IMF Staff Completes Review Mission to Seychelles

Stocks and Financial Services Press Releases Wednesday March 21, 2018 08:35
IMF--21 Mar--International Monetary Fund
The staff team reached staff level agreement on policies for completion of the review.
Seychelles' growth outlook for 2018 remains positive, supported by the tourism sector.
Downside risks to the outlook largely lie in external factors, which could dampen tourism performance.
An International Monetary Fund (IMF) staff mission led by Amadou Sy visited Victoria during March 7?20, 2018, to conduct discussions on the first review under the Policy Coordination Instrument (PCI). [1]
At the conclusion of the visit, Mr. Sy issued the following statement:

"Macroeconomic performance continued to be strong in 2017. Economic growth is estimated to have exceeded 5.0 percent, reflecting buoyant tourism activity, strong output in the fishery industry, and expanding credit to the private sector. Inflation (year-on-year) has been picking up and reached 3.5 percent at end-2017 reflecting the rising trend in international commodity prices. The program is on track—with reserves and the primary surplus exceeding targets—and the mission reached staff level agreement on policies for completion of the review"

"The growth outlook for 2018 remains positive, supported by the tourism sector. While a strengthening in international commodity prices 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 concurred with the authorities on the need to make progress in enhancing medium-term growth prospects, including building up infrastructure and resilience to climate change. However, this should be done in a prudent manner that allows fiscal and monetary policies to continue anchoring Seychelles' hard-won economic stability and strengthening fiscal sustainability. In this context, the mission recommended 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 percent by 2021."

"The mission supports a tightening of monetary policy by the Central Bank of Seychelles given the increased demand-pull inflationary pressures and the potential second-round effects of administrative measures. The mission encourages the authorities to continue efforts to strengthen the AML/CFT framework and formulate a new strategy for the international financial services sector."

"The mission met with His Excellency President Danny Faure, Minister of Finance, Trade, and Economic Planning Peter Larose, 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 May 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."

[1] The PCI is an instrument of the IMF designed for countries that do not need balance of payments financial support. The PCI helps countries design effective economic programs that, once approved by the IMF's Executive Board, signal to donors, multilateral development banks, and markets the Fund's endorsement of a member's policies (seehttps://www.imf.org/en/About/Factsheets/Sheets/2017/07/25/policy-coordination-instrument).


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