{
  "title": "Seychelles: Technical Assistance Report—Stress Testing the Central Bank Balance Sheet",
  "publication": "IMF Staff Country Reports, November 7, 2023",
  "sourceUrl": "https://www.imf.org/en/publications/cr/issues/2023/11/07/seychelles-technical-assistance-report-stress-testing-the-central-bank-balance-sheet-541247",
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  "summary": "This Technical Assistance Report on the Seychelles discusses Stress Testing the Central Bank Balance Sheet (CBS). The CBS balance sheet is weak, due to the cost of carrying foreign exchange (FX) reserves.",
  "sections": [
    {
      "heading": "Key findings",
      "content": "- The Central Bank of Seychelles (CBS) balance sheet is weak due to the cost of carrying foreign exchange (FX) reserves.\n- Conditions of CBS lending in Seychellois rupees (SCR) contributed to weakening the CBS balance sheet.\n- Multiyear budget planning would support the CBS’s balance sheet strength.\n- A capital injection is necessary to strengthen the CBS’s balance sheet.\n- The CBS’s income stream needs strengthening to cover operational costs and the carry cost of the FX reserve."
    },
    {
      "heading": "Policy recommendations",
      "content": "- Increase the authorized capital of the CBS to strengthen the income stream and cover operational and FX reserve carry costs.\n- Revise the profit distribution rule to allow the CBS to retain all distributable earnings if statutory capital is below the target level of 10 percent of monetary liabilities.\n- Prepare a communications strategy to bolster public support for the recapitalization plan, with communications that:\n  - Explain the causes of the losses.\n  - Reiterate the commitment to the policy objective regardless of financial considerations.\n  - Present the solution devised to address the financial weakness."
    },
    {
      "heading": "Technical and institutional measures",
      "content": "- Strengthen multiyear budget planning to support balance sheet resilience.\n- Adjust lending conditions in SCR to reduce adverse impacts on the CBS balance sheet.\n- Adopt communications that transparently link causes, policy commitments, and remediation steps to build public and stakeholder support.\n\nSource: Seychelles: Technical Assistance Report-Stress Testing the Central Bank Balance Sheet, IMF Staff Country Reports, November 7, 2023.\n\n---\n\n Content in this bundle\n\n- 1sycea2023002\n  - 1sycea2023002 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - 1sycea2023002 (PDF){rel=\"external\" type=\"application/pdf\"}"
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    "Published: November 7, 2023",
    "Series: IMF Staff Country Reports",
    "DOI: https://doi.org/10.5089/9798400258527.002",
    "The Central Bank of Seychelles (CBS) balance sheet is weak due to the cost of carrying foreign exchange (FX) reserves.",
    "Conditions of CBS lending in Seychellois rupees (SCR) contributed to weakening the CBS balance sheet.",
    "Multiyear budget planning would support the CBS’s balance sheet strength.",
    "A capital injection is necessary to strengthen the CBS’s balance sheet.",
    "The CBS’s income stream needs strengthening to cover operational costs and the carry cost of the FX reserve.",
    "Increase the authorized capital of the CBS to strengthen the income stream and cover operational and FX reserve carry costs.",
    "Revise the profit distribution rule to allow the CBS to retain all distributable earnings if statutory capital is below the target level of 10 percent of monetary liabilities.",
    "Prepare a communications strategy to bolster public support for the recapitalization plan, with communications that:",
    "Strengthen multiyear budget planning to support balance sheet resilience.",
    "Adjust lending conditions in SCR to reduce adverse impacts on the CBS balance sheet.",
    "Adopt communications that transparently link causes, policy commitments, and remediation steps to build public and stakeholder support.",
    "**1sycea2023002**"
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