IMF Staff Completes Mission to the Seychelles
An International Monetary Fund (IMF) staff mission led by Mr. Amadou Sy visited Victoria during September 13‒26, 2017
Seychelles has made considerable progress toward macroeconomic stability under the three consecutive IMF-supported programs
- The IMF team reached a staff level agreement with the authorities on their economic program that could be supported by a new 3-year IMF arrangement under the Policy Coordination Instrument.
- The authorities have implemented prudent macroeconomic policies together with bold structural reforms that led to strong economic growth as well as noticeable improvement in fiscal and external position as well as a reduction in debt.
- Macroeconomic performance has been robust in 2017, with economic growth for 2017 projected to reach around 4 percent.
An International Monetary Fund (IMF) staff mission led by Mr. Amadou Sy visited Victoria during September 13‒26, 2017. The mission reached a staff level agreement with the Seychellois authorities on their economic program which could be supported by a new 3-year IMF arrangement under the Policy Coordination Instrument (PCI) . Subject to IMF management approval, the staff-level agreement is expected to be submitted to the IMF Executive Board for its consideration in December 2017. Under the arrangement, Seychelles economic program would be subject to semi-annual reviews.
At the conclusion of the visit, Mr. Sy issued the following statement:
“Seychelles has made considerable progress toward macroeconomic stability under the three consecutive IMF-supported programs. Since the 2008 crisis, the authorities have implemented prudent macroeconomic policies together with bold structural reforms. These led to strong economic growth as well as noticeable improvement in fiscal and external position as well as a reduction in debt. Consequently, Seychelles’ external reserve buffers have reached a comfortable level and the country does not need the IMF’s financial assistance now.”
“Notwithstanding remarkable progress in recent years, Seychelles still faces vulnerabilities and pressures, as a small island economy in a challenging global economic environment. The authorities have requested a program to consolidate macroeconomic stabilization, enhance resilience, and foster sustained and inclusive growth to be supported under the IMF’s new PCI. Seychelles is the first IMF member country to request a PCI.”
“Macroeconomic performance has been robust in 2017. The external current account deficit is estimated to have narrowed, supported by strong tourism arrivals. Reflecting this, economic growth for 2017 is projected to reach around 4 percent. With the economy performing well, the primary fiscal surplus is expected to reach 2.5 percent of GDP this year in line with the authorities’ target.”
“The growth outlook for 2018 remains positive, buoyed by the tourism sector. While a strengthening in international commodity prices could have some negative impacts on the balance of payments, the country’s international reserves coverage is expected to remain at an adequate level, anchored by the authorities’ prudent policies. Downside risks to the outlook largely lie in the external factors which could dampen tourism performance.”
“The mission concurred with the authorities on the need to make progress in enhancing medium-term growth prospects, including building up infrastructure, and resilience to climate change. However, this should be done in a prudent manner that allows fiscal and monetary policies to continue anchoring economic stability and strengthening fiscal sustainability. In this context, the mission discussed a number of potential measures with the authorities to ensure continued fiscal discipline and progress towards the authorities’ debt reduction goals. The Central Bank of Seychelles (CBS) should also remain vigilant to any signs of inflationary pressures.”
“The mission met with His Excellency President Danny Faure, Minister of Finance, Trade, and Planning Peter Larose, and Governor of the CBS Caroline Abel, as well as other members of the government, members of the National Assembly, and representatives of the private sector and civil society.”
“The mission appreciates the open and constructive dialogue and thanks the authorities for their hospitality.”
 The Policy Coordination Instrument (PCI) is the Fund’s new non-financing Fund instrument that supports countries seeking assistance to develop and help monitor a reform agenda. It is designed for countries that are seeking to unlock financing from multiple sources and/or to demonstrate a commitment to a reform agenda. It enables a closer policy dialogue between the Fund and countries, more regular monitoring of economic developments and policies, as well as Board endorsement of those policies. The PCI is available for all member countries.
Distributed by APO Group on behalf of International Monetary Fund (IMF).