IMF’s Extended Fund Facility (EFF) |23 June 2015

Seychelles economy to get $2.3 million boost from IMF

Seychelles will soon receive a loan disbursement of US $2.3 million from the International Monetary Fund (IMF) under the institution’s Extended Fund Facility (EFF).

The executive board of the IMF has completed the second review of the arrangement under the EFF with Seychelles and this enables the disbursement of an amount equivalent to SDR 1.635 million (about US $2.3 million) bringing the total disbursements to SDR 4.905 million (about US $6.9 million).

In completing the review, the executive board also approved the authorities’ request for waiver and modification of performance criteria. The 36-month, SDR 11.445 million arrangement under the EFF (about US $16.1 million, the equivalent of 105 percent of Seychelles’ quota) was approved by the executive board in June 2014.

Following the executive board's discussion, Min Zhu, deputy managing director and acting chair issued the following statement:

“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 debt burden below 50 percent of GDP 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.

“The authorities should continue to improve the forward-looking elements of their monetary policy framework, including inflation forecasting and liquidity management. The exchange rate 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.”

Welcoming the announcement, the government of Seychelles has said it 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.

The Extended Fund Facility (EFF) is assistance provided by the IMF for medium-term structural reforms over a longer repayment period.

The fund is disbursed in phases based on semi-annual reviews of the country’s economic performance.