The Union of the Comoros is a small island in Eastern Africa which is characterized by a modest economic expansion and fiscal issues which have had an impact on long-term growth. GDP growth averaged 2.7 percent in 2011–2020, resulting in per capita GDP growth averaging 0.4 percent over the same period. The economy has been primarily driven by consumption, fueled by remittances and tourism receipts from the diaspora. Economic activity is undiversified, characterized by a small, largely informal, private sector with limited value addition. Its distance to world markets, the small size of the economy and the weak institutions resulted into high unitary costs across sectors, and the creatin of several state-owned enterprises (SOEs). Labor force participation, especially among women (which is about half that of men), has been remarkably low, and poor quality of education has persistently undermined the contribution of human capital to productivity growth, with overall total factor productivity nearly absent. The low human capital mirrors the need for the fiscal policy to be more inclusive and efficient to boost growth. Hence, this Public Expenditure Review (PER) aims at analyzing core elements of the fiscal policy and its implementation to improve public expenditure efficiency and create fiscal space with long term goal of supporting public service delivery, ensuring fiscal sustainability, and achieving an inclusive growth.
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