Africa Economic Forum Comoros

Recent Macro Economic and Financial Development

Growth in Comoros is predicted to reach 3% in 2023 and 3.8% over 2024-2025, primarily driven by private consumption and public investment. The construction of the El Maarouf Hospital and the Galawa Hotel, as well as the construction or restoration of roads and ports, should significantly contribute to the economic expansion. The fiscal deficit is projected to widen to 6.3% of GDP in 2023 due to the completion of major investment and low domestic resource mobilization, before narrowing to an estimated 3.1% in 2025 on the back of a fiscal consolidation program, enhanced SOE performance monitoring, and increased expenditure efficiency through the use of an e-procurement system. Due to the disbursement of existing loans, public debt is projected to reach 45.2% of GDP in 2025, but the implementation of the 2023 debt management law will help contain it.

Outlook and Risks

The medium-term economic outlook is favorable, though fragile, with GDP projected to grow 3.5% in 2023 and 4.0% in 2024, supported by implementation of both the Plan Comores Émergent and the four-year arrangement under the IMF Extended Credit Facility for around $43 million, expected to be approved in 2023. The engines of growth are expected to be services and agriculture on the supply side and household final consumption expenditure on the demand side. Inflation is projected to decline due to downward trending global prices.

The budget deficit is projected to remain high due to increased public spending linked to continued government subsidies for certain products and support for the economic recovery, specifically public investment. The current account deficit is projected to widen to 4.5% of GDP in 2023 due to an anticipated drop in the trade deficit following economic recovery and reduced external aid. Public debt is projected to rise moderately, and foreign exchange reserves are projected to remain high. Possible headwinds are escalation of Russia's invasion of Ukraine, reduced aid and external financing, and socio-political turmoil.

Climate change issues and policy options

Climate finance depends on development partners. Having experienced a series of external shocks, Comoros must commit to green growth funded with private support to achieve sustainable development, economic growth, and climate action. The country has great potential for green growth, specifically its unique biodiversity and renewable energy potential. Since 2020, private international developers have started to invest in mini solar power stations, following the liberalization of electricity production and a commitment from the National Electricity Distribution Company to buy electricity produced from imported fossil fuels.

Transfers from the diaspora—almost $232 million in 2021, equivalent to 16.5% of GDP—could also be used to finance low-carbon flagship infrastructure projects. This would require improving climate data, strengthening the public–private cooperation framework, and developing innovative climate finance instruments. The estimated value of natural capital—primarily forests, coastal ecosystems, and agricultural land—was $1.3 billion in 2018. Properly exploiting this natural capital could support climate finance and sustainable green growth.