An International Monetary Fund (IMF) staff mission led by Mr. Wendell Samuel visited Victoria during October 19‒November 1, 2016 to conduct discussions on the fourth and fifth reviews under the Extended Fund Facility (EFF) Arrangement with Seychelles. The mission reached agreement on a framework that would facilitate the completion of the reviews.
At the conclusion of the visit, Mr. Samuel issued the following statement:
“Macroeconomic performance has been robust in 2016. All end-June program performance criteria were met and solid progress has been made with regard to implementation of the structural agenda. The external current account deficit is estimated to have narrowed, supported by low international commodity prices and strong tourism receipts. Reflecting vibrant tourist arrivals and expanding credit to the private sector, economic growth for 2016 is projected to reach around 4.5 percent. Year-on-year inflation has been negative since the beginning of 2016 largely due to the low commodity prices and stable exchange rates. With the economy performing well, the primary fiscal surplus is expected to reach 3 percent of GDP this year, despite the impact of the various fiscal initiatives announced in the State of the Nation Address (SONA) in February 2016.
“The growth outlook for 2017 remains positive, buoyed by foreign direct investment related projects in the tourism sector. While a recovery in international commodity prices could have some negative impact on the balance of payments, the country’s international reserves coverage is expected to remain adequate, anchored by strong macroeconomic policies. Downside risks to the outlook largely arise from the external sector: weaker-than-expected global growth could dampen tourism performance.
“The mission concurred with the authorities on the need to make more progress in reducing poverty and ensuring that the benefits of economic growth are shared by all. However, this should be done in a manner that safeguards macroeconomic stability and preserves the gains achieved through the bold reforms implemented since the 2008 crisis. In this context, the mission discussed a number of potential measures with the authorities to help entrench fiscal discipline and progress towards the authorities’ debt reduction goals. The Central Bank of Seychelles (CBS) should also remain vigilant to the potential impact on inflation of domestic demand pressures stemming from the SONA initiatives.
“Subject to the approval of IMF Management and submission to the National Assembly of a budget for 2017 consistent with the program, the IMF Executive Board is expected to discuss the completion of the reviews in January 2017.
“The mission met with His Excellency President Danny Faure, Minister of Finance, Trade, and the Blue Economy Jean Paul Adam, and Governor of the CBS Caroline Abel, as well as other members of the government, and members of the opposition.
“The mission appreciates the high quality of the discussions and thanks the authorities for their hospitality, as well as the open and constructive dialogue.”
The Extended Fund Facility under the Extended Arrangement is an instrument of the IMF designed for countries facing medium-term balance of payments problems because of structural weaknesses that require time to address. Assistance under the Extended Fund Facility features longer program engagement—to help countries implement medium-term structural reforms—and a longer repayment period. (See http://www.imf.org/external/np/exr/facts/eff.htm). Details on Seychelles’ Extended Arrangement are available at www.imf.org/seychelles.
Distributed by APO on behalf of International Monetary Fund (IMF).