Sound macroeconomic management strengthened Seychelles’ economy |28 July 2015

Sound macroeconomic management has strengthened the Seychelles economy significantly, the executive board of the International Monetary Fund has said.

This came out in the second review of the arrangement under the Extended Fund Facility (EFF) with Seychelles by the executive board of the International Monetary Fund (IMF) on June 17, 2015.

The Ministry of Finance, Trade and The Blue Economy has welcomed the announcement of the completion of the second review.

From this completion, Seychelles will now access an additional disbursement of US $2.3 million to further consolidate the gains attained in strengthening and to further improve the national economy. This is part of the three-year arrangement under the Extended Fund Facility (to the value of US $17.6 million) approved in June 2014. The fund is disbursed in phases based on semi-annual reviews of the country’s economic performance.

Following the executive board's discussion, Min Zhu, deputy managing director and acting chair of the executive board said: “Sound macroeconomic management has strengthened the Seychelles’ economy significantly”.

“The near-term growth outlook is favourable and prospects in the tourism sector remain strong, with noticeable gains in both traditional and non-traditional markets. Policies have aimed at reinforcing resilience and entrenching macroeconomic stability. The authorities remain on track to achieve their objective of reducing the debut burden below 50 percent of gross domestic products by 2018. Balancing this objective with the need to address critical infrastructure needs will require tight control of current expenditure and improved governance and financial performance of state-owned enterprises. Further progress in building international reserves has ensured an effective buffer against external pressures,” adds Mr Zhu.

On the other hand, Mr Zhu noted that the authorities should continue to improve the forward-looking elements of their monetary policy framework, including inflation forecasting and liquidity management. The exchange rate, he said, should continue to be allowed to adjust freely to changes in the economic external and internal conditions.

“To support sustained and inclusive growth, structural reforms should aim to increase the role for the private sector in the economy and enhance competition. In this regard, caution should be exercised in expanding the roles and mandates of public enterprises. Accession to the World Trade Organisation is welcome, while further improvements in the business climate should aim to make growth more inclusive by broadening access to credit, enhancing infrastructure, and reducing skills mismatches in the labour market,” adds Mr Zhu in the IMF press release.

The directors also congratulated Seychelles on the progress made in strengthening economic growth and resilience and welcomed the continued strong programme implementation.

The Seychelles economy has seen consistent growth and recovery from the comprehensive reforms started in 2008.

“The government of Seychelles is committed and will continue through the Ministry of Finance, Trade and the Blue Economy to put in place the necessary framework, strategies, policies and fiscal measures to facilitate economic growth and a more conducive business environment through partnership and collaboration,” writes a press release from the Ministry of Finance, Trade and The Blue Economy.

The extended fund facility (EFF) is help provided by the IMF for medium-term structural reforms over a longer repayment period.