Seychelles’ economic prospects good -- IMF |16 January 2012

The organisation hails the country’s performance with the IMF executive board’s deputy managing director and acting chair Min Zhu saying:

“Aided by sound macroeconomic policies and timely structural reforms, the Seychelles economy rebounded strongly from the crisis of 2008-09. Medium-term prospects are good, but downside risks exist due to the crisis in Europe. Inflation has picked up recently, reflecting the delayed pass-through of global food and fuel price increases, but remains broadly in check.

He refers to the issues brought forward by Central Bank governor Pierre Laporte and principal secretary for Finance Ahmed Afif in their Thursday press conference by saying:

“Safeguarding debt sustainability is critical for sustaining the gains from macroeconomic stabilisation. The restructuring of the loss-making national airline and increases in utility tariffs to cost-recovery levels will help achieve a sounder fiscal position while creating space for needed infrastructure investments. Development of a well-targeted social safety net will be important to protect vulnerable groups.

“The central bank needs to remain vigilant against inflationary pressures. A further build-up of foreign reserves and continued exchange rate flexibility will provide buffers against external shocks.

“Structural reforms continue to focus on improving public financial management and fostering private sector-led growth. In the financial sector, efforts should focus on limiting the role of state-owned institutions, strengthening competition, enhancing governance and transparency, and improving banking intermediation.”

On Thursday Messrs Laporte and Afif announced the IMF has completed the fourth programme review and financing assurances review under Seychelles’ programme supported by a three-year extended arrangement under the Extended Fund Facility (EFF).

Completion of the review, they said, allows the immediate disbursement of an amount equivalent to US $4.8 million.