Seychelles: IMF Completes the Third Review Under the Extended Arrangement

The Executive Board of the International Monetary Fund (IMF) has completed the third review under the three-year Extended Arrangement (EFF), which became effective on December 23, 2009 in the amount of SDR 19.8 million (see Press Release No. 09/472). The completion of the review makes available a disbursement of SDR 3.52 million (about US$5.6 million). The Board's decision was taken on a lapse of time basis.¹

In 2010, the Seychelles economy recovered strongly from the debt and balance of payments crisis in 2008, followed by last year’s global recession. Economic growth was driven by exceptionally high foreign direct investment and a rebound in tourism. Inflation remained near zero, and the country continued to rebuild its international reserves and reduce public debt. The economic program supported by the Extended Fund Facility remains on track and all quantitative performance criteria at end-December 2010 were met.

In 2011, the policy mix under the program has been adjusted in response to the global commodities price shock and the recent financial difficulties of Air Seychelles. Fiscal policy will be slightly looser to accommodate additional priority spending, while maintaining the targeted progress toward external stability and debt sustainability. Structural reforms will focus on strengthening the financial sector through the modernization of its legal and regulatory framework and the restructuring and/or privatization of several state-owned financial institutions.

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¹ The Executive Board takes decisions under its lapse of time procedure when it is agreed by the Board that a proposal can be considered without convening formal discussions.