Press Release No. 15/484

Press Release: IMF Staff Completes Review Mission to Seychelles

October 28, 2015

An International Monetary Fund (IMF) staff mission led by Mr. Wendell Samuel visited Victoria from October 15-28, 2015 to conduct discussions on the third review under the Extended Fund Facility (EFF) Arrangement with Seychelles.¹

At the conclusion of the visit, Mr. Samuel issued the following statement:

“Macroeconomic outcomes in the first half of 2015 have been positive and all end-June performance criteria were met. The balance of payments strengthened, supported by low commodity prices and higher tourism arrivals. The external current account deficit is estimated to have narrowed substantially, facilitating a partial reversal of the exchange rate depreciation experienced toward the end of 2014. The Central Bank of Seychelles continued accumulating foreign exchange, which contributed to further improving the reserve coverage in months of imports. Fiscal policy remains on track to achieve a primary fiscal surplus of around 4 percent of GDP this year and adequate progress has been made with implementation of the structural agenda.

“Reflecting strong tourist arrivals and expanding credit to the private sector, economic growth for 2015 has been revised up from 3.5 to 4.3 percent. Inflation is expected to recede to 4.4 percent by the end of the year, given low oil and food prices internationally, and an appropriately tight monetary stance domestically.

“The growth outlook for 2016 remains positive, despite economic headwinds in China and Europe, which are important source markets for tourists in Seychelles. As external debt repayments increase, continued fiscal discipline will be important, while monetary policy should be vigilant to the potential impact of domestic demand pressures stemming from wage increases on inflation and inflationary expectations. Volatility in foreign direct investment inflows could result in a moderate and temporary widening of the current account deficit. Further progress on structural reforms should enhance public financial management, reduce vulnerabilities, and lay the foundations for broad-based sustainable growth.

“The mission met with His Excellency President James Michel, Vice President Danny Faure, Minister of Finance, Trade, and the Blue Economy Jean Paul Adam, and Governor of the Central Bank of Seychelles Caroline Abel, as well other members of government, members of the National Assembly, and representatives of the private sector and civil society.

“Subject to the approval by IMF Management, the IMF Executive Board is expected to discuss the completion of the review in December. The mission appreciates the high quality of the discussions and thanks the authorities for their hospitality, as well as the open and constructive dialogue.”

¹ The Extended Fund Facility under the Extended Arrangement is an instrument of the IMF designed for countries facing serious medium-term balance of payments problems because of structural weaknesses that require time to address. Assistance under the extended 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’ current arrangement are available at www.imf.org/seychelles.