IMF Staff Completes Mission to the Seychelles

IMF News, September 27, 2017

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IMF staff mission led by Mr. Amadou Sy visited Victoria during September 13‒26, 2017.
The mission reached a staff level agreement with the authorities on an economic program that could be supported by a new 3-year IMF arrangement under the Policy Coordination Instrument (PCI).
Subject to IMF management approval, the staff-level agreement is expected to be submitted to the IMF Executive Board for its consideration in December 2017.
Under the arrangement, Seychelles economic program would be subject to semi-annual reviews.
Seychelles is the first IMF member country to request a PCI.

“Seychelles has made considerable progress toward macroeconomic stability under the three consecutive IMF-supported programs.”
The authorities implemented prudent macroeconomic policies together with bold structural reforms that:
- led to strong economic growth;
- produced noticeable improvement in fiscal and external position; and
- resulted in a reduction in debt.
Seychelles’ external reserve buffers have reached a comfortable level and “the country does not need the IMF’s financial assistance now.”
Macroeconomic performance has been robust in 2017:
- Economic growth for 2017 is projected to reach around 4 percent.
- The primary fiscal surplus is expected to reach 2.5 percent of GDP this year in line with the authorities’ target.
- The external current account deficit is estimated to have narrowed, supported by strong tourism arrivals.

The growth outlook for 2018 remains positive, buoyed by the tourism sector.
“While a strengthening in international commodity prices could have some negative impacts on the balance of payments, the country’s international reserves coverage is expected to remain at an adequate level, anchored by the authorities’ prudent policies.”
Downside risks to the outlook largely lie in external factors which could dampen tourism performance.
The mission emphasized the need to enhance medium-term growth prospects by:
- building up infrastructure; and
- increasing resilience to climate change.
Such actions should be undertaken prudently so that fiscal and monetary policies continue to anchor economic stability and strengthen fiscal sustainability.
The Central Bank of Seychelles (CBS) should remain vigilant to any signs of inflationary pressures.

The mission discussed a number of potential measures with the authorities to ensure continued fiscal discipline and progress towards the authorities’ debt reduction goals.
PCI as a non-financing instrument: it supports countries seeking assistance to develop and help monitor a reform agenda, unlock financing from multiple sources, and demonstrate commitment to reforms; it enables closer policy dialogue, more regular monitoring, and Board endorsement of policies. The PCI is available for all member countries.

The mission met with His Excellency President Danny Faure, Minister of Finance, Trade, and Planning Peter Larose, and Governor of the CBS Caroline Abel, as well as other members of the government, members of the National Assembly, and representatives of the private sector and civil society.
“The mission appreciates the open and constructive dialogue and thanks the authorities for their hospitality.”

IMF Press Release No. 17/372 — September 27, 2017.