Washington, DC –
The Executive Board of the International Monetary Fund (IMF) approved today
Seychelles’ request for emergency financial assistance under the Rapid
Financing Instrument (RFI) equivalent to SDR 22.9 million (about US$31.2
million, or 100 percent of quota) to meet the country’s urgent balance of
payment needs stemming from the COVID-19 pandemic.
The near-term economic fallout of the COVID19 pandemic is expected to be
severe. Travel restrictions and the subsequent loss of tourism receipts are
sharply reducing economic activity and weakening the fiscal and external
positions, creating large additional financing needs. The authorities
reacted swiftly by taking immediate measures of containment, including
border closures, strengthening health policy responses and supporting
households and firms.
The RFI will provide timely resources to the authorities to address the
urgent balance of payments needs and soften the hit on the budget. The IMF
will continue to monitor Seychelles’ situation closely and remain in close
dialogue with the authorities.
Following the Executive Board discussions, Mr. Tao Zhang, Deputy Managing
Director and Chair, made the following statement:
“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. The authorities have taken
decisive measures to prevent a local outbreak and mitigate the economic
fallout on affected businesses and the most vulnerable households. Once the
pandemic dissipates and confidence is restored, the authorities are
committed to return to a fiscal stance that stabilizes debt.
“The central bank’s prompt response to provide emergency assistance will
help alleviate the economic fallout. The flexible exchange rate has served
Seychelles well, and the resilience of the banking system will play a
crucial role in restoring external and internal balances. The central bank
should remain vigilant to potential market stress and emerging risks to
financial markets.
“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. The assistance of other international
financial institutions and development partners is crucial to close the
remaining financing gaps, ease the adjustment burden, and preserve economic
growth. The authorities are committed to transparency and good governance
in the use of emergency financing by providing monthly reports of
pandemic-related expenditure to the National Assembly and undertaking an
independent audit of such spending and procurement and publishing the
results.”
For information on the emergency financing requests approved by the IMF
Executive Board, please see a link to the IMF Lending Tracker:
https://www.imf.org/en/Topics/imf-and-covid19/COVID-Lending-Tracker
For upcoming discussions on the emergency financing requests, please see a
link to the calendar of the IMF Executive Board meetings:
https://www.imf.org/external/NP/SEC/bc/eng/index.aspx