IMF Executive Board Approves a US$31.2 Million Purchase in Emergency Assistance to Seychelles to Address the COVID-19 Pandemic

IMF News, May 8, 2020

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The Executive Board approved Seychelles’ request for emergency financial assistance under the Rapid Financing Instrument (RFI).
The RFI amount: SDR 22.9 million (about US$31.2 million, or 100 percent of quota).
Purpose: to meet the country’s urgent balance of payment needs stemming from the COVID-19 pandemic and to soften the hit on the budget.

The near-term economic fallout of the COVID-19 pandemic is expected to be severe.
Key channels of impact:
- Travel restrictions and the subsequent loss of tourism receipts are sharply reducing economic activity.
- Fiscal and external positions are weakening, creating large additional financing needs.

Immediate containment and support measures taken by the authorities include:
- Border closures.
- Strengthening health policy responses.
- Supporting households and firms.
The central bank provided emergency assistance and maintained a flexible exchange rate.
The resilience of the banking system is highlighted as crucial to restoring external and internal balances.
The central bank should remain vigilant to potential market stress and emerging risks to financial markets.

The RFI will provide timely resources to address urgent balance of payments and budgetary needs.
The IMF will continue to monitor Seychelles’ situation closely and remain in close dialogue with the authorities.
The assistance of other international financial institutions and development partners is described as crucial to:
- Close the remaining financing gaps.
- Ease the adjustment burden.
- Preserve economic growth.

The authorities committed to transparency and good governance in the use of emergency financing by:
- Providing monthly reports of pandemic-related expenditure to the National Assembly.
- Undertaking an independent audit of such spending and procurement and publishing the results.

Excerpted points:
- “Seychelles’ hard-won economic gains since the 2008 crisis, supported by successive Fund arrangements, are being eroded by the severe impact of the COVID-19 pandemic.”
- “A temporary fiscal expansion as well as expeditious external support are needed to address the large output contraction.”
- “Once the pandemic dissipates and confidence is restored, the authorities are committed to return to a fiscal stance that stabilizes debt.”
- “The emergency IMF support under the Rapid Financing Instrument provides timely resources to the authorities to address the urgent balance of payments and budgetary needs.”

Press Release No. 20/212 — May 8, 2020; IMF Communications Department.