Figure 1: Current Account Balance in the Comoros (2016-2025)
Source: IMF 2019, Comoros Request for Disbursement Under the Rapid Credit Facility. Note: (*) Figures from 2018 onwards are projections.
Total merchandise imports to Comoros increased to USD 300.5 million in 2018, from an annual average of USD 228.2 million for 2015 to 2017[1]. Exports increased to USD 52.0 million in 2018 from an annual average of USD 29.1 million for 2015 to 2017[2]. The slower growth in exports has deteriorated Comoros’s current account balance from a deficit averaging -USD 38.2 million (approx. -3.4% of GDP) for 2016 to 2018, to a deficit of -USD 92.0 million (approx. -7.7% of GDP) in 2019[3]. The lower export earnings have deteriorated the Comoros’s balance of payments and gross official reserves.
Figure 2: Capital and Financial Account Balance in the Comoros (2016-2025)
Source: IMF 2019, Comoros Request for Disbursement Under the Rapid Credit Facility. Note: (*) Figures from 2018 onwards are projections.
The Comoros’s capital and financial account balance improved from a surplus (net inflows) averaging USD 42.8 million (approx. 3.9% of GDP) for 2016 to 2018, to a surplus of USD 90.8 million (approx. 7.5% of GDP) in 2019[4]. The balance of payments improved from an average of -USD 4.5 million (approx. -0.5% of GDP) for 2016 to 2018, to a deficit of -USD 2.4 million (approx. -0.2% of GDP) in 2019[5]. However, the Comoros’s gross official reserves increased from USD 167.3 million in 2016 to USD 213.8 million in 2018, before decreasing to USD 197.3 million in 2019[6]. During this period, the Comoros experienced persistent inward FDI inflows.
Figure 3: Gross Official Reserves and Balance of Payment in the Comoros (2016-2025)
Source: IMF 2019, Comoros Request for Disbursement Under the Rapid Credit Facility. Note: (*) Figures from 2018 onwards are projections.
Inward FDI inflows decreased from USD 4.9 million in 2015 to USD 3.9 million in 2017, before recovering to USD 8.0 million in 2018[7]. As a result, Comoros’s inward FDI stock increased from an average of USD 110.5 million for 2015 to 2017, to USD 122.2 million in 2018[8]. Comoros citizens have no investments abroad which also suggests that the country is reliant on remittances from its citizens abroad to balance its international payments.
Figure 4: Inward Foreign Direct Investment in the Comoros (2015-2018)
Sources: UNCTAD 2019, UNCTADStat Database.
Personal remittance receipts increased from USD 128.8 million in 2015 to USD 132.1 million in 2017, before continuing to increase to USD 142.6 million in 2018[9]. The Comoros does not have any outward FDI stock during this period[10]. These remittance flows have improved the Comoros’s balance of payment but have no impact on the country’s net international FDI position.
Figure 5: Outward Foreign Direct Investment from the Comoros (2015-2018)
Sources: UNCTAD 2019, UNCTADStat Database.
The Comoros’s balance of payment has been supported by persistent inward FDI inflows despite the volatility in the level of net inflows to the country in the period from 2015 to 2018. In addition, the country has received increased personal remittance receipts from its diaspora which helps balance its international payments. The Comoros’s net international FDI position deteriorated from net liabilities amounting to an average of -USD 114.7 million (approx. -13.7% of GDP) for 2015 to 2017, to net liabilities amounting to -USD 130.1 million (approx. -10.6% of GDP) in 2018[11].
Figure 6: International Foreign Direct Investment Position in the Comoros (2015-2018)
Sources: UNCTAD 2019, UNCTADStat Database.
At these levels the Comoros’s foreign liabilities remain sustainable and relatively small as a proportion of GDP. Given the very narrow domestic capital markets, the Comoros should focus on attracting inward FDI in sectors that will increase its productive capacity and diversify its exports because the country is still heavily dependent on agricultural exports. Nevertheless, the Comoros’s balance of payments is projected to deteriorate to a small deficit in the medium-term, which is projected to deteriorate gross official reserves.
Fluctuations in inward FDI inflows and the consistently growing current account deficit should undermine continued improvement of Comoros’s balance of payments in the forward-looking medium-term. The current account balance is projected to improve from a deficit of -USD 92.0 million (approx. -7.7% of GDP) in 2019 to a deficit averaging -USD 77.5 million (approx. -5.3% of GDP) from 2020 to 2025[12]. The Comoros’s capital and financial account balance is projected to deteriorate to a surplus (net inflows) averaging USD 75.9 million (approx. 5.2% of GDP) from 2020 to 2025[13]. Therefore, the balance of payment is projected to deteriorate from a surplus of USD 2.5 million in 2020 to a deficit of -USD 1.7 million in 2025, which is equivalent to an average of -USD 1.8 million (approx. -0.1% of GDP)[14]. Thus, the Comoros’s gross official reserves are projected to decrease from USD 197.3 million in 2019 to an average of USD 193.1 million from 2020 to 2025[15].
[1] UNCTAD 2019. UNCTADStat Database, United Nations Conference on Trade and Development: Geneva. Available At: https://unctadstat.unctad.org/ [Last Accessed: 8 March 2020].
[2] UNCTAD 2019. UNCTADStat Database, ibid.
[3] IMF 2019. Comoros Request for Disbursement Under the Rapid Credit Facility, International Monetary Fund: Washington, D. C. Available At: https://www.imf.org/ [Last Accessed: 8 March 2020]; IMF 2018. Comoros 2018 Article IV Consultation, International Monetary Fund: Washington, D. C. Available At: https://www.imf.org/ [Last Accessed: 8 March 2020].
[4] IMF 2019. Comoros Request for Disbursement Under the Rapid Credit Facility, ibid.
[5] IMF 2019. Comoros Request for Disbursement Under the Rapid Credit Facility, ibid. There are relatively significant errors and omissions in Comoros’s balance of payments data equivalent to: -USD 49.5 million in 2016, USD 25.3 million in 2017 and -USD 3.6 million in 2018.
[6] IMF 2019. Comoros Request for Disbursement Under the Rapid Credit Facility, ibid.; IMF 2018. Comoros 2018 Article IV Consultation, ibid.
[7] UNCTAD 2019. UNCTADStat Database, ibid.
[8] UNCTAD 2019. UNCTADStat Database, ibid.
[9] UNCTAD 2019. UNCTADStat Database, ibid.
[10] UNCTAD 2019. UNCTADStat Database, ibid.
[11] UNCTAD 2019. UNCTADStat Database, ibid.
[12] IMF 2019. Comoros Request for Disbursement Under the Rapid Credit Facility, ibid.
[13] IMF 2019. Comoros Request for Disbursement Under the Rapid Credit Facility, ibid.
[14] IMF 2019. Comoros Request for Disbursement Under the Rapid Credit Facility, ibid.
[15] IMF 2019. Comoros Request for Disbursement Under the Rapid Credit Facility, ibid.
