IMF Executive Board Completes First Reviews of the Arrangements Under the Extended Fund Facility and the Resilience and Sustainability Facility for Seychelles and Approves US$12.3 Million Disbursement

December 4, 2023

  • The IMF Executive Board completed today the first reviews of the Seychelles Extended Arrangement under the Extended Fund Facility (EFF) and the Arrangement under the Resilience and Sustainability Facility (RSF). The completion of the reviews allows for an immediate disbursement of about US$12.3 million to help strengthen macroeconomic stability, boost inclusive growth, and strengthen fiscal and monetary policy frameworks, while also supporting efforts to build resilience to climate change, exploit synergies with other sources of official financing, and catalyze private financing for climate-related investments.
  • Seychelles’ economic recovery has continued in 2023 as tourist arrivals move closer to pre-pandemic levels.
  • The government has made significant progress in restoring macroeconomic balances and performance under the EFF and RSF programs are strong. But it will remain critical for the Seychelles to stay the course with respect to reducing public debt, rebuilding fiscal space, and increasing foreign exchange buffers.

Washington, DC: The Executive Board of the International Monetary Fund (IMF) completed today the first reviews of Seychelles’ economic performance under the 36-month EFF and RSF. The EFF and RSF were approved on May 31, 2023 in the amount of SDR 42.365 million (about US$56 million) for the EFF and in the amount of SDR 34.35 million (about US$46 million for the RSF). The completion of the review allows for an immediate disbursement of SDR 6.1 million (about US$8.13 million) under the EFF and SDR 3.1 million (about US$4.13 million) under the RSF. The Executive Board’s decision was taken on a lapse-of-time basis. [1]

Seychelles’ economic recovery continues, albeit at a more moderate pace than the sharp rebound observed in 2022. Tourist arrivals through September 2023 increased by 5 percent over the same period in 2022—reaching about 92 percent of pre-pandemic highs. Inflation has been on a downward trajectory, enabling the Central Bank of Seychelles to maintain its accommodative monetary stance. Year-on-year headline inflation became negative in May, reaching -2.4 percent by September. The external current account deficit narrowed to 7.1 percent of GDP in 2022 and is benefitting from the rise in tourist arrivals. Gross international reserves rose to US$708 million in September (3.6 months of imports), up from US$639 million at end-2022. Fiscal performance exceeded budget projections in the first half of 2023 driven by lower capital spending and strong collections in some tax segments. Private sector credit growth reached 9.6 percent year-on-year by July.

Program performance remains strong. All end-June 2023 quantitative performance criteria (QPCs) and indicative targets (ITs) as well as all end-September 2023 ITs were met. Good progress was made toward structural benchmarks, although some were implemented with a delay or rescheduled to a later implementation date due to technical issues or capacity constraints. The single reform measure (RM) under the RSF for the first review was also met.

The outlook remains positive, but risks remain. Real GDP growth is expected to moderate to 3.8 percent in 2023 and is projected to rise modestly to 4.0 percent in 2024. Average annual inflation is projected to be -0.8 percent in 2023 and 0.3 percent in 2024 reflecting the moderation in food and fuel import prices since. The current account deficit is expected to decline to 5.4 percent of GDP in 2023, but to widen over the medium term as tourism growth stabilizes and imports increase with continued investment in capital projects. Foreign exchange reserves are now projected to reach US$733 million by end-2023, equivalent to 3.7 months of imports. Reserve coverage is forecast to increase gradually to around 4 months of imports over the medium term. Potential downside risks to this outlook include a rebound in international commodity prices and external shocks to tourism demand.

The authorities’ near-term priorities are to support the ongoing economic recovery, continue to build fiscal and external buffers, and maintain macroeconomic stability. Over the medium-term, the authorities’ measures aim to increase revenues and boost the efficiency of capital expenditure, with a focus on climate change mitigation and adaptation. In addition, the structural reform agenda prioritizes revenue administration, public financial and investment management, and governance, including digitalization and state-owned enterprise reform.

Seychelles: Selected Economic Indicators (2020-2028)

2020

2021

2022

2023

2024

2025

2026

2027

2028

Act.

Prel.

Proj.

(Annual percent change, unless otherwise indicated)

National income and prices

Nominal GDP (millions of Seychelles rupees)

24,294

25,347

28,222

29,095

30,318

32,012

34,057

36,432

39,037

Real GDP (millions of Seychelles rupees)

23,810

24,410

26,593

27,604

28,695

29,822

30,983

32,178

33,411

Real GDP

-8.5

2.5

8.9

3.8

4.0

3.9

3.9

3.9

3.8

CPI (annual average)

1.2

9.8

2.6

-0.8

0.3

2.0

3.0

3.5

3.5

CPI (end-of-period)

3.8

7.9

2.5

-1.6

0.9

2.8

3.5

3.5

3.5

GDP deflator average

1.2

1.8

2.2

-0.7

0.2

1.6

2.4

3.0

3.2

Money and credit

Broad money

27.0

-5.1

3.7

9.0

…

…

…

…

…

Reserve money (end-of-period)

40.4

11.1

-3.0

9.0

…

…

…

…

…

Velocity (GDP/broad money)

1.0

1.1

1.2

1.1

…

…

…

…

…

Money multiplier (broad money/reserve money)

3.9

3.3

3.5

3.5

…

…

…

…

…

Credit to the private sector 5

20.2

-11.9

5.0

8.4

8.8

8.2

7.9

7.8

7.4

(Percent of GDP, unless otherwise indicated)

Savings-Investment balance

External savings

12.3

10.1

7.1

5.4

7.1

7.4

7.9

8.6

9.2

Gross national savings

9.4

15.4

15.7

19.3

18.9

19.5

19.0

18.1

17.4

Of which: government savings

-11.9

-3.0

1.0

0.4

3.0

4.3

5.2

5.7

6.0

private savings

21.3

18.4

14.7

18.9

15.9

15.3

13.8

12.4

11.4

Gross investment

21.8

25.5

22.8

24.8

25.8

26.7

26.7

26.5

26.4

Of which: public investment 1

4.3

5.2

2.4

4.3

5.3

6.1

6.1

5.9

5.8

private investment

17.5

20.3

20.4

20.5

20.5

20.6

20.6

20.6

20.6

Private consumption

43.6

45.9

49.7

43.0

43.5

45.6

46.6

47.9

49.1

(Percent of GDP)

Government budget 4

Total revenue, excluding grants

29.5

30.2

30.8

32.9

34.5

34.5

34.5

34.2

33.9

Expenditure and net lending

47.1

38.8

32.7

37.0

37.2

36.8

35.8

34.3

33.5

Current expenditure

41.3

33.5

29.8

32.7

31.6

30.4

29.4

28.6

27.9

Capital expenditure 1

4.3

5.2

2.4

4.2

5.3

6.1

6.1

5.9

5.8

Overall balance, including grants

-16.8

-5.5

-1.3

-2.8

-1.5

-1.1

-0.5

0.6

1.0

Primary balance

-13.4

-2.9

0.8

0.0

1.1

1.1

1.6

2.5

2.9

Total government and government-guaranteed debt 2

81.1

73.9

64.1

64.4

65.6

64.3

61.2

56.1

51.3

External sector

Current account balance including official transfers
(in percent of GDP)

-12.3

-10.1

-7.1

-5.4

-7.1

-7.4

-7.9

-8.6

-9.2

Total external debt outstanding (millions of U.S. dollars) 3

5,049

5,261

5,391

5,583

5,825

6,029

6,157

6,252

6,111

(percent of GDP)

365.8

350.6

272.7

267.9

277.6

273.6

262.6

249.3

227.4

Terms of trade (-=deterioration)

10.7

-5.0

-8.4

-2.2

1.5

5.6

0.0

0.0

0.0

Gross official reserves (end of year, millions of U.S. dollars)

575

702

639

733

791

843

904

953

997

Months of imports, c.i.f.

3.8

3.7

3.4

3.7

3.7

3.8

3.9

4.0

4.1

In percent of Assessing Reserve Adequacy (ARA) metric

112

121

101

110

112

116

122

126

128

Exchange rate

Seychelles rupees per US$1 (end-of-period)

21.0

14.7

14.1

…

…

…

…

…

…

Seychelles rupees per US$1 (period average)

17.6

16.9

14.3

…

…

…

…

…

…

Sources: Central Bank of Seychelles; Ministry of Finance; and IMF staff estimates and projections.

1 Includes on lending to the parastatals for investment purposes.

2 Includes debt issued by the Ministry of Finance for monetary purposes.

3 Includes private external debt.


[1] The Executive Board takes decisions under its lapse-of-time procedure when a proposal can be considered without convening formal discussions.

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