IMF Announces Staff Level Agreement with Seychelles on a 3-year Successor Arrangement Under the Extended Fund Facility

Press Release No. 09/379
November 2, 2009

An IMF mission led by Mr. Paul Mathieu visited Victoria during October 19-November 2 to assess performance at end-September for the third review under the Stand-by Arrangement and discuss a new 3-year arrangement under the Extended Fund Facility. The mission met with His Excellency President James Michel, Minister of Finance Danny Faure, and Governor of the Central Bank of Seychelles Pierre Laporte, as well other members of government and representatives of the private sector, parliamentarians, and civil society.

At the conclusion of the visit, the mission issued the following statement:

“An IMF mission and the Seychelles authorities have reached agreement, subject to approval by IMF Management and the Executive Board, on the third Stand-by Arrangement (SBA) review as well as on a successor 3-year arrangement under the Extended Fund Facility (EFF), to replace the current SBA. All the end-September quantitative performance criteria and structural benchmarks were met with margins.

“Rapid progress has been made on restoring macroeconomic stability, the result of the liberalization of the exchange regime, strong fiscal adjustment, and prudent monetary policies. Program implementation has been exemplary, even in the face of strong head winds from the global recession. Strong ownership and broad public support for the reforms have been the keys to the program’s success. Inflation has been near zero since March and the exchange rate has appreciated steadily from lows early in the year. Official external reserves continue to recover from near depleted levels. The economy is responding well to the reforms and the contraction in economic activity will be somewhat less than previously forecast, with real GDP now expected to decline 7.5% in 2009. The economic recovery is expected to strengthen, with economic growth rising to 4 percent in 2010

“The focus now shifts to implementation of a second generation of reforms aimed at putting public finances on a sustainable footing and durably raising growth. The key program objectives are to consolidate macroeconomic stability, remove constraints to growth and improve the performance of the public sector. The reforms include a fundamental overhaul of the tax system, improved management of government finances and performance of public enterprises, and strengthening the financial system.

“Good progress is being made in discussions with external creditors aimed at achieving a comprehensive restructuring of Seychelles’ unsustainable public external debt. The mission encourages the authorities to press ahead with their debt restructuring strategy.

“SDR 2.2 million (US$3.4 million) will be available upon completion of the third SBA review. Access under the EFF arrangement is proposed at 225 percent (SDR 19.8 million; about US$30.3 million) of Seychelles’ IMF quota with 10 percent of quota disbursed upon approval of the arrangement. The first program review under the EFF will be based on end-March 2010 performance, which is expected to be completed in June 2010.”



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