IMF Staff Completes Mission to the Seychelles

The IMF team reached a staff level agreement with the authorities on their economic program that could be supported by anew 3-yearIMF arrangement under thePolicy Coordination Instrument.

The authorities have implemented prudent macroeconomic policies together with bold structural reforms that led to strong economic growth as well as noticeable improvement in fiscal and external position as well as a reduction in debt.

Macroeconomicperformance hasbeenrobustin 2017, with economic growth for 2017projected to reach around 4 percent.

An International Monetary Fund (IMF) staff mission led by Mr.AmadouSyvisited Victoria duringSeptember 13?26, 2017. The mission reached a staff level agreement with the Seychellois authorities on their economic program which could be supported by anew 3-yearIMF arrangement under thePolicy Coordination Instrument (PCI) [1].Subject to IMF management approval, the staff-level agreement is expected to be submitted to the IMF Executive Board for its considerationinDecember2017. Under the arrangement, Seychelleseconomic programwould be subject to semi-annual reviews.

At the conclusion ofthe visit, Mr. Syissued the following statement:

Seychelles has made considerable progress toward macroeconomic stability under the three consecutive IMF-supported programs. Since the 2008 crisis, the authorities have implemented prudent macroeconomic policies together with bold structural reforms. These led to strong economic growth as well as noticeable improvement in fiscal and external position as well as a reduction in debt.Consequently, Seychelles’ external reserve buffershavereached a comfortable leveland the country does not need the IMF’s financial assistance now.rdquo;

Notwithstanding remarkable progress in recent years, Seychelles still faces vulnerabilities and pressures, as a small island economy in a challenging global economic environment. Theauthorities have requested a program to consolidate macroeconomic stabilization, enhance resilience, and foster sustained and inclusive growthto be supported under the IMF’s new PCI.Seychelles is the first IMF member country to request a PCI.rdquo;

Macroeconomicperformance hasbeenrobustin 2017.The external current account deficit is estimated to have narrowed, supported bystrongtourism arrivals.Reflecting this, economic growth for 2017is projected to reach around 4 percent.With the economy performing well,theprimary fiscal surplusis expected to reach 2.5 percent of GDP this yearin line with the authorities’ target.rdquo;

The growth outlook for 2018remains positive,buoyed bythe tourism sector. Whileastrengtheningininternational commodity pricescould have some negative impactson the balance of payments, the country’s international reserves coverage is expected toremainatan adequate level, anchored by the authorities’ prudent policies.Downside risks to the outlook largely lie in the external factors whichcould dampen tourism performance.rdquo;

The mission concurred with the authorities on the need to make progress inenhancing medium-term growth prospects, including building up infrastructure, and resilience to climate change. However, this should be done in a prudent manner that allows fiscaland monetarypoliciesto continue anchoringeconomicstability andstrengthening fiscal sustainability. In this context, the mission discusseda number ofpotential measures with the authorities to ensure continued fiscal discipline and progress towards the authorities’ debt reduction goals. The Central Bank of Seychelles (CBS) should also remain vigilant to any signs of inflationary pressures.rdquo;

The mission met with His Excellency President Danny Faure, Minister of Finance, Trade, andPlanning Peter Larose, and Governor of the CBS Caroline Abel, as well as other members ofthegovernment, members of the National Assembly, and representatives of the private sectorand civil society.rdquo;

The mission appreciates the open and constructive dialogue and thanks the authorities for their hospitality.rdquo;

[1] The Policy Coordination Instrument (PCI) is the Fund’s new non-financing Fund instrument that supports countries seeking assistance to develop and help monitor a reform agenda. It is designed for countries that are seeking to unlock financing from multiple sources and/or to demonstrate a commitment to a reform agenda. It enables a closer policy dialogue between the Fund and countries, more regular monitoring of economic developments and policies, as well as Board endorsement of those policies. The PCI is available for all member countries.

Source: International Monetary Fund (IMF).

[related_post themes="text" id="60530"]