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- GDP (PPP):
- $0.9 billion
- 3.5% growth
- 2.5% 5-year compound annual growth
- $1,287 per capita
- Inflation (CPI):
- FDI Inflow:
Comoros’s economic freedom score is 52.1, making its economy the 142nd freest in the 2015 Index. Its overall score is 0.7 point higher than last year, reflecting improvements in half of the 10 economic freedoms, including freedom from corruption, investment freedom, monetary freedom, and labor freedom. Comoros is ranked 32nd out of 46 countries in the Sub-Saharan Africa region, and its overall score is lower than the regional average.
Over the past five years, economic freedom in Comoros has advanced by 8.3 points, the second-best improvement by any country. Comoros has recorded impressive score improvements in five straight years, led by double-digit gains in labor freedom, trade freedom, investment freedom, and financial freedom. Investment freedom has improved by 30 points since 2011.
Comoros has been graded only since 2009. It moved out of the ranks of the “repressed” last year and registered its highest score ever in the 2015 Index. Institutionalizing and improving on gains made in the past half-decade will be essential. Comoros continues to lag far behind on rule of law, and corruption remains pervasive. Despite opening to foreign investment, the repressive domestic regulatory environment hinders entrepreneurial dynamism. The government must also do more to promote competition, as financial and investment regimes remain among the world’s least free.
The three-island Union of the Comoros has endured more than 20 coups since independence in 1975. Under a 2001 constitution granting each island increased autonomy, the presidency rotates among the three islands every four years. The transfer of power to President Ikililou Dhoinine in 2011 was peaceful. Although Comoros is a leading producer of ylang-ylang, cloves, and vanilla, its narrow export base leaves it vulnerable to external shocks. It also has poor transportation links. Comoros remains heavily dependent on foreign aid and remittances. In 2012, the International Monetary Fund and the World Bank provided $176 million in debt relief to Comoros.
Although President Dhoinine is pursuing governance reforms, corruption remains a serious problem at all levels of the government, judiciary, and civil service, as well as among the police and security forces. The judicial system, based on both Sharia (Islamic) law and the French legal code, is relatively weak and subject to influence by the executive branch and other elites.
The top individual income tax rate is 30 percent, and the top corporate tax rate is 50 percent. Other taxes include a value-added tax and an insurance tax. The overall tax burden is 12.3 percent of GDP. Government expenditures equal 26.6 percent of the domestic economy. Public debt has fallen to 19 percent of the domestic economy as debt forgiveness continues under the Highly Indebted Poor Country initiative.
Simplifying the business start-up process has progressed unevenly, and private enterprises still face costly and time-consuming regulatory hurdles. Launching a company costs more than the level of average annual income, and completing licensing requirements takes over 100 days. The formal labor market is not fully developed. The government subsidizes state-owned utilities (water, electricity, and oil) and controls other prices.
Comoros has an average tariff rate of 6.0 percent. It is a member of the Common Market for Eastern and Southern Africa. Lack of a strong court system to enforce contracts can deter foreign investors. The financial sector remains limited in scope and depth, and much of the population has very limited access to financial services. The majority of bank loans are for short terms only.