IMF says Seychelles has achieved programme objectives |12 March 2014

• Considers demand for further arrangement

Seychelles has largely achieved the objectives of the IMF-supported programme which concluded last December, and the organisation is currently considering Seychelles’ demand for a further arrangement or an extension.

This has been revealed by Marshall Mills, the head of an IMF mission which has been in the country for the last twelve days. Mr Mills was speaking during a press conference at the Ministry of Finance headquarters yesterday afternoon, in the presence of the Minister for Finance, Trade and Investment Pierre Laporte and the Governor of the Central Bank Caroline Abel.
 
The IMF envoy said that the programme which aimed at placing Seychelles firmly on the path to fiscal sustainability through reducing debt, rebuilding reserves and implementing financial reforms has continued to improve macroeconomic performance.

This has been measured by an accelerated economic growth of 3.5 percent in 2013, rebuild of external reserves in the Central Bank and an inflation drop of 3.4 percent.

Mr Mills added that Seychelles remains on the right track to meet its objective of reducing public debt below 50 percent of GDP (Gross Domestic Product) by 2018.

Despite an uncertain global economic environment, he expects the country’s economy to continue to strengthen this year with a projected growth of 3.7 percent.

The IMF chief of mission has however warned that the rebuilding of foreign exchange reserves and the reduction of public debt remain the two most important vulnerabilities of the Seychelles economy.

He advised the government to put into place measures or buffers to prevent external shocks.

Added to reserve accumulation and a more healthy debt situation, those also include food and energy security, a disciplined and transparent public sector, respect of their core mandates by parastatal companies and the creation of Public Private Partnerships or PPPs.
 
Mr Mills highlighted that PPPs can be very effective in meeting investment needs.

During the press conference, Mr Mills also announced that the IMF is presently considering an extension of the programme to support a new generation of reforms which will consist of maintenance of low inflation, good governance and accountability, elimination of red tape, improved fiscal discipline, development of the financial sector as well as development of the private sector which he described as the engine of economy growth. This will include increased competition in key sectors such as fisheries.

Under the new arrangement which will be submitted to the IMF executive board by the end of June this year, Seychelles will be able to access fresh funds amounting to 17.8 million US dollars.

“The authorities have requested a programme to support their efforts to consolidate macroeconomic stabilisation, enhance resilience and foster sustained and inclusive growth. A new generation of reforms will aim to combine continued reduction in public debt with efforts to increase investment spending and to enhance the performance of the public sector,” Mr Mills said.

He concluded that the IMF is pleased to support Seychelles’ effort and that the organisation feels that the programmes put into place by the Seychelles government will eventually address the current economic vulnerabilities.

During its stay in Seychelles, the IMF mission also met and had discussions with President James Michel (see separate story on page 1), Vice-President Danny Faure, members of the National Assembly as well as representatives of the private sector and the civil society.