IMF staff mission to discuss Seychelles's 2nd review under PCI concludes today

The growth outlook for 2019 remains positive, supported by continuous growth in the fishery, tourism and construction sectors.

An International Monetary Fund (IMF) staff mission led by Amadou Sy visited Victoria during September 19‒October 2, 2018, to conduct discussions on the second review under the Policy Coordination Instrument (PCI).

At the conclusion of the visit, Mr Sy issued the following statement:

“Macroeconomic performance continued to be strong in 2018. Real GDP growth is estimated to reach around 3½ per cent, reflecting strong output in the fishery industry and the information and communications sector. The external current account narrowed thanks to strong tourism earnings. The program is on track—with reserves and the primary surplus exceeding targets—and the mission reached a staff-level agreement on policies for completion of the review.

“The growth outlook for 2019 remains positive, supported by continuous growth in the fishery, tourism and construction sectors. While the strengthening in international commodity prices in recent months could have some negative impacts on the balance of payments and inflation, the country’s international reserves coverage is expected to remain at the adequate level discussed in the previous Article IV mission, anchored by the authorities’ prudent policies. Downside risks to the outlook largely lie in external factors which could dampen tourism performance.

“The mission recognizes the need to make progress in enhancing medium-term growth prospects, including building up infrastructure and resilience to climate change. However, this should be reconciled with the need to shore up Seychelles’ hard-won economic stability and strengthen fiscal sustainability. In this context, the mission reiterates that the large infrastructure projects announced in the State of the Nation Address in March be implemented within the envelope of the authorities’ goal to reduce the public debt to GDP ratio below 50 per cent by 2021. The mission also encourages the authorities to implement permanent fiscal saving measures from 2019 onwards to shore up the medium-term debt reduction goal.

“The mission supports the Central Bank of Seychelles’ stance to stay vigilant to any sign of demand-pull inflationary pressures and the potential second-round effects of electricity tariff adjustments and administrative measures. The mission encourages the authorities to step up efforts to strengthen the AML/CFT framework and formulate a new strategy for the international financial services sector.

“The mission met with President Danny Faure, Minister of Finance, Trade, Investment and Economic Planning Maurice Loustau-Lalanne, and Governor of the CBS Caroline Abel, as well as other members of the government, members of the National Assembly, and representatives of the private sector.

“Subject to the approval of IMF management, the IMF Executive Board is expected to discuss the completion of the review in December 2018. The mission appreciates the high quality of the discussions and thanks the authorities for their hospitality, as well as the open and constructive dialogue.”