## IMF Executive Board Completes Second Reviews Under the Extended Fund Facility and the Resilience and Sustainability Facility Arrangements and Concludes the 2024 Article IV Consultation with Seychelles

_IMF News, June 3, 2024_

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## Bibliographic details
- Published: June 3, 2024

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### Program actions and financing
- The Executive Board completed the second reviews of Seychelles’ economic performance under the 36-month EFF and RSF Arrangements approved on May 31, 2023.
- Completion of the reviews allows the authorities to draw:
  - the equivalent of SDR 6.1 million (about $8.1 million) under the EFF, and
  - SDR 3.1 million (about $4.1 million) under the RSF.
- Total disbursements to date:
  - EFF: SDR 18.3 million (about $24.3 million)
  - RSF: SDR 6.2 million (about $8.2 million)
- The Executive Board’s approval will allow for a total disbursement of SDR 9.2 million ($12.2 million) as a result of these reviews.

### Recent economic performance (2023) — key findings
- Real GDP growth: 3.2 percent in 2023, compared to 15 percent in 2022.
- Tourist arrivals: rose to about 91 percent of the pre-pandemic high (2019); spending per tourist was flat.
- Sector performance: Information technology drove non-tourism growth, along with fishing and construction; manufacturing contracted following unseasonably heavy rains, flooding, and an industrial explosion in December 2023.
- Inflation: Year-on-year headline inflation was -2.7 percent by December 2023, reflecting lower global commodity prices and a broadly stable exchange rate.
- Gross international reserves: increased to $682 million (3.2 months of imports) by end-2023.
- Fiscal outcome: Government primary fiscal surplus of 1.7 percent of GDP was higher than expected, driven mainly by lower than projected current and capital spending.
- Longer-term vulnerabilities: limits to sustainable tourism-based growth, need for economic diversification, and high vulnerability to climate change.

### Outlook and projections
- Real GDP growth: projected to rise to 3.7 percent in 2024.
- Annual average inflation: expected to reach 1.2 percent in 2024.
- Gross foreign exchange reserves: projected to reach $751 million by end-2024, equivalent to 3.4 months of imports.
- External current account: expected to remain broadly stable.
- Potential downside risks include:
  - Seychelles’ high vulnerability to external shocks (such as volatility in commodity and shipping prices),
  - climate-related events,
  - disruptions to tourism.

### Selected quantitative indicators (selected rows preserved exactly as presented)
- Nominal GDP (millions of Seychelles rupees): 25,164 (2021); 29,373 (2022); 30,019 (2023); 31,464 (2024); 33,420 (2025); 35,496 (2026); 37,874 (2027); 40,462 (2028); 43,213 (2029).
- Real GDP (millions of Seychelles rupees): 22,700 (2021); 26,100 (2022); 26,926 (2023); 27,920 (2024); 29,072 (2025); 30,155 (2026); 31,229 (2027); 32,330 (2028); 33,457 (2029).
- Real GDP (annual percent change): 0.6 (2021); 15.0 (2022); 3.2 (2023); 3.7 (2024); 4.1 (2025); 3.6 (2026); 3.5 (2027); (2028 and 2029 entries not shown).
- CPI (annual average): 9.8 (2021); 2.6 (2022); -1.0 (2023); 1.2 (2024); 2.3 (2025); 3.0 (2026).
- CPI (end-of-period): 7.9 (2021); 2.5 (2022); -2.7 (2023); 1.6 (2024).
- Gross official reserves (end of year, millions of U.S. dollars): 702 (2021); 639 (2022); 682 (2023); 751 (2024); 805 (2025); 841 (2026); 879 (2027); 937 (2028); 977 (2029).
- Months of imports, c.i.f.: 3.1 (2021); (2022 entry displayed as 3.1 under table heading but context shows 3.2 months of imports by end-2023 in text).
- Total government and government-guaranteed debt (percent of GDP): 74.5 (2021); 61.4 (2022); 58.5 (2023); 60.0 (2024); 59.1 (2025); 57.0 (2026); 53.5 (2027); 49.5 (2028); 45.5 (2029).
- Current account balance including official transfers (percent of GDP): -10.1 (2021); -7.4 (2022); -7.2 (2023); -7.3 (2024); -7.8 (2025); -8.4 (2026); -9.1 (2027); -9.3 (2028).
- Total external debt outstanding (millions of U.S. dollars): 5,261 (2021); 5,387 (2022); 5,570 (2023); 5,859 (2024); 6,145 (2025); 6,386 (2026); 6,581 (2027); 6,501 (2028); 6,470 (2029).
- Terms of trade (-=deterioration): -8.5 (2021); -3.6 (2022); -2.6 (2023); -1.8 (2024); -1.1 (2025); -0.7 (2026).
- Seychelles rupees per US$1 (end-of-period): 14.7 (2021); 14.1 (2022); 14.2 (2023).
- Seychelles rupees per US$1 (period average): 16.9 (2021); 14.3 (2022); 14.0 (2023).

### Policy messages and recommendations from IMF senior management (Mr. Bo Li, Deputy Managing Director, acting Chair)
- Overall assessment: The Seychellois economy has demonstrated resilience despite external volatility and intensified climate shocks; performance under the EFF and RSF has been strong.
- Fiscal policy:
  - Pursue sustained growth‑friendly fiscal consolidation through revenue mobilization, prudent spending, and improved public financial management to reduce debt vulnerabilities and create fiscal space for priority social and climate-related investment.
  - Address bottlenecks in public sector hiring.
  - Strengthen the debt management framework.
  - Improve governance, transparency, and monitoring of state-owned enterprises.
- Monetary and financial sector policy:
  - Monetary stance is appropriate; closely monitor inflationary pressures.
  - Strengthen the central bank’s balance sheet and enhance the monetary policy framework to improve policy transmission.
  - Maintain a flexible exchange rate regime.
  - Closely monitor non-performing loans to safeguard financial sector stability.
  - Upgrade the regulatory framework for crisis prevention and management.
  - Further strengthen the AML/CFT framework, including enhancing transparency of beneficial ownership information.
- Structural and climate policies:
  - Commit to reforms to boost inclusive growth, economic diversification, modernization of public service and the education system, and strengthening climate change resilience in line with the National Development Strategy.
  - Implement RSF reform measures to strengthen the climate-focus of public investment, integrate climate change into the budget process, and develop a climate financing strategy.
  - Strengthen climate-related risk management for financial institutions and deepen climate adaptation and mitigation reforms.
- Development partner support: Strong support from development partners is critical for successful implementation of the reform agenda.

### Executive Board Assessment — Directors’ emphasis
- Directors commended strong performance under the Fund‑supported programs and recognized the favorable outlook while noting vulnerabilities to external and climate‑related shocks.
- Main recommendations echoed:
  - Preserve macroeconomic sustainability and build buffers while supporting inclusive growth and resilience.
  - Sustain growth‑friendly fiscal consolidation; strengthen public investment management; address civil service hiring bottlenecks; modernize and streamline tax procedures to bolster revenues.
  - Strengthen the debt management framework in light of potential lower access to concessional financing.
  - Improve governance, transparency, and monitoring of state‑owned enterprises.
  - Monitor inflation and be ready to adjust monetary policy; strengthen central bank balance sheet and policy transmission.
  - Continue building external buffers and maintain a flexible exchange rate regime.
  - Safeguard financial sector stability; monitor non‑performing loans that remain well above pre‑pandemic levels.
  - Upgrade regulatory framework for crisis prevention and management.
  - Strengthen AML/CFT, including beneficial ownership transparency.
  - Advance structural reforms: economic diversification, public service and education modernization, and climate resilience; sustain reform implementation and secure development partner support for climate mitigation and adaptation goals.

*IMF Press Release No. PR24203, June 3, 2024 — IMF Communications Department*

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## References

- [PRESS CENTER](http://presscenter.imf.org/)
- [Seychelles and the IMF](http://www.imf.org/external/country/SYC/index.htm)
- [IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)
- [IMF-World Bank Debt Sustainability Framework for Low-Income Countries -- A Factsheet](https://www.imf.org/en/about/factsheets/sheets/2023/imf-world-bank-debt-sustainability-framework-for-low-income-countries)
- [Special Drawing Rights (SDRs) -- A Factsheet](https://www.imf.org/en/about/factsheets/sheets/2023/special-drawing-rights-sdr)
- [Press Releases](https://www.imf.org/en/news/searchnews)
- [approved on May 31, 2023](https://www.imf.org/en/News/Articles/2023/05/31/pr23189-seychelles-imf-executive-board-approves-extended-fund-facility-arrangement-for-seychelles)
- [http://www.IMF.org/external/np/sec/misc/qualifiers.htm](http://www.imf.org/external/np/sec/misc/qualifiers.htm)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2024/06/03/pr24203-seychelles-rsf-eff-review-and-article-iv-consultation_