IMF Concludes EFF Review Mission to Seychelles
An International Monetary Fund (IMF) mission led by Carol Baker visited Victoria from October 17–26, 2012 to assess performance at end-June for the sixth program review under the Extended Fund Facility (EFF) Arrangement with Seychelles and discuss the authorities’ request for a one-year extension of the three-year arrangement and augmentation of access.
“The government has made sustained progress in implementing the IMF-supported program. All end-June 2012 quantitative targets under the program were met—some, including the fiscal primary balance target, by a wide margin. The broader structural reform agenda is also moving ahead, with implementation of the electronic clearing house and completion of a study on utility tariff reform. The mission welcomes adoption of the value-added tax (VAT), and notes that delayed implementation to January 1, 2013 does not materially affect the reform agenda.
“However, challenges remain. Seychelles’ open economy remains highly vulnerable to external shocks, while the weak financial position of public enterprises may increasingly strain public finances in the absence of domestic price adjustments. Ensuring a buildup of buffers against shocks will be critical in the current global environment, and requires the continuation of prudent macroeconomic policies and the safeguarding of international reserves. Moreover, the mission urges the authorities to bring the same level of fiscal discipline observed at the central government level to the broader public sector, including through the gradual adjustment and rebalancing of domestic utility, food and transport prices. Throughout this price adjustment process, it is of utmost importance to take the necessary steps to protect the most vulnerable segments of Seychellois society.
“In light of these challenges, the IMF mission and the Seychelles authorities have reached an agreement, subject to approval by IMF management and the Executive Board, on a one-year extension of the Extended Arrangement through December 2013 which includes an augmentation of access of 60.6 percent of quota ($10.23 million), bringing total access under the EFF-supported arrangement to 242.3 percent of Seychelles’ quota in the IMF. Specifically, the authorities and the mission reached understandings, ad referendum, on economic policies and reforms to lock in the gains to date, make further inroads on key reforms and build policy buffers in the uncertain global environment.
“The mission appreciates the high quality of the technical discussions and wishes to thank the authorities for their warm hospitality, and the open and constructive dialogue.”
Source: International Monetary Fund
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