COMOROS: Rescue plan on the table for troubled islands
Beached for the past 30 years - Comoros' economy needs rescuing
johannesburg, 24 January 2008 (IRIN) - A US$30 million debt bailout by donors has eased troubled Comoros' payment arrears, opening the door to re-engagement with the international community, and the bigger potential prize of debt cancellation.
An African Development Bank (ADB) delegation is currently visiting the capital, Moroni, to discuss future development cooperation in the Indian Ocean archipelago. "We came here to take stock of the problems and to know what has to be done; since 1992, the [ADB] has not intervened in Comoros," Dialietou Gaye, regional director of the bank, told IRIN.
An ADB financial rescue plan, negotiated with donors in December, could pave the way to an agreement with the International Monetary Fund (IMF) and eventual debt relief: great news for a country where external debt is estimated at a whopping 72 percent of GDP
"The ADB debt write-off is a condition for the IMF to engage in negotiations leading to Comoros acceding to the HIPC [Highly Indebted Poor Countries] process. Lord knows, the country needs this break," Opia Kumah, the United Nations Development Programme (UNDP) Resident Representative in the Comoros, explained.
The ADB stumped up over two-thirds of the financing for the plan, the international donor community put in 30 percent, and the Comoros Union government 1 percent.
Comoros' debt burden has been unsustainable for over two decades. "Large-scale borrowing from official creditors after independence led to rapid accumulation of external debt, which reached 100 percent of GDP (Gross Domestic Product) by the mid-1980s," noted the IMF's 2006 Comoros Debt Sustainability Analysis. It acknowledged that debt relief was essential to the future growth of a country ranked 132 out of 177 on the UNDP's Human Development Index.
But despite the international community clearly signaling its interest in re-engaging with Comoros, initiatives such as HIPC come with conditions. Political stability is one: a criterion the archipelago will find difficult to meet given the ongoing tension between the Union government and the semiautonomous island of Anjouan.
|Lord knows, the country needs this break |
Individual elections on the three islands that make up the federal union in June 2007 reignited hostility between Anjouan and the central government. With the prospects of a peaceful resolution to the political impasse ever less likely, debt relief hangs in the balance.
"The crisis has put Comoros' development on hold. People are concerned about the impact on IMF, ADB and World Bank decisions," Kumah said, adding that much-needed bilateral assistance was also drying up while donors waited for the situation on Anjouan to be resolved.
Instability is not new to the Comoros: years of political bickering and bubbling secessionism since independence from France in 1975 has worn away standards of living. According to UNDP, GDP has fallen by –0.5 percent annually since 1990 to $640 per capita in 2005.
"For over 30 years since independence, the economy of Comoros has stagnated," said Kumah. "In many areas it has actually regressed."
According to the Organisation for Economic Cooperation and Development, Official Development Assistance (ODA), on which the country is heavily dependent, plunged from around $60 million a year in 1990 to $25 million in 2005.
"We need a solution because the people are suffering. Poverty is increasing, there is no development, there is no investment, no economic activities, no employment, and the international community will not start helping until we have stability," commented Elyachroutu Mohamed Caabi, a former Union vice-president, now an economic advisor to the semi-autonomous government of Anjouan.