IMF Executive Board Approves US$56 Million Extended Fund Facility Arrangement and US$46 Million under the Resilience and Sustainability Facility for Seychelles
May 31, 2023
- The Executive Board of the International Monetary Fund (IMF) approved today a three-year arrangement for Seychelles under the Extended Fund Facility (EFF), in an amount equivalent to US$56 million, as well as a three-year arrangement under the Resilience and Sustainability Facility (RSF), in an amount equivalent to US$46 million.
- Under the previous EFF approved in 2021, Seychelles has made substantial progress in restoring macroeconomic sustainability after being hard hit by the COVID-19 pandemic. The new EFF will build on this progress and maintain macroeconomic stability, boost inclusive growth, and strengthen fiscal and monetary policy frameworks.
- The RSF will support the Seychellois authorities’ agenda to build resilience to climate change, to exploit synergies with other sources of official financing, and to help catalyze further private financing for climate-related investments.
Washington, DC:The Executive Board of the International Monetary Fund (IMF) approved today for Seychelles a three-year arrangement under the Extended Fund Facility (EFF), in the amount of SDR 42.365 million (about US$56 million), and a three-year arrangement under the Resilience and Sustainability Facility (RSF), in the amount of SDR 34.35 million (about US$46 million).
The new EFF for Seychelles will replace the EFF approved on July 29, 2021 (2021 EFF). Under the 2021 EFF arrangement, the authorities satisfactorily implemented policies to restore macroeconomic stability in the face of multiple shocks, including the COVID-19 pandemic disruptions. All quantitative targets through end-December 2022 were met and all but one structural benchmark were met or implemented with delay. The new EFF will build on progress made under the 2021 EFF to strengthen macroeconomic stability while emphasizing reforms to boost investments in human and physical capital to support inclusive growth. Efforts will also focus on strengthening fiscal and monetary policy frameworks.
The RSF will support the authorities’ agenda to build resilience to climate change by lifting bottlenecks to climate-related investments and by facilitating the integration of climate-related considerations into macroeconomic policies and frameworks. The RSF arrangement for Seychelles, the second in Africa, will exploit synergies with other sources of public financing and help catalyze further private financing for climate-related investments.
Following the Executive Board’s discussion, Gita Gopinath, First Deputy Managing Director and Acting Chair of the Board, issued the following statement:
“Under the 2021 EFF, the Seychellois economy showed resilience to shocks, including the COVID-19 pandemic and Russia’s war in Ukraine. The authorities’ policy measures helped the economy recover quickly from the pandemic-related disruptions and provided necessary support for households and the private sector. Strong growth and better than expected fiscal outturns contributed to the rapid decline in public debt and the restoration of macroeconomic stability. Monetary policy has remained appropriately accommodative in light of moderate inflation. However, the authorities should remain vigilant to signs of inflationary pressures and adjust the monetary policy stance if needed.
The outlook is positive, with tourism almost back to its pre-pandemic level and inflation projected to remain moderate. However, Seychelles continues to face substantial risks, including from global financial and economic developments, which could severely impact tourism, and climate change.
The new EFF arrangement will protect macroeconomic stability and rebuild buffers, while helping to advance the authorities’ reform agenda. Fiscal consolidation efforts through revenue gains, prudent spending, and improvements in Public Financial Management will help reduce debt vulnerabilities and create fiscal space for priority spending, including social spending and investment in climate change adaptation and mitigation. The authorities are also committed to continue reforms to boost inclusive growth by improving social protection targeting and investing in human capital. Reforms are also planned to improve the monetary policy implementation framework and to strengthen the resilience of the financial system.
The authorities plan to leverage the RSF to undertake reforms to remove bottlenecks to, and strengthen the climate-resilience of, public investment. The RSF will also help authorities catalyze further private financing and exploit synergies with other official financing. In particular, the RSF will focus on mainstreaming climate change in the government budget, strengthening climate-related risk management for financial institutions, and undertaking climate adaptation and mitigation reforms, including through measures to facilitate energy transition.”
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Seychelles: Selected Economic Indicators (2020-2028) |
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|
2020 |
2021 |
2022 |
2023 |
2024 |
2025 |
2026 |
2027 |
2028 |
|
|
Act. |
Prel. |
Proj. |
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|
National income and prices |
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|
Nominal GDP (millions of Seychelles rupees) |
21,458 |
23,209 |
26,112 |
27,666 |
29,309 |
31,366 |
33,554 |
35,909 |
38,317 |
|
Real GDP (millions of Seychelles rupees) |
19,987 |
21,062 |
22,966 |
23,952 |
24,943 |
25,908 |
26,901 |
27,942 |
28,948 |
|
Real GDP |
-7.7 |
5.4 |
9.0 |
4.3 |
4.1 |
3.9 |
3.8 |
3.9 |
3.6 |
|
CPI (annual average) |
1.2 |
9.8 |
2.6 |
1.4 |
2.0 |
3.5 |
3.5 |
3.5 |
3.5 |
|
CPI (end-of-period) |
3.8 |
7.9 |
2.5 |
2.2 |
2.4 |
3.6 |
3.5 |
3.5 |
3.5 |
|
GDP deflator average |
0.7 |
2.6 |
3.2 |
1.6 |
1.7 |
3.0 |
3.0 |
3.0 |
3.0 |
|
Money and credit |
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|
Broad money |
29.1 |
5.8 |
4.4 |
… |
… |
… |
… |
… |
… |
|
Reserve money (end-of-period) |
40.4 |
11.1 |
-3.0 |
… |
… |
… |
… |
… |
… |
|
Velocity (GDP/broad money) |
0.9 |
0.9 |
0.9 |
… |
… |
… |
… |
… |
… |
|
Money multiplier (broad money/reserve money) |
3.9 |
3.7 |
4.0 |
… |
… |
… |
… |
… |
… |
|
Credit to the private sector 5 |
20.2 |
-11.9 |
4.9 |
7.3 |
8.0 |
7.8 |
7.6 |
7.4 |
7.4 |
|
Savings-Investment balance |
(Percent of GDP, unless otherwise indicated) |
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|
External savings |
14.0 |
11.0 |
7.6 |
9.5 |
10.1 |
10.7 |
10.7 |
10.8 |
11.5 |
|
Gross national savings |
8.4 |
15.0 |
15.5 |
16.2 |
16.7 |
16.2 |
16.1 |
16.1 |
15.2 |
|
Of which: government savings |
-13.4 |
-3.3 |
0.8 |
1.4 |
2.5 |
4.0 |
5.0 |
6.0 |
6.5 |
|
private savings |
21.8 |
18.3 |
14.7 |
14.8 |
14.2 |
12.2 |
11.0 |
10.1 |
8.7 |
|
Gross investment |
22.3 |
25.9 |
23.1 |
25.7 |
26.8 |
27.0 |
26.8 |
26.8 |
26.7 |
|
Of which: public investment 1 |
4.8 |
5.6 |
2.7 |
5.2 |
6.3 |
6.4 |
6.2 |
6.2 |
6.1 |
|
private investment |
17.5 |
20.3 |
20.4 |
20.5 |
20.5 |
20.6 |
20.6 |
20.6 |
20.6 |
|
Private consumption |
38.5 |
42.8 |
46.8 |
45.6 |
45.3 |
48.0 |
48.8 |
49.6 |
50.3 |
|
Government budget 4 |
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|
Total revenue, excluding grants |
33.3 |
33.0 |
33.3 |
34.3 |
34.8 |
34.9 |
34.9 |
34.7 |
34.6 |
|
Expenditure and net lending |
53.3 |
42.4 |
35.3 |
38.7 |
38.8 |
37.3 |
36.0 |
34.8 |
34.0 |
|
Current expenditure |
46.8 |
36.6 |
32.5 |
33.0 |
32.3 |
31.1 |
29.8 |
28.7 |
28.1 |
|
Capital expenditure 1 |
4.8 |
5.7 |
2.7 |
5.2 |
6.3 |
6.4 |
6.2 |
6.2 |
6.1 |
|
Overall balance, including grants |
-19.0 |
-6.0 |
-1.6 |
-2.9 |
-2.5 |
-1.4 |
-0.2 |
0.8 |
1.3 |
|
Primary balance |
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|
Primary balance |
-15.2 |
-3.2 |
0.7 |
-0.4 |
0.2 |
1.0 |
2.0 |
2.8 |
3.0 |
|
Total government and government-guaranteed debt 2 |
91.9 |
80.8 |
69.2 |
67.6 |
66.0 |
63.1 |
59.6 |
55.3 |
51.2 |
|
External sector |
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|
Current account balance including official transfers
|
-14.0 |
-11.0 |
-7.6 |
-9.5 |
-10.1 |
-10.7 |
-10.7 |
-10.8 |
-11.5 |
|
Total external debt outstanding (millions of U.S. dollars) 3 |
5,049 |
5,261 |
5,391 |
5,584 |
5,791 |
5,994 |
6,111 |
6,191 |
6,050 |
|
(percent of GDP) |
414.2 |
382.9 |
293.2 |
285.0 |
279.0 |
269.8 |
257.2 |
243.4 |
223.0 |
|
Terms of trade (-=deterioration) |
10.6 |
-5.0 |
-8.4 |
1.8 |
6.4 |
5.3 |
0.0 |
0.0 |
0.0 |
|
Gross official reserves (end of year, millions of U.S. dollars) |
575 |
702 |
639 |
655 |
700 |
787 |
824 |
847 |
858 |
|
Months of imports, c.i.f. |
3.8 |
3.7 |
3.6 |
3.4 |
3.5 |
3.8 |
3.8 |
3.8 |
3.7 |
|
In percent of Assessing Reserve Adequacy (ARA) metric |
111 |
119 |
100 |
100 |
102 |
112 |
115 |
117 |
115 |
|
Exchange rate |
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|
Seychelles rupees per US$1 (end-of-period) |
21.0 |
14.7 |
14.3 |
… |
… |
… |
… |
… |
… |
|
Seychelles rupees per US$1 (period average) |
17.6 |
16.9 |
14.2 |
… |
… |
… |
… |
… |
… |
|
Sources: Central Bank of Seychelles; Ministry of Finance; and IMF staff estimates and projections. |
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1Includes onlending to the parastatals for investment purposes. |
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2Includes debt issued by the Ministry of Finance for monetary purposes. |
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3Includes private external debt. |
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4The fiscal program targets at the approval of the EFF are now presented in percent of the new GDP. |
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