IMF Executive Board Completes the Third Reviews Under the Extended Fund Facility and the Resilience and Sustainability Facility Arrangements and Approves US$12.1 Million Disbursement for Seychelles
IMF News, December 9, 2024
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- Published: December 9, 2024
Review outcome and disbursement
- The Executive Board completed the third reviews of Seychelles’ economic performance under the 36-month Extended Fund Facility (EFF) and Resilience and Sustainability Facility (RSF) Arrangements approved on May 31, 2023.
- The completion allows for an immediate disbursement of about US$12.1 million to help strengthen macroeconomic stability, boost growth, and strengthen fiscal and monetary policy frameworks, while supporting efforts to strengthen resilience to climate change, exploit synergies with other sources of official financing, and catalyze financing for climate-related investments.
- Disbursement details:
- EFF: authorities to draw the equivalent of SDR 6.1 million (about $8 million) under the EFF.
- RSF: authorities to draw the equivalent of SDR 3.1 million (about $4.1 million) under the RSF.
- Cumulative disbursements to date: SDR 24.4 million (about $32.1 million) under the EFF and SDR 9.3 million (about $12.2 million) under the RSF.
Recent macroeconomic performance
- Growth and activity:
- Economic growth in Seychelles appears to have slowed relative to earlier forecasts, reflecting lower tourist arrivals from most regions as well as shorter stays and less spending per tourist.
- Fisheries and related product manufacturing is lower than expected, driven by lower tuna production targets.
- Prices and monetary policy:
- Year-on-year inflation rose to 0.6 percent by September 2024, compared to -2.7 percent in December 2023, due primarily to higher utility tariffs.
- The Central Bank of Seychelles (CBS) has maintained an accommodative monetary stance.
- Fiscal and external:
- Fiscal performance in the first half of the year was tighter than budgeted, driven by robust tax collection.
- Lower than expected tourist arrivals and lower spending per capita is expected to contribute to a wider current account deficit by year-end.
- Gross international reserves rose to $754 million by August 2024, equivalent to 3.5 months of import cover.
- Program implementation:
- All end-June 2024 quantitative performance criteria (QPCs) and all end-September 2024 indicative targets (ITs) were met.
- Good progress on structural benchmarks, though some were delayed or rescheduled due to capacity constraints.
- Three reform measures (RMs) under the RSF for the third review were adjusted, with two extended to September 2025; the third RM—adoption of a National Climate Finance Strategy—was achieved with a short delay.
Outlook and risks
- Projections:
- Real GDP growth is projected at 4.3 percent in 2025, stabilizing at around 3.5 percent in the medium term.
- Average annual inflation is expected to reach 2.3 percent in 2025, stabilizing at around 3 percent thereafter.
- The current account deficit is anticipated to average about 9 percent of GDP over the medium term.
- A balance of payments surplus, supported by modest improvements in the goods and services balance and continued FDI, is projected to raise reserve coverage to approximately 3.8 months of imports.
- Downside risks:
- Rising global commodity prices.
- External shocks to tourism demand.
- Climate change.
Authorities’ priorities and recommended policy directions
- Near-term priorities:
- Bolster economic growth, enhance fiscal and external buffers, and maintain macroeconomic stability.
- Medium-term priorities:
- Gradual fiscal consolidation to reduce the ratio of public debt to GDP while improving the efficiency of public spending.
- Build capacity in public financial management and financial sector supervision—particularly with respect to climate change.
- Structural reform emphasis:
- Revenue administration, public financial and investment management, and governance improvements, including digitalization and fiscal transparency.
- Improve monetary policy implementation framework and strengthen financial system resilience.
- RSF-specific recommendations:
- Strengthen climate-resilience of public investment, integrate climate change into the budget process and financing strategy, and bring climate risks to the fore in financial sector supervision.
- Strengthen climate-related risk management for financial institutions, and undertake climate adaptation and mitigation reforms, including measures to facilitate energy transition.
- From the statement of Mr. Bo Li, Deputy Managing Director and acting Chair:
- “Fiscal consolidation through revenue gains, prudent spending, and improvements in public financial management will help reduce debt and create space for priority expenditure, including social spending and investment in climate change adaptation and mitigation.”
- “The authorities are committed to continue reforms to boost inclusive growth by supporting economic diversification and value added, improving social protection, and investing in human capital.”
Selected economic and financial indicators (extract)
- Nominal GDP (millions of Seychelles rupees): 2021: 25,164; 2022: 29,373; 2023: 30,015; 2024: 31,041; 2025: 33,033; 2026: 35,027; 2027: 37,208; 2028: 39,561; 2029: 42,055.
- Real GDP (millions of Seychelles rupees): 2021: 22,700; 2022: 26,100; 2023: 26,922; 2024: 27,735; 2025: 28,922; 2026: 29,929; 2027: 30,983; 2028: 32,079; 2029: 33,205.
- Real GDP (annual percent change): 2021: 0.6; 2022: 15.0; 2023: 3.2; 2024: 3.0; 2025: 4.3; 2026: 3.5.
- CPI (annual average): 2021: 9.8; 2022: 2.6; 2023: -1.0; 2024: 0.5; 2025: 2.3.
- CPI (end-of-period): 2021: 7.9; 2022: 2.5; 2023: -2.7.
- GDP deflator average: 2021: 2.7; 2022: 1.5; 2023: -0.9; 2024: 0.4; 2025: 2.0.
- Broad money (annual percent change): 2021: -5.1; 2022: 5.8; 2023: 11.3.
- Reserve money (end-of-period): 2021: 11.1; 2022: -3.0; 2023: -3.5.
- Credit to the private sector (annual percent change): 2021: -11.9; 2022: 4.0; 2023: 7.4; 2024: 10.0; 2025: 10.2; 2026: 10.1; 2027: 9.9.
- Gross national savings (percent of GDP): 2021: 16.8; 2022: 15.6; 2023: 17.5; 2024: 14.7; 2025: 17.0; 2026: 16.3; 2027: 16.2; 2028: 17.4.
- Government total revenue, excluding grants (percent of GDP): 2021: 30.3; 2022: 29.5; 2023: 31.5; 2024: 33.9; 2025: 35.3; 2026: 33.4; 2027: 33.1; 2028: 33.0; 2029: 32.9.
- Expenditure and net lending (percent of GDP): 2021: 39.1; 2022: 31.0; 2023: 33.6; 2024: 37.0; 2025: 38.2; 2026: 35.4; 2027: 33.5; 2028: 32.8; 2029: 32.?
- Overall balance, including grants (percent of GDP): 2021: -5.7; 2022: 0.1; 2023: 0.2; 2024: -2.0; 2025: -1.6; 2026: -1.2; 2027: -0.1; 2028: 0.7.
- Total government and government-guaranteed debt (percent of GDP): 2021: 74.5; 2022: 61.4; 2023: 58.6; 2024: 61.5; 2025: 60.8; 2026: 59.1; 2027: 55.9; 2028: 52.5; 2029: 48.7.
- Current account balance including official transfers (percent of GDP): 2021: -8.7; 2022: -7.4; 2023: -7.2; 2024: -10.7; 2025: -9.8; 2026: -9.2; 2027: -9.5; 2028: -9.3; 2029: -8.9.
- Total external debt outstanding (millions of U.S. dollars): 2021: 5,297; 2022: 5,481; 2023: 5,708; 2024: 6,082; 2025: 6,386; 2026: 6,642; 2027: 6,873; 2028: 6,919; 2029: 7,017.
- Gross official reserves (end of year, millions of U.S. dollars): 2021: 702; 2022: 639; 2023: 682; 2024: 806; 2025: 851; 2026: 852; 2027: 889; 2028: 958; 2029: 1,001.
- Months of imports, c.i.f.: 3.1 (2023), 3.8 (2024).
- In percent of Assessing Reserve Adequacy (ARA) metric: 121 (2021); 102 (2022); 104 (2023); 118 (2024); 119 (2025); 116 (2026); 123 (2027); 125 (2028).
- Seychelles rupees per US$1 (end-of-period): 14.1 (2021); 14.2 (2022).
- Seychelles rupees per US$1 (period average): 16.9 (2021); 14.3 (2022); 14.0 (2023).
IMF Executive Board press release, December 9, 2024.