## SEYCHELLES — INTERIM PERFORMANCE UPDATE UNDER THE POLICY COORDINATION INSTRUMENT — SECTION 1

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---

### Executive summary
- Context:
  - COVID-19 has had a severe economic impact on Seychelles through strict domestic containment measures and related global spillovers.
  - Executive Board approved emergency financing under the Rapid Financing Instrument (RFI) of SDR 22.9 million, equivalent to 100 percent of quota.
- Summary of program status:
  - Performance under the program had been strong until end-2019; four reviews under the PCI were concluded on time.
  - The 5th review under the PCI could not be completed within the three-month grace period of the scheduled review date (July 31, 2020) due to large uncertainty around the near-term outlook and rapidly adapting travel restrictions.
  - All end-December 2019 quantitative targets for the 5th review were met.
  - The heavy toll of the pandemic has pushed the fiscal targets for end-June 2020 out-of-reach, though progress in structural reforms continues.
- Key near-term guidance:
  - Authorities would need to identify fiscal saving measures to shore up medium-term fiscal consolidation in view of substantial risks to debt sustainability.

### Recent economic developments
- Impact and immediate policy response:
  - Seychelles’ heavy dependence on tourism has resulted in a severe economic impact.
  - 2020 tourism receipts are expected to fall by 64 percent compared to 2019.
  - To address urgent BOP needs, RFI financing of SDR 22.9 million was approved.
  - Authorities have successfully prevented a local outbreak and are gradually reopening the border; passenger flights allowed from June 1, 2020 (chartered) and some commercial flights expected from August 1, 2020.
  - Central Bank of Seychelles (CBS) cut the policy rate by 100 basis points effective July 1, 2020; market reaction was muted.
  - Nominal exchange rates stable since late May; inflation contained so far.
- Revised outlook and projections:
  - Global downturn and prolonged travel restrictions have worsened the near-term outlook.
  - Tourist arrivals in 2020 are expected to decline by about two thirds (compared with a 50 percent decline anticipated in May 2020).
  - Real GDP:
    - Projected to decline by almost 14 percent in 2020 (compared with a previously projected contraction of almost 11 percent).
    - Projected growth: 4¼ percent in 2021; 5½ percent in 2022; gradually moderate to around 4 percent over the medium term.
  - Fiscal implications:
    - Growth shock reduces fiscal revenue by about 1¼ percent of GDP in 2020 compared with the projection at the time of the RFI request.
    - Authorities reformed wage subsidy measures, maintaining the nominal cap of spending on wage subsidies at 5¼ percent of GDP in 2020.
    - Execution of capital expenditures in 2020 expected to be higher by about 1¼ percent of GDP.
    - Primary deficit expected to reach 12¼ percent of GDP in 2020.
    - Debt-to-GDP ratio expected to increase to about 90 percent by end-2020, due to widening fiscal deficit and further depreciation of Seychelles rupee since late April.
    - Current account deficit expected to reach about 27 percent of GDP in 2020.
  - External financing and reserves:
    - External financing needs for 2020 expected to be covered by IFI support (about $55 million by the World Bank and African Development Bank), notably RFI financing ($31 million) and a reduction of gross international reserves (GIR).
    - GIR expected to decline to slightly below 100 percent of the Fund’s standard reserve adequacy (ARA) metric at end-2020.
- Risks:
  - Downside risks remain substantial; medium-term recovery contingent on resumption of tourism and capital flows.
  - Staff assumes global tourism demand rebounds from 2021 and tourist arrivals return to 2019 level by 2025.
  - A protracted global normalization or resurgence of the pandemic would delay recovery or deepen the slump.

### Program issues
- Performance through end-2019:
  - The first four PCI reviews concluded on time.
  - All end-December 2019 QTs for the 5th review were met: floors on the primary fiscal surplus and net international reserves (NIR) were both exceeded by comfortable margins; 12-month average inflation at end-2019 was within the inner bound of the MPCC; continuous targets observed.
- 5th and 6th review status:
  - The 5th review could not be completed by deadline (July 31, 2020) given extreme uncertainty and changed outlook.
  - PCI targets for the 6th review were set pre-pandemic; the end-June 2020 QT on the fiscal primary surplus is likely to be missed by a significant margin.
  - Preliminary data indicate the end-June 2020 QT on NIR was met with a comfortable margin; inflation at end-June 2020 was within the inner bound of the MPCC.
  - Progress on 6th review RTs is generally in line with prior understandings, except for draft legislation on crisis management, bank resolution and safety nets (postponed).
- Structural and contingent liabilities:
  - RT on legal framework for a risk-based approach to AML/CFT supervision was met in March 2020.
  - RT on legal framework to strengthen entity transparency was partially implemented in April 2020; full implementation requires further reform on publication and access to beneficial ownership information of legal entities and legal arrangements created in Seychelles.
  - Operational and governance assessment of Air Seychelles to be submitted to Cabinet by end-July (delayed); authorities are discussing Air Seychelles’ future with other shareholder to minimize fiscal risks.
- Fiscal consolidation and financing needs:
  - End-2020 primary fiscal balance and public debt-to-GDP ratio expected to deteriorate further relative to values at the time of the RFI request.
  - After the pandemic, measures should be taken to improve the primary fiscal balance from 2021 onwards, broadly in line with those illustrated at the time of the RFI request.
  - Public debt-to-GDP ratio projected to steadily decline from over 90 percent at end-2020 to around 65 percent by 2025, assuming measures and additional support.
  - Since the RFI request, risks to debt sustainability have heightened due to sharp increase in public debt ratio, substantial gross financing needs, downward growth revisions, and uncovered financing gaps from 2021 onward.
  - Authorities would need to seek additional external budget support from 2021 onwards and undertake ambitious fiscal consolidation and structural reforms.
  - Macro framework assumes unidentified external budget support loans of $50 million in 2021 and $30 million each year during 2022–25.
- Transparency and oversight:
  - Government submitting monthly reports of emergency spending on wage subsidies, health, and social spending to the Finance Public Accounts Committee (FPAC) of the National Assembly per RFI commitment.
  - Authorities committed to an independent audit of emergency spending and related procurement processes and publishing results.
- Preconditions for 6th review:
  - Policy discussions will continue ahead of the 6th and final review before the PCI expires in December 2020.
  - A full Debt Sustainability Analysis (DSA) will be a prerequisite for completion of the 6th review.

### Continuous targets
- Not to impose or intensify restrictions on the making of payments and transfers for current international transactions
- Not to introduce or modify multiple currency practices
- Not to conclude bilateral payments agreements that are inconsistent with Article VIII
- Not to impose or intensify import restrictions for balance of payments reasons

### Key statistics and selected indicators (excerpts)
- Nominal GDP (2017): US$1,498 million
- Per capita GDP (2017): US$15,735
- Population, end-year (2016): 94,677
- Literacy rate (2015): 95.3 percent
- Main products and exports: Tourism, Canned Tuna
- Nominal GDP (millions of Seychelles rupees), 2016–25 (selected rows shown in source table):
  - 2016 Act.: 19,002
  - 2017 Act.: 20,806
  - 2018 Act.: 22,064
  - 2019 Act.: 23,191
  - 2020 Prel.: 20,724
  - 2021 Proj.: 22,234
  - 2022 Proj.: 24,075
  - 2023 Proj.: 25,995
  - 2024 Proj.: 27,891
  - 2025 Proj.: 29,865
- Real GDP growth (annual):
  - 2016 Act.: 4.6
  - 2017 Act.: 4.4
  - 2018 Act.: 3.8
  - 2019 Act.: 3.9
  - 2020 Prel.: -13.8
  - 2021 Proj.: 4.2
  - 2022 Proj.: 5.5
  - 2023 Proj.: 4.8
  - 2024 Proj.: 4.2
  - 2025 Proj.: 4.0
- CPI (annual average):
  - 2016 Act.: -1.0
  - 2017 Act.: 2.9
  - 2018 Act.: 3.7
  - 2019 Act.: 1.8
  - 2020 Prel.: 3.9
  - 2021 Proj.: 2.9
  - 2022 Proj.: 2.9
  - 2023–2025 Proj.: 3.0 (each year)
- Other monetary indicators (selected):
  - Broad money, 2016 Act.: 12.1; 2017 Act.: 16.4; 2018 Act.: 7.7; 2019 Act.: 13.9; 2020 Prel.: -6.3
  - Reserve money (end-of-period), 2016 Act.: 14.5; 2017 Act.: 18.9; 2018 Act.: 4.5; 2019 Act.: 22.7; 2020 Prel.: -6.4
  - Money multiplier (broad money/reserve money), 2016 Act.: 4.6; 2017 Act.: 4.5; 2018 Act.: 4.6; 2019 Act.: 4.3; 2020 Prel.: 4.3
  - Credit to the private sector, 2016 Act.: 10.3; 2017 Act.: 17.8; 2018 Act.: 11.5; 2019 Act.: 22.3; 2020 Prel.: 10.5

### Savings–Investment balance (selected series)
- External savings: 20.6; 20.1; 17.9; 16.7; 27.0; 25.3; 23.8; 21.3; 19.3; 18.6
- Gross national savings: 9.7; 8.8; 8.6; 9.5; -1.9; 4.2; 5.4; 7.9; 8.4; 9.1
  - Of which: government savings: 3.8; 3.7; 4.2; 4.4; -13.6; -4.6; -0.8; 2.8; 3.7; 4.8
  - Of which: private savings: 5.9; 5.0; 4.4; 5.1; 11.7; 8.8; 6.3; 5.2; 4.7; 4.3
- Gross investment: 30.2; 28.9; 26.6; 26.2; 25.2; 29.4; 29.3; 29.2; 27.7; 27.7
  - Of which: public investment 1: 5.0; 4.4; 5.1; 3.7; 5.2; 6.4; 5.8; 5.7; 5.7; 5.7
  - Private investment: 25.2; 24.5; 21.5; 22.5; 20.0; 23.0; 23.5; 23.5; 22.0; 22.0
- Private consumption: 47.1; 51.3; 52.7; 53.1; 49.6; 51.3; 53.0; 52.1; 52.2; 52.4

### Government budget (selected series)
- Total revenue, excluding grants: 36.7; 35.1; 36.2; 36.0; 31.7; 32.9; 33.1; 33.9; 33.8; 33.7
- Expenditure and net lending: 38.1; 36.5; 37.8; 36.1; 51.2; 44.8; 40.5; 39.0; 37.2; 35.7
  - Current expenditure: 33.1; 32.1; 32.8; 32.4; 46.1; 38.4; 35.8; 33.5; 32.2; 30.7
  - Capital expenditure 1: 5.0; 4.4; 5.1; 3.7; 5.1; 6.5; 5.8; 5.7; 5.0; 5.1
- Overall balance, including grants: -1.4; 0.1; 0.7; -0.8; -16.1; -7.1; -5.2; -3.2; -2.1; -0.8
- Program primary balance: 3.4; 3.1; 2.9; 2.7; -12.2; -3.3; -1.7; 0.0; 1.6; 2.5
- Total government and government-guaranteed debt 2: 72.7; 65.8; 60.9; 59.1; 93.1; 89.9; 84.7; 77.4; 71.4; 64.9
  - Domestic (including debt issued for monetary purposes): 40.5; 36.2; 32.3; 32.1; 46.0; 45.3; 42.5; 39.2; 35.3; 29.6
    - of which: Monetary debt: 16.2; 11.2; 9.2; 8.6; 8.2; 6.3; 4.5; 3.1; 1.8; 1.0
  - External: 32.2; 29.7; 28.5; 27.0; 47.2; 44.6; 42.2; 38.2; 36.2; 35.3

### External sector (selected series)
- Current account balance including official transfers (in percent of GDP): -20.6; -20.1; -17.9; -16.7; -27.0; -25.3; -23.8; -21.3; -19.3; -18.6
- Total external debt outstanding (millions of U.S. dollars) 3: 1,505; 1,639; 1,762; 1,875; 1,842; 1,921; 2,010; 2,099; 2,172; 2,200
  - (percent of GDP): 105.5; 107.5; 111.6; 113.6; 153.7; 154.9; 141.5; 130.1; 121.3; 114.8
- Terms of trade (-=deterioration): -13.7; -2.8; -3.3; 6.7; 12.7; -2.7; -0.7; -0.1; 0.2; 0.2
- Gross official reserves (end of year, millions of U.S. dollars): 522.6; 546; 548; 580; 354; 389; 425; 483; 524; 577
  - Months of imports, c.i.f.: 3.7; 3.5; 3.6; 6.1; 2.9; 2.8; 2.8; 3.0; 3.1; 3.2
  - In percent of Assessing Reserve Adequacy (ARA) metric: 131.0; 129.3; 122.9; 129.5; 99.2; 100.7; 103.5; 109.2; 118.6; 124.0
- Exchange rate
  - Seychelles rupees per US$1 (end-of-period) 4: 13.5; 13.8; 14.0; 14.1; 18.1; ...; ...; ...; ...; ...
  - Seychelles rupees per US$1 (period average) 4: 13.3; 13.6; 13.9; 14.0; 16.0; ...; ...; ...; ...; ...

### Quantitative Targets (QTs) Under the PCI, December 2019 – December 2020 (selected)
- Net international reserves of the CBS, millions of U.S. dollars (floor) 1:
  - Projection 396; 3rd Review Act. 409 (Met); 4th Review Act. 403 (Met); Proposed 430 (Met); Prel. 402; Prel. 440 (Met); Projection 208
- Primary balance of the consolidated government (cumulative floor):
  - 265; 254 (Not Met); 584; 615 (Met); 211; N.A.; -2,538
- Accumulation of external payments arrears by the public sector (ceiling) 3:
  - 0.0; 0.0 (Met); 0.0; 0.0 (Met); 0.0; 0.0 (Met); 0.0
- Monetary Policy Consultation Clause 4 (inflation series):
  - Inflation (mid-point, percent) 5: 2.8; 2.7; 1.8; 1.8; 1.8; 1.0; 3.9
  - Inflation (upper bound, percent) 5: 4.8; 3.8; 3.8; 5.9
  - Inflation (lower bound, percent) 5: 0.8; -0.2; -0.2; 1.9
  - Inflation (upper inner-bound, percent) 5: 4.3; 3.3; 3.3; 5.4
  - Inflation (lower inner-bound, percent) 5: 1.3; 0.3; 0.3; 2.4
- Memorandum item:
  - Nominal public debt (millions of Seychelles Rupees, ceiling) 1 2: 13,301; 13,001; 14,257; 13,361; 14,352; N.A.; 17,117
- Program accounting exchange rates 6 (SR/US$ (end-of-quarter)): 14.02; 14.06; 14.06; 14.06

### Reform Targets Under the PCI, 2019–20 (selected)
- State-Owned Enterprises (SOEs)
  - Submit the amendments on Public Enterprise Monitoring Committee (PEMC) Act to the Cabinet to strengthen enforcement power of PEMC.
    - Timing: End September 2019 (4th review)
    - Status: Not met. To be implemented in September 2020.
  - Submit operational and governance assessments of Air Seychelles to the Cabinet.
    - Timing: End December 2019 (5th review)
    - Status: Not met. To be implemented in July 2020.
- Business environment
  - Submit the policy paper on the draft amendments to the Companies Act and Insolvency Act to the Cabinet.
    - Timing: End September 2020 (6th review)
    - Objective/Status: Improve Business environment. On track to be implemented on time.
- Financial Sector Stability
  - Submit to the Cabinet amendments to legal framework that allows to implement a risk-based approach to the supervision of banks and trusts and company service providers, consistent with the FATF standard.
    - Timing: End-March 2020 (5th review)
    - Status: Met.
  - Submit draft legislation for crisis management, bank resolution, and safety nets to the Cabinet.
    - Timing: End-November 2020 (6th review), reset from end-March 2020
    - Status: Will be delayed to November 2021.
  - Submit a policy framework paper for an implementation of Basel II pillar 1 and Basel III capital definition to the Cabinet.
    - Timing: End-December 2019 (5th review)
    - Status: Strengthen macro prudential framework. On track to be implemented on time.
  - Submit a policy framework paper on Financial Stability Act to the Cabinet to assign macro prudential power to relevant institutions.
    - Timing: End-September 2020 (6th review)
    - Status: Will be delayed to end-June 2021.
  - Submit amendments to the Cabinet to the legal framework to strengthen entity transparency (including on basic and beneficial ownership information on the domestic companies and international financial services companies and the establishment of a master registry of beneficial owners) in line with the FATF standard and the IMF’s capacity development recommendations.
    - Timing: End-March 2020 (5th review)
    - Status: Not met. It was partially implemented in March 2020.

*IMF Country Report No. 20/272 — Seychelles: Interim Performance Update under the Policy Coordination Instrument — Section 1.*

### Section 1

### SEYCHELLES — INTERIM PERFORMANCE UPDATE UNDER THE POLICY COORDINATION INSTRUMENT — SECTION 1

### Executive summary
- Context:
  - COVID-19 has had a severe economic impact on Seychelles through strict domestic containment measures and related global spillovers.
  - Executive Board approved emergency financing under the Rapid Financing Instrument (RFI) of SDR 22.9 million, equivalent to 100 percent of quota.
- Summary of program status:
  - Performance under the program had been strong until end-2019; four reviews under the PCI were concluded on time.
  - The 5th review under the PCI could not be completed within the three-month grace period of the scheduled review date (July 31, 2020) due to large uncertainty around the near-term outlook and rapidly adapting travel restrictions.
  - All end-December 2019 quantitative targets for the 5th review were met.
  - The heavy toll of the pandemic has pushed the fiscal targets for end-June 2020 out-of-reach, though progress in structural reforms continues.
- Key near-term guidance:
  - Authorities would need to identify fiscal saving measures to shore up medium-term fiscal consolidation in view of substantial risks to debt sustainability.

*Approved by David Owen (AFR) and Chad Steinberg (SPR); prepared by a staff team headed by Ms. Yontcheva.*

### Recent economic developments
- Impact and immediate policy response:
  - Seychelles’ heavy dependence on tourism has resulted in a severe economic impact.
  - 2020 tourism receipts are expected to fall by 64 percent compared to 2019.
  - To address urgent BOP needs, RFI financing of SDR 22.9 million was approved.
  - Authorities have successfully prevented a local outbreak and are gradually reopening the border; passenger flights allowed from June 1, 2020 (chartered) and some commercial flights expected from August 1, 2020.
  - Central Bank of Seychelles (CBS) cut the policy rate by 100 basis points effective July 1, 2020; market reaction was muted.
  - Nominal exchange rates stable since late May; inflation contained so far.
- Revised outlook and projections:
  - Global downturn and prolonged travel restrictions have worsened the near-term outlook.
  - Tourist arrivals in 2020 are expected to decline by about two thirds (compared with a 50 percent decline anticipated in May 2020).
  - Real GDP:
    - Projected to decline by almost 14 percent in 2020 (compared with a previously projected contraction of almost 11 percent).
    - Projected growth: 4¼ percent in 2021; 5½ percent in 2022; gradually moderate to around 4 percent over the medium term.
  - Fiscal implications:
    - Growth shock reduces fiscal revenue by about 1¼ percent of GDP in 2020 compared with the projection at the time of the RFI request.
    - Authorities reformed wage subsidy measures, maintaining the nominal cap of spending on wage subsidies at 5¼ percent of GDP in 2020.
    - Execution of capital expenditures in 2020 expected to be higher by about 1¼ percent of GDP.
    - Primary deficit expected to reach 12¼ percent of GDP in 2020.
    - Debt-to-GDP ratio expected to increase to about 90 percent by end-2020, due to widening fiscal deficit and further depreciation of Seychelles rupee since late April.
    - Current account deficit expected to reach about 27 percent of GDP in 2020.
  - External financing and reserves:
    - External financing needs for 2020 expected to be covered by IFI support (about $55 million by the World Bank and African Development Bank), notably RFI financing ($31 million) and a reduction of gross international reserves (GIR).
    - GIR expected to decline to slightly below 100 percent of the Fund’s standard reserve adequacy (ARA) metric at end-2020.
- Risks:
  - Downside risks remain substantial; medium-term recovery contingent on resumption of tourism and capital flows.
  - Staff assumes global tourism demand rebounds from 2021 and tourist arrivals return to 2019 level by 2025.
  - A protracted global normalization or resurgence of the pandemic would delay recovery or deepen the slump.

### Program issues
- Performance through end-2019:
  - The first four PCI reviews concluded on time.
  - All end-December 2019 QTs for the 5th review were met: floors on the primary fiscal surplus and net international reserves (NIR) were both exceeded by comfortable margins; 12-month average inflation at end-2019 was within the inner bound of the MPCC; continuous targets observed.
- 5th and 6th review status:
  - The 5th review could not be completed by deadline (July 31, 2020) given extreme uncertainty and changed outlook.
  - PCI targets for the 6th review were set pre-pandemic; the end-June 2020 QT on the fiscal primary surplus is likely to be missed by a significant margin.
  - Preliminary data indicate the end-June 2020 QT on NIR was met with a comfortable margin; inflation at end-June 2020 was within the inner bound of the MPCC.
  - Progress on 6th review RTs is generally in line with prior understandings, except for draft legislation on crisis management, bank resolution and safety nets (postponed).
- Structural and contingent liabilities:
  - RT on legal framework for a risk-based approach to AML/CFT supervision was met in March 2020.
  - RT on legal framework to strengthen entity transparency was partially implemented in April 2020; full implementation requires further reform on publication and access to beneficial ownership information of legal entities and legal arrangements created in Seychelles.
  - Operational and governance assessment of Air Seychelles to be submitted to Cabinet by end-July (delayed); authorities are discussing Air Seychelles’ future with other shareholder to minimize fiscal risks.
- Fiscal consolidation and financing needs:
  - End-2020 primary fiscal balance and public debt-to-GDP ratio expected to deteriorate further relative to values at the time of the RFI request.
  - After the pandemic, measures should be taken to improve the primary fiscal balance from 2021 onwards, broadly in line with those illustrated at the time of the RFI request.
  - Public debt-to-GDP ratio projected to steadily decline from over 90 percent at end-2020 to around 65 percent by 2025, assuming measures and additional support.
  - Since the RFI request, risks to debt sustainability have heightened due to sharp increase in public debt ratio, substantial gross financing needs, downward growth revisions, and uncovered financing gaps from 2021 onward.
  - Authorities would need to seek additional external budget support from 2021 onwards and undertake ambitious fiscal consolidation and structural reforms.
  - Macro framework assumes unidentified external budget support loans of $50 million in 2021 and $30 million each year during 2022–25.
- Transparency and oversight:
  - Government submitting monthly reports of emergency spending on wage subsidies, health, and social spending to the Finance Public Accounts Committee (FPAC) of the National Assembly per RFI commitment.
  - Authorities committed to an independent audit of emergency spending and related procurement processes and publishing results.
- Preconditions for 6th review:
  - Policy discussions will continue ahead of the 6th and final review before the PCI expires in December 2020.
  - A full Debt Sustainability Analysis (DSA) will be a prerequisite for completion of the 6th review.

### Continuous targets (Box 1)
- Not to impose or intensify restrictions on the making of payments and transfers for current international transactions
- Not to introduce or modify multiple currency practices
- Not to conclude bilateral payments agreements that are inconsistent with Article VIII
- Not to impose or intensify import restrictions for balance of payments reasons

### Key statistics and selected indicators (excerpts)
- Nominal GDP (2017): US$1,498 million
- Per capita GDP (2017): US$15,735
- Population, end-year (2016): 94,677
- Literacy rate (2015): 95.3 percent
- Main products and exports: Tourism, Canned Tuna
- Nominal GDP (millions of Seychelles rupees), 2016–25 (selected rows shown in source table):
  - 2016 Act.: 19,002
  - 2017 Act.: 20,806
  - 2018 Act.: 22,064
  - 2019 Act.: 23,191
  - 2020 Prel.: 20,724
  - 2021 Proj.: 22,234
  - 2022 Proj.: 24,075
  - 2023 Proj.: 25,995
  - 2024 Proj.: 27,891
  - 2025 Proj.: 29,865
- Real GDP growth (annual):
  - 2016 Act.: 4.6
  - 2017 Act.: 4.4
  - 2018 Act.: 3.8
  - 2019 Act.: 3.9
  - 2020 Prel.: -13.8
  - 2021 Proj.: 4.2
  - 2022 Proj.: 5.5
  - 2023 Proj.: 4.8
  - 2024 Proj.: 4.2
  - 2025 Proj.: 4.0
- CPI (annual average):
  - 2016 Act.: -1.0
  - 2017 Act.: 2.9
  - 2018 Act.: 3.7
  - 2019 Act.: 1.8
  - 2020 Prel.: 3.9
  - 2021 Proj.: 2.9
  - 2022 Proj.: 2.9
  - 2023–2025 Proj.: 3.0 (each year)
- Other monetary indicators (selected):
  - Broad money, 2016 Act.: 12.1; 2017 Act.: 16.4; 2018 Act.: 7.7; 2019 Act.: 13.9; 2020 Prel.: -6.3
  - Reserve money (end-of-period), 2016 Act.: 14.5; 2017 Act.: 18.9; 2018 Act.: 4.5; 2019 Act.: 22.7; 2020 Prel.: -6.4
  - Money multiplier (broad money/reserve money), 2016 Act.: 4.6; 2017 Act.: 4.5; 2018 Act.: 4.6; 2019 Act.: 4.3; 2020 Prel.: 4.3
  - Credit to the private sector, 2016 Act.: 10.3; 2017 Act.: 17.8; 2018 Act.: 11.5; 2019 Act.: 22.3; 2020 Prel.: 10.5

*IMF Country Report No. 20/272 — Seychelles: Interim Performance Update under the Policy Coordination Instrument — Section 1.*

### Section 2

### Section 2

### Savings–Investment balance
- External savings: 20.6; 20.1; 17.9; 16.7; 27.0; 25.3; 23.8; 21.3; 19.3; 18.6
- Gross national savings: 9.7; 8.8; 8.6; 9.5; -1.9; 4.2; 5.4; 7.9; 8.4; 9.1
  - Of which: government savings: 3.8; 3.7; 4.2; 4.4; -13.6; -4.6; -0.8; 2.8; 3.7; 4.8
  - Of which: private savings: 5.9; 5.0; 4.4; 5.1; 11.7; 8.8; 6.3; 5.2; 4.7; 4.3
- Gross investment: 30.2; 28.9; 26.6; 26.2; 25.2; 29.4; 29.3; 29.2; 27.7; 27.7
  - Of which: public investment 1: 5.0; 4.4; 5.1; 3.7; 5.2; 6.4; 5.8; 5.7; 5.7; 5.7
  - Private investment: 25.2; 24.5; 21.5; 22.5; 20.0; 23.0; 23.5; 23.5; 22.0; 22.0
- Private consumption: 47.1; 51.3; 52.7; 53.1; 49.6; 51.3; 53.0; 52.1; 52.2; 52.4

### Government budget
- Total revenue, excluding grants: 36.7; 35.1; 36.2; 36.0; 31.7; 32.9; 33.1; 33.9; 33.8; 33.7
- Expenditure and net lending: 38.1; 36.5; 37.8; 36.1; 51.2; 44.8; 40.5; 39.0; 37.2; 35.7
  - Current expenditure: 33.1; 32.1; 32.8; 32.4; 46.1; 38.4; 35.8; 33.5; 32.2; 30.7
  - Capital expenditure 1: 5.0; 4.4; 5.1; 3.7; 5.1; 6.5; 5.8; 5.7; 5.0; 5.1
- Overall balance, including grants: -1.4; 0.1; 0.7; -0.8; -16.1; -7.1; -5.2; -3.2; -2.1; -0.8
- Program primary balance: 3.4; 3.1; 2.9; 2.7; -12.2; -3.3; -1.7; 0.0; 1.6; 2.5
- Total government and government-guaranteed debt 2: 72.7; 65.8; 60.9; 59.1; 93.1; 89.9; 84.7; 77.4; 71.4; 64.9
  - Domestic (including debt issued for monetary purposes): 40.5; 36.2; 32.3; 32.1; 46.0; 45.3; 42.5; 39.2; 35.3; 29.6
    - of which: Monetary debt: 16.2; 11.2; 9.2; 8.6; 8.2; 6.3; 4.5; 3.1; 1.8; 1.0
  - External: 32.2; 29.7; 28.5; 27.0; 47.2; 44.6; 42.2; 38.2; 36.2; 35.3

### External sector
- Current account balance including official transfers (in percent of GDP): -20.6; -20.1; -17.9; -16.7; -27.0; -25.3; -23.8; -21.3; -19.3; -18.6
- Total external debt outstanding (millions of U.S. dollars) 3: 1,505; 1,639; 1,762; 1,875; 1,842; 1,921; 2,010; 2,099; 2,172; 2,200
  - (percent of GDP): 105.5; 107.5; 111.6; 113.6; 153.7; 154.9; 141.5; 130.1; 121.3; 114.8
- Terms of trade (-=deterioration): -13.7; -2.8; -3.3; 6.7; 12.7; -2.7; -0.7; -0.1; 0.2; 0.2
- Real effective exchange rate (average, percent change): -0.1; -3.2; ...; ...; ...; ...; ...; ...; ...; ...
- Gross official reserves (end of year, millions of U.S. dollars): 522.6; 546; 548; 580; 354; 389; 425; 483; 524; 577
  - Months of imports, c.i.f.: 3.7; 3.5; 3.6; 6.1; 2.9; 2.8; 2.8; 3.0; 3.1; 3.2
  - In percent of Assessing Reserve Adequacy (ARA) metric: 131.0; 129.3; 122.9; 129.5; 99.2; 100.7; 103.5; 109.2; 118.6; 124.0
- Exchange rate
  - Seychelles rupees per US$1 (end-of-period) 4: 13.5; 13.8; 14.0; 14.1; 18.1; ...; ...; ...; ...; ...
  - Seychelles rupees per US$1 (period average) 4: 13.3; 13.6; 13.9; 14.0; 16.0; ...; ...; ...; ...; ...

Sources: Central Bank of Seychelles; Ministry of Finance; and IMF staff estimates and projections.
- Note 1: Includes onlending to the parastatals for investment purposes.
- Note 2: Includes debt issued by the Ministry of Finance for monetary purposes.
- Note 3: Includes private external debt.
- Note 4: As to 2020, exchange rate measured as of July 14, 2020.

### Table 2. Seychelles: Quantitative Targets (QTs) Under the PCI, December 2019 – December 2020
- Net international reserves of the CBS, millions of U.S. dollars (floor) 1: Projection 396; 3rd Review Act. 409 (Met); 4th Review Act. 403 (Met); Proposed 430 (Met); Prel. 402; Prel. 440 (Met); Projection 208
- Primary balance of the consolidated government (cumulative floor): 265; 254 (Not Met); 584; 615 (Met); 211; N.A.; -2,538
- Accumulation of external payments arrears by the public sector (ceiling) 3: 0.0; 0.0 (Met); 0.0; 0.0 (Met); 0.0; 0.0 (Met); 0.0
- Monetary Policy Consultation Clause 4
  - Inflation (mid-point, percent) 5: 2.8; 2.7; 1.8; 1.8; 1.8; 1.0; 3.9
  - Inflation (upper bound, percent) 5: 4.8; 3.8; 3.8; 5.9
  - Inflation (lower bound, percent) 5: 0.8; -0.2; -0.2; 1.9
  - Inflation (upper inner-bound, percent) 5: 4.3; 3.3; 3.3; 5.4
  - Inflation (lower inner-bound, percent) 5: 1.3; 0.3; 0.3; 2.4
- Memorandum items:
  - Nominal public debt (millions of Seychelles Rupees, ceiling) 1 2: 13,301; 13,001; 14,257; 13,361; 14,352; N.A.; 17,117
- Program accounting exchange rates 6 (SR/US$ (end-of-quarter)): 14.02; 14.06; 14.06; 14.06
  - US$/Euro (end-of-quarter): 1.14; 1.10; 1.10; 1.10
  - US$/UK pound (end-of-quarter): 1.33; 1.22; 1.22; 1.22
  - US$/AUD (end-of-quarter): 0.71; 0.67; 0.67; 0.67
  - US$/CAD (end-of-quarter): 0.76; 0.75; 0.75; 0.75
  - US$/CNY (end-of-quarter): 0.15; 0.14; 0.14; 0.14
  - US$/SDR (end-of-quarter): 1.40; 1.37; 1.37; 1.37
- Sources: Seychelles authorities; and IMF staff estimates and projections.
- Notes:
  - 1 Measured at program accounting exchange rate. The NIR floor is adjusted as defined in the TMU.
  - End-June 2019 target is adjusted downward by $7 million due to the shortfall of receipts from sales of Cable and Wireless Company, in accordance with TMU.
  - 2 Nominal public debt includes government guarantees.
  - 3 The nonaccumulation of new external payment arrears constitutes a standard continuous target. Excludes arrears for which a rescheduling agreement is sought.
  - 4 When the end of period annual average headline inflation is above/below the upper/lower bound, a formal consultation with the Executive Board would be triggered.
  - 5 Average of year-on-year headline inflation for the past 12 months.
  - 6 Program exchange rates have been set according to prevailing market rates at the latest available update.

### Table 3. Seychelles. Reform Targets Under the PCI, 2019–20
- State-Owned Enterprises (SOEs)
  - Submit the amendments on Public Enterprise Monitoring Committee (PEMC) Act to the Cabinet to strengthen enforcement power of PEMC.
    - Timing: End September 2019 (4th review)
    - Status: Not met. To be implemented in September 2020.
  - Submit operational and governance assessments of Air Seychelles to the Cabinet.
    - Timing: End December 2019 (5th review)
    - Status: Not met. To be implemented in July 2020.
- Business environment
  - Submit the policy paper on the draft amendments to the Companies Act and Insolvency Act to the Cabinet.
    - Timing: End September 2020 (6th review)
    - Objective/Status: Improve Business environment. On track to be implemented on time.
- Financial Sector Stability
  - Submit to the Cabinet amendments to legal framework that allows to implement a risk-based approach to the supervision of banks and trusts and company service providers, consistent with the FATF standard.
    - Timing: End-March 2020 (5th review)
    - Status: Met.
  - Submit draft legislation for crisis management, bank resolution, and safety nets to the Cabinet.
    - Timing: End-November 2020 (6th review), reset from end-March 2020
    - Status: Will be delayed to November 2021.
  - Submit a policy framework paper for an implementation of Basel II pillar 1 and Basel III capital definition to the Cabinet.
    - Timing: End-December 2019 (5th review)
    - Status: Strengthen macro prudential framework. On track to be implemented on time.
  - Submit a policy framework paper on Financial Stability Act to the Cabinet to assign macro prudential power to relevant institutions.
    - Timing: End-September 2020 (6th review)
    - Status: Will be delayed to end-June 2021.
  - Submit amendments to the Cabinet to the legal framework to strengthen entity transparency (including on basic and beneficial ownership information on the domestic companies and international financial services companies and the establishment of a master registry of beneficial owners) in line with the FATF standard and the IMF’s capacity development recommendations.
    - Timing: End-March 2020 (5th review)
    - Status: Not met. It was partially implemented in March 2020.

*Source: 1sycea2020003 - Section 2, IMF staff estimates and projections.*

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_Source: https://www.imf.org/-/media/files/publications/cr/2020/english/1sycea2020003.pdf_