IMF gives US $1.4 million support |02 July 2009

The decision was made on June 30 following the review and the completion of the latest quarterly financing assurances review.
 
“This second positive review confirms the IMF’s view that we are indeed making headway with our reforms,” says Ahmed Afif, principal secretary for finance, adding “the disbursement is part of the earlier approved support of almost USD 27 million to Seychelles”.

The IMF website reports that following the discussion of the executive board, the deputy managing director and the acting chair Takatoshi Kato said:

“Seychelles’ commitment to reform and prudent financial policies has brought about rapid progress on macroeconomic stabilisation. The significant fiscal consolidation effort, backed by the new market-based monetary policy, has restored confidence in the rupee and helped bring inflation down rapidly.”

He added that “economic policies are geared toward consolidating this progress. The fiscal stance aims to support the disinflation objective and contribute to public debt sustainability, while preserving priority social spending.

“The market-based floating exchange rate regime is serving the economy well, and monetary policy should aim to maintain interest rates positive in real terms in order to anchor price stability.

“Efforts should continue to expand monetary policy instruments and modernise the legal and institutional framework for the financial sector.”

Mr Kato also outlined the progress that Seychelles has made so far with its reform and they include: the advancement with public external debt which includes restructuring efforts to normalise relations with all creditor groups following the favorable agreement with the Paris Club; strengthened tax administration along with a fundamental tax policy reform already launched; and, the strengthening of public financial management and expenditure control.

The executive board also agreed to carry out IMF mission reviews every six months instead of every quarter henceforth.  However, they will still maintain their quarterly quantitative performance criteria and financing assurances reviews. The two-year SDR 17.6 million (about US$27.3 million) Stand-By Arrangement for Seychelles was approved on November 14, 2008.