With the International Monetary Fund, Seychelles will receive assistance totaling about $46.19 million under a freshly negotiated Resilience and Sustainability Facility and $56.96 million with a new Extended Fund Facility (EFF).
Following a trip to Seychelles from March 16–29 to evaluate the previous EFF, which will end in June, IMF staff and the Seychellois authorities achieved a staff-level agreement on a successor to the two facilities.
The two initiatives will assist the island country's economic reforms and policies. In addition, the Resilience and Sustainability Trust (RST) has reached a staff-level deal with Seychelles, the second African nation to do so.
We know that Seychelles is at the forefront of climate policies, so the authorities have requested access to the new facility to address long-term challenges, according to IMF Chief of Mission Calixte Ahokpossi, who spoke to reporters on Wednesday.
He continued that the authorities' efforts to advance the macroeconomic, fiscal, and financial reforms begun under the EFF that was signed in July 2021 would be supported by the new EFF.
The agreement is pending approval by the IMF management and executive board. The board's deliberation is anticipated to take place in May 2023.
Naadir Hassan, the finance minister for Seychelles, stated that a new EFF was negotiated to aid in financing recent reforms because the program is ending this year.
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"We have reached an agreement for a smoother path to achieving our target debt-to-GDP ratio; originally, the deadline was 2026, but we now have to push it to 2028. This will allow us more room to invest, particularly in the nation's infrastructures," Hassan continued.
The International Monetary Fund also assessed Seychelles' advancements since the prior EFF, and according to Ahokpossi, the IMF is pleased.
He says, "the government has made significant progress in carrying out policies and reforms outlined in the current IMF-supported EFF program and restoring macroeconomic balances."
Both the overall structural reform agenda and quantitative results have been solid. Therefore, according to Ahokpossi, the program is anticipated to be canceled and replaced by the new one.
Despite a challenging global economy, according to the IMF's report following the review, tourism rebounded firmly in 2022, with arrivals that reached about 87 percent of pre-pandemic levels.
GDP growth accelerated from 5.4 percent in 2021 to 9 percent, and this year the economy is forecast to expand at a slower pace of 4.3 percent. However, the problematic global climate exposes this outlook to risks associated with tourism that could be negative.
"The lagged impacts of currency appreciation, as well as base effects, contributed to the relatively low level of inflation in Seychelles in 2022. Inflation dropped to 2.6 percent on average in 2022 after reaching 9.8 percent in 2021.
According to the study, inflation is anticipated to moderate and fall to an average of 1.4 percent in 2023. Seychelles recorded a 0.7 percent GDP primary fiscal surplus last year as opposed to a deficit of 15.2 percent in 2020. and 3.2 percent in 2021.
