Forex rate hike calls for growth target review |29 February 2012

The principal secretary for Finance Ahmed Afif yesterday said:
“The exchange rate has fluctuated and risen slightly above what had been focused and we require a slight review in our expenditure levels so that the targets reflect an achievable and realistic primary physical target.”

Mr Afif said the growth target had been set at 4.7% of gross domestic product estimating the exchange rate would be R13 to the US dollar but it is now trading at around R14.

He said this in an interview yesterday when an IMF mission started its fifth review under the three-year Extended Fund Facility, which was approved by the fund’s executive board on December 18, 2009.

Besides this area, every other aspect of the programme has remained on track, said Mr Afif.
“We have passed the primary surplus target set for December, we have not exceeded the debt level ceilings that have been set, or accumulated any arrears, and we believe the Central Bank of Seychelles has also met the reserve money targets as well as the international net reserve goals.”

Seychelles delegation at the review launch talks was led by Finance Minister, Vice-President Danny Faure, and the IMF team was led by mission head Jean Le Dem.

The IMF does such reviews every six months looking at the targets set, including the physical and the monetary, for example those to do with primary surplus of government while the monetary targets are about the country’s reserve levels.

On the debt side the mission will also check that the government has not contracted debts above set limits and no arrears have been accumulated either in normal operations or on debts.

“These are the parameters they will measure. They also take this opportunity once in Seychelles to review the current economic performance which may have changed given the dynamics of a lot of what happens around us, for example changes in exchange rates, visitor arrival numbers and how fisheries is doing,” said Mr Afif.