Press Release: IMF Completes the First Review Under the Extended Fund Facility Arrangement for Seychelles and Approves US$3.3 Million Disbursement

IMF News, June 30, 2010

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Canonical URL: Press Release: IMF Completes the First Review Under the Extended Fund Facility Arrangement for Seychelles and Approves US$3.3 Million Disbursement

The Executive Board completed the first review of Seychelles’ performance under the three-year Extended Fund Facility (EFF).
Disbursement made: SDR 2.2 million (about US$3.3 million).
Total disbursements under the arrangement to date: SDR 5.28 million (about US$7.8 million).
The Board’s decision was taken on a lapse of time basis.
The EFF for Seychelles became effective on December 23, 2009 in the amount of SDR 19.8 million (about US$29.3 million, or 225 percent of Seychelles’ quota in the Fund).

Real gross domestic product (GDP) grew by 0.7 percent in 2009.
Growth is projected to recover to 4 percent in 2010.
The Seychelles economy has proved remarkably resilient to the double crisis experienced (external debt crisis and global financial crisis in 2008).

The program remains fully on track and all quantitative performance criteria at end-March 2010 were met.
Government revenue is exceeding expectations in 2010, facilitating implementation of key public infrastructure projects.
Decision to save part of the revenue overperformance is intended to strengthen fiscal and external sustainability.

Maintenance of prudent policies has given credibility to the currency float introduced in November 2008.
Inflation has virtually disappeared, allowing a reduction in key policy interest rates.
International reserves are being rebuilt.

Progress on structural reforms is described as good.
Tax reforms implemented:
- Business tax was rationalized.
- A personal income tax was introduced.
Next challenges identified:
- Further broaden the tax base.
- Reduce tax rates.
- Modernize customs.
- Introduce a value-added tax in 2012.
Authorities have strengthened public finance and central bank management.
Steps are starting to address restructuring of several key public enterprises and financial institutions to reduce risks to the government budget and foster sustained private sector-led growth.

Restructuring of Seychelles’ external debt is progressing well.
Strong policy implementation has convinced most external creditors to bring external debt to sustainable levels.
A debt exchange with private creditors was completed in February 2010.

Source: Press Release No. 10/269, June 30, 2010 — International Monetary Fund.