IMF staff and Seychellois authorities reach staff-level agreement on first review under EFF and RSF programmes   |04 October 2023

The press conference: (l to r) Governor Abel, Mr Schneider, Minister Hassan and SS Payet (Photo: Sunny Esparon)

An International Monetary Fund (IMF) mission led by Todd Schneider, mission chief for Seychelles, recently concluded discussions with Seychellois authorities from September 21 to October 3, 2023, and reached a staff-level agreement on the first review under the Extended Fund Facility (EFF) arrangement and the Resilience and Sustainability Facility (RSF).

This agreement is subject to approval of the IMF’s executive board.

In a press conference held yesterday morning at the Central Bank of Seychelles, the Minister for Finance, National Planning & Trade, Naadir Hassan, commented on the fact that the Seychellois economy is on an upward trajectory, with recovery gathering steam as tourism returns to normalcy and economic activity inches closer to pre-pandemic levels.

The collaborative efforts between IMF staff and Seychellois authorities have culminated in this staff-level agreement, reflecting the government's substantial progress in implementing policies outlined in the EFF and RSF programmes.

Notably, all quantitative performance and indicative targets for the first review have been met, and significant strides have been made in addressing macro-structural issues.

“We saw for the first six months of the year, the revenue that we accumulated is much higher than we forecast. We forecast approximately R3.8 billion, however, we managed to accumulate R4.3 billion,” stated Mr Hassan.

Present for the press conference was the IMF mission chief for Seychelles, the Governor of the Central Bank of Seychelles, Caroline Abel and the secretary of state in the finance ministry, Patrick Payet.

At the end of the mission, Mr Schneider issued the following statement: “The authorities have made significant progress in implementing the EFF-supported programme and strengthening macroeconomic balances. All end-June 2023 quantitative performance and indicative targets under the programme were met, and structural reforms are proceeding at a good pace.

“The Seychellois economy continues to recover in 2023. Real GDP growth is projected at 3.8 percent in 2023, based largely on a continued increase in tourist arrivals. This outlook is subject to continued risks given the challenging international environment and uncertainty around tourist arrivals and average spending. Year-on-year inflation was negative (-2.4 percent) as of August, reflecting the impact of lower international commodity prices on food inflation as well as moderating prices for housing and utilities.

“The government’s primary fiscal position is expected to be near balance in 2023—stronger than expected at the outset of the EFF/RSF programme. Favourable revenue performance is offsetting a projected decline in external grants, and overall spending is less than projected due to an under-execution of capital expenditures.

“Seychelles’ external balances have improved with the continued recovery in tourism. Tourist arrivals through August were estimated at 229,000, or about 92 percent of 2019 levels. The external current account deficit is projected to strengthen to 5.4 percent of GDP in 2023. Central bank foreign exchange reserves are projected to reach an equivalent of 3.7 months of import cover by end-of-year.

“Debt vulnerabilities have been reduced on the back of GDP growth, robust government revenues, and fiscal consolidation. The debt-to-GDP ratio is expected to fall to 64 percent of GDP by end-2023, compared to 81 percent in 2020 at the height of the pandemic.

“The Central Bank of Seychelles (CBS) has maintained an accommodative monetary policy in the context of disinflation and ample liquidity. The CBS stands ready to act if inflationary pressures materialise. The CBS will continue its efforts to strengthen Seychelles’ monetary policy framework and closely monitor financial sector soundness to reinforce banks’ ability to support the recovery.

“The authorities are committed to bolstering governance and fighting corruption. The new state-owned enterprise (SOE) legislation provides a harmonised framework for the establishment, governance, and operation of SOEs. Efforts also continue to improve the transparency of the beneficial ownership database and ensure the accuracy of collected information.

“With respect to climate change mitigation and adaptation, the authorities are advancing with reform measures agreed under the RSF.

“The forthcoming National Development Strategy (2023-27) will include priority climate adaptation and mitigation objectives stipulated in Seychelles Nationally Determined Contribution (NDC).”

He concluded by thanking the Seychellois authorities for the open dialogue and close collaboration.

It should be noted that during their mission, meetings were held with President Ramkalawan, Minister Hassan, and Governor of the Central Bank of Seychelles, Ms Abel, and other senior government officials as well as representatives of the private sector.

Sunny Esparon/Press Release