwithstanding a moderate deterioration in the terms of trade, the external current account deficit is projected to significantly narrow to 6.9 percent of GDP in 2012 from 9 percent of GDP in 2011,” the IMF said, crediting this to a surge in public transfers.
As a result, gross foreign exchange reserves would likely increase to a “comfortable” level equivalent to 7.2 months of imports, the IMF said.
Comoros had an estimated GDP of $595 million in 2010, according to Global Finance.
Source: Reuters Africa