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International Monetary Fund (IMF) Executive Board Approves US$12.3 Million Rapid Financial Assistance to the Union of Comoros in the Wake of Cyclone Kenneth

International Monetary Fund (IMF) Executive Board Approves US$12.3 Million Rapid Financial Assistance to the Union of Comoros in the Wake of Cyclone Kenneth

IMF financial assistance will help to address Comoros’ budgetary and external financing gaps arising from reconstruction and humanitarian needs after Cyclone Kenneth; The authorities are committed to rebuilding the economy’s productive capacity. To this end, they plan to repair damaged infrastructure and provide support to the poor while maintaining macroeconomic stability and debt sustainability.

On Jul 24, 2019, the Executive Board of the International Monetary Fund (IMF) approved the equivalent of SDR 8.9 million (US$12.3 million) in financial assistance to the Union of Comoros, with one-third (US$4.1 million) to be drawn under the Rapid Credit Facility and two-thirds (US$8.2 million) to be drawn under the Rapid Financing Instrument. These funds will help the authorities address large budgetary and external financing needs arising from the effects of Tropical Cyclone Kenneth. The funds will be made available immediately and are expected to help secure aid from development partners and the international community.

Cyclone Kenneth hit Comoros on April 23-24, inflicting casualties, displacing thousands, and damaging substantial parts of the building stock, infrastructure, and plants used in subsistence and commercial farming, thereby lowering productive capacity and bringing hardship to the population, particularly the poor.

Following the Executive Board’s discussion of the Union of Comoros, Mr. Mitsuhiro Furusawa, Deputy Managing Director and Acting Chair, issued the following statement:

“Tropical Cyclone Kenneth struck Comoros in late April, inflicting casualties and damaging infrastructure, buildings, and agriculture. The cyclone has created large and urgent external and fiscal financing needs. Financial assistance from the IMF will help fill part of these needs and is expected to catalyze additional financing from donors and the international community, which will be critical in aiding the authorities’ efforts to rebuild the economy.

“The authorities are committed to rebuild the economy’s productive capacity fully by repairing damaged infrastructure and providing support to the poor, who were disproportionately affected by the cyclone, while maintaining macroeconomic stability and debt sustainability. For full effectiveness of the authorities’ efforts, it will be key to make all cyclone-related spending in a timely and transparent manner. To this effect the authorities have created an inter-ministerial committee to coordinate these efforts.

“To create fiscal space for cyclone-related spending, the authorities intend to contain the civil service wage bill without reducing the quality of service delivery, strengthen state-owned enterprise oversight, and make continued efforts on domestic revenue mobilization. Nevertheless, the bulk of cyclone-related fiscal spending needs will have to be covered by aid from donors and the international community. To preserve debt sustainability and development prospects, the authorities will need to implement prudent fiscal and borrowing policies, relying primarily on concessional borrowing. The authorities also plan to reflect the post-cyclone developments in a realistic supplementary budget and make further efforts to enhance public financial management.

“The authorities also plan to address financial sector weaknesses, including by finding a solution for the critical situation of the postal bank, closely monitoring non-performing loans, and addressing obstacles in the judicial system to facilitate the use of collateral and promote lending.

“In an effort to address longstanding structural weaknesses, the authorities intend to strengthen institutions, promote good governance and reduce the scope for corruption. As part of these efforts, they are committed to reporting quarterly on cyclone-related spending. The authorities agree that it will be important to boost the economy’s resilience and preparedness to natural disasters and climate change.”

Distributed by APO Group on behalf of International Monetary Fund (IMF).International Monetary Fund (IMF)
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