Cabinet approves further discussions with the IMF to set up a new Extended Fund Facility |17 March 2023

Vice-President Afif during the live press briefing yesterday (Photo: Joena Meme)

The Ministry of Finance, National Planning and Trade received the green light from the cabinet of ministers to undertake further discussions with the International Monetary Fund to set up a new Extended Fund Facility and an arrangement under the Resilience and Sustainability Facility  to support efforts in maintaining macroeconomic stability, advancing the reform agenda.

This followed the scheduled meeting of the cabinet on Wednesday, chaired by President Wavel Ramkalawan, where the cabinet was briefed on status of the implementation of the Extended Fund Facility (EFF) with the International Monetary Fund (IMF) which was approved in July 2021, where also a number of policy and legal memoranda were approved.

The arrangement will also include focus on climate to enhance Seychelles’ resilience to climate-related shocks.

In a live cabinet press briefing yesterday, Vice-President Ahmed Afif explained that the approval will allow the Ministry of Finance, National Planning and Trade to further discussions with IMF which would lead to setting up the EFF, allowing the country to remain under a support programme, similar to the existing one which was negotiated in 2021.

The vice-president noted that since the existing agreement is nearing its end, it is always wise to negotiate a new plan while maintaining a support programme with the IMF.

He explains that the big advantage of being on a programme with the IMF is that Seychelles is internationally seen as a country with the required discipline according to the international standard.

This, he said, is assessed based on fiscal performances, including taxes collected, stability of commercial banks, production rate, and exchange rates.

He said without an international body by your side, the credibility attached to the various performances will not be the same.

“A good credibility helps, since we are a country which remains in debt, and after the Covid-19, our GDP ratio compared to the size of our economy was high, while our aim is to bring it down to 50 percent by 2026,” added Vice-President Afif who further indicated that the country is on the right track, in terms of achieving such goal.

This, he said, to be continuously successful requires the trust of the lenders.

“Having a facility with an independent body which provides a good ranking at the end of each review , allows you to get better conditions with the banks,” added Vice-President Afif who further noted that other than international credibility, reduced interests on loans is also a huge advantage for the country.

He also noted that the sum for the new EFF is yet to be determined since negotiations have not begun yet, but it will be very likely within the range of present one under the existing programme with the IMF.

Cabinet also approved the draft Broadcasting and Telecommunication (Mobile Number Portability) Regulations, 2023. 

The MNP is a service which allows mobile phone users to retain their numbers when they change operator without any impairment on quality, reliability and convenience. 

The regulations will make it obligatory for operators to implement MNP for both pre-paid and post-paid subscribers upon request on a non-discriminatory basis.

Vice-President Afif said the government has been in negotiations with local service providers regarding the issue of MNP, whereby the latter expressed that even if such service is possible, there is a significant cost attached to it, since it requires several technical adjustments, mainly in terms of software.

He explained that the service will not be available this year since the service providers need adequate time to fine-tune their systems, involving a cost, along with technical negotiations between the service providers themselves.

Cabinet also approved proposal for the government to subscribe to an automated fuelling system for government vehicles. 

The aim of the move is to increase efficiency in the government’s fuel management process and usage and also to address fraudulent practices and revenue leakages attributed to the current manual system. The fuel automation system is also in line with the digitalisation programme of the government.

Vice-President Afif explained that system will be fully digital which will transfer reading from pumps, directly into a system – through an application – with all transactions carried out digitally, without any paper trail.

He explained that it will be the responsibility of the service provider, and not the government, to develop the application for the new system.

The amendment of the Harbour (Inner Harbour) (Control of Traffic) Regulations, 1973 was also approved by cabinet on Wednesday. The aim of the amendments will be to address errors in the regulations.

As a result of the amendments, regulation 2 will be amended to reflect the correct speed measurement as knots instead of nautical miles.

Regulation 3 will reflect a speed of 5 knots while regulation 4 will increase the fine for over speeding in the inner harbour to R2000 from R500.

Cabinet also approved for key deliverables under the budget support from the African Development Bank (AfDB) and World Bank (WB) to be incorporated as part of the work plans of the relevant ministries. 

Such a move will ensure that the agreed deliverables under the budget support agreement will be achieved in the set time frame. 

The budget support programme was started in 2020 as a result of the economic impact of the Covid-19 pandemic and based on the financing gap.