IMF Executive Board Completes First Reviews of the Arrangements Under the Extended Fund Facility and the Resilience and Sustainability Facility for Seychelles and Approves US$12.3 Million Disbursement
IMF News, December 4, 2023
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- IMF Executive Board Completes First Reviews of the Arrangements Under the Extended Fund Facility and the Resilience and Sustainability Facility for Seychelles and Approves US$12.3 Million Disbursement
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- Published: December 4, 2023
Overview
- The Executive Board completed the first reviews of Seychelles’ economic performance under the 36-month Extended Fund Facility (EFF) and Resilience and Sustainability Facility (RSF).
- The EFF was approved on May 31, 2023 in the amount of SDR 42.365 million (about US$56 million).
- The RSF was approved on May 31, 2023 in the amount of SDR 34.35 million (about US$46 million).
- The completion of the review allows for immediate disbursement of:
- SDR 6.1 million (about US$8.13 million) under the EFF.
- SDR 3.1 million (about US$4.13 million) under the RSF.
- The Executive Board’s decision was taken on a lapse-of-time basis.
Recent economic developments
- Tourism and activity
- Tourist arrivals through September 2023 increased by 5 percent over the same period in 2022—reaching about 92 percent of pre-pandemic highs.
- Seychelles’ economic recovery continued in 2023, albeit at a more moderate pace than the sharp rebound observed in 2022.
- Inflation and monetary stance
- Year-on-year headline inflation became negative in May 2023, reaching -2.4 percent by September 2023.
- The Central Bank of Seychelles has maintained an accommodative monetary stance.
- External sector and reserves
- The external current account deficit narrowed to 7.1 percent of GDP in 2022.
- Gross international reserves rose to US$708 million in September 2023 (3.6 months of imports), up from US$639 million at end-2022.
- Fiscal and credit developments
- Fiscal performance exceeded budget projections in the first half of 2023, driven by lower capital spending and strong collections in some tax segments.
- Private sector credit growth reached 9.6 percent year-on-year by July 2023.
Program performance and implementation
- All end-June 2023 quantitative performance criteria (QPCs) and indicative targets (ITs) and all end-September 2023 ITs were met.
- Structural benchmarks: good progress was made toward structural benchmarks, although some were implemented with a delay or rescheduled to a later implementation date due to technical issues or capacity constraints.
- The single reform measure (RM) under the RSF for the first review was met.
Outlook and risks
- Growth and inflation projections
- Real GDP growth is expected to moderate to 3.8 percent in 2023 and is projected to rise modestly to 4.0 percent in 2024.
- Average annual inflation is projected to be -0.8 percent in 2023 and 0.3 percent in 2024.
- External sector projections
- The current account deficit is expected to decline to 5.4 percent of GDP in 2023, but to widen over the medium term as tourism growth stabilizes and imports increase with continued investment in capital projects.
- Foreign exchange reserves are projected to reach US$733 million by end-2023, equivalent to 3.7 months of imports.
- Reserve coverage is forecast to increase gradually to around 4 months of imports over the medium term.
- Key downside risks
- A rebound in international commodity prices.
- External shocks to tourism demand.
Policy priorities and reform agenda
- Near-term priorities
- Support the ongoing economic recovery.
- Continue to build fiscal and external buffers.
- Maintain macroeconomic stability.
- Medium-term priorities
- Increase revenues and boost the efficiency of capital expenditure, with a focus on climate change mitigation and adaptation.
- Structural reform agenda priorities: revenue administration, public financial and investment management, and governance, including digitalization and state-owned enterprise reform.
- Objectives tied to the RSF
- Strengthen fiscal and monetary policy frameworks.
- Support efforts to build resilience to climate change.
- Exploit synergies with other sources of official financing and catalyze private financing for climate-related investments.
Selected economic indicators (highlights from the table)
- Nominal GDP (millions of Seychelles rupees)
- 2020: 24,294
- 2021: 25,347
- 2022: 28,222
- 2023 (Prel.): 29,095
- 2024 (Proj.): 30,318
- 2025 (Proj.): 32,012
- 2026 (Proj.): 34,057
- 2027 (Proj.): 36,432
- 2028 (Proj.): 39,037
- Real GDP (millions of Seychelles rupees)
- 2020: 23,810
- 2021: 24,410
- 2022: 26,593
- 2023 (Prel.): 27,604
- 2024 (Proj.): 28,695
- 2025 (Proj.): 29,822
- 2026 (Proj.): 30,983
- 2027 (Proj.): 32,178
- 2028 (Proj.): 33,411
- Real GDP (annual percent change)
- 2020: -8.5
- 2021: 2.5
- 2022: 8.9
- 2023 (Proj.): 3.8
- 2024 (Proj.): 4.0
- 2025 (Proj.): 3.9
- 2026 (Proj.): 3.8
- CPI (annual average)
- 2020: 1.2
- 2021: 9.8
- 2022: 2.6
- 2023 (Proj.): -0.8
- 2024 (Proj.): 0.3
- 2025 (Proj.): 2.0
- 2026 (Proj.): 3.0
- 2027 (Proj.): 3.5
- Broad money (annual percent change)
- 2020: 27.0
- 2021: -5.1
- 2022: 3.7
- 2023 (Proj.): 9.0
- Credit to the private sector (annual percent change)
- 2020: 20.2
- 2021: -11.9
- 2022: 5.0
- 2023 (Prel.): 8.4
- 2024 (Proj.): 8.8
- 2025 (Proj.): 8.2
- 2026 (Proj.): 7.8
- 2027 (Proj.): 7.4
- External savings / Current account balance including official transfers (percent of GDP)
- 2020: -12.3
- 2021: -10.1
- 2022: -7.1
- 2023 (Proj.): -5.4
- 2024 (Proj.): -7.4
- 2025 (Proj.): -7.9
- Gross official reserves (end of year, millions of U.S. dollars)
- 2020: 575
- 2021: 702
- 2022: 639
- 2023 (Proj.): 733
- 2024 (Proj.): 791
- 2025 (Proj.): 843
- 2026 (Proj.): 904
- 2027 (Proj.): 953
- 2028 (Proj.): 997
- Months of imports (c.i.f.)
- 2022: 3.4
- 2023 (Proj.): 4.1
- Total government and government-guaranteed debt (percent of GDP)
- 2020: 81.1
- 2021: 73.9
- 2022: 64.1
- 2023 (Proj.): 64.4
- 2024 (Proj.): 65.6
- 2025 (Proj.): 64.3
- 2026 (Proj.): 61.2
- 2027 (Proj.): 56.1
- 2028 (Proj.): 51.3
- Total external debt outstanding (millions of U.S. dollars)
- 2020: 5,049
- 2021: 5,261
- 2022: 5,391
- 2023 (Proj.): 5,583
- 2024 (Proj.): 5,825
- 2025 (Proj.): 6,029
- 2026 (Proj.): 6,157
- 2027 (Proj.): 6,252
- 2028 (Proj.): 6,111
IMF Communications Department, Press Release No. 23/424, December 4, 2023.
