IMF Executive Board Approves US$ 17.6 Million Extended Fund Facility Arrangement for Seychelles

MAHE, Victoria, June 6, 2014/African Press Organization (APO)/ — The Executive Board of the International Monetary Fund (IMF) yesterday approved a three year SDR 11.445 million (about US$ 17.6 million, or 105 percent of Seychelles’ quota) arrangement under the Extended Fund Facility (EFF) for the Republic of Seychelles to support the authorities’ economic program. The approval enables the immediate disbursement of SDR 1.635 million (about US$ 2.5 million), while the remaining amount will be phased over the duration of the program, subject to semi-annual program reviews.
The authorities’ EFF-supported program aims to reduce the high debt levels, improve external buffers and sustainability in the face of emergent balance of payments pressures, and strengthen the economy through sustained and inclusive growth.
Following the Executive Board discussion on Seychelles, Mr. Naoyuki Shinohara, Deputy Managing Director and Acting Chair, said:
“The authorities have undertaken comprehensive reforms since the 2008 crisis that have supported a strong recovery and improvements in fiscal and external sustainability. Growth was strong in 2013, boosted by increased tourism arrivals. Inflation stabilized at a low level. The current account deficit fell sharply, allowing the central bank to rebuild its reserves. However, debt levels and the current account deficit remain high, while some persistent structural weaknesses are holding back growth potential and economic resilience.
“The authorities’ economic program supported by the EFF-arrangement appropriately focuses on reducing vulnerabilities and containing fiscal risks while fostering sustained and inclusive growth. The authorities’ target of reducing the debt-to-GDP ratio to below 50 percent by 2018 remains an anchor for stability, while allowing the necessary investments in human and physical capital to support growth. The new monetary policy framework builds on recent progress in mopping up structural excess liquidity, and exchange rate flexibility and moderate reserve accumulation continue to facilitate adjustment to external shocks.
“The structural reform agenda is ambitious and targeted. The adoption of a Medium-Term National Development Strategy, the associated medium-term fiscal framework, and a financial sector development strategy, together constitute critical reforms needed to promote growth. Reforms also aim to strengthen the management and transparency of public finances. Building on the progress already made, it is important to enhance the oversight of state-owned enterprises to contain fiscal risks and avoid excessive expansion from crowding out the private sector.”
Recent economic developments
In the five years following the 2008 crisis, the Seychellois authorities have successfully enacted a comprehensive IMF-supported program of reforms – floating the exchange rate, eliminating exchange restrictions, turning fiscal deficits into surpluses, and halving the debt burden with the assistance of external debt relief. Structural reforms sought to foster long-term growth, including through simplifying the tax system and promoting the private sector.
These reforms have borne fruit in the form of a strong and sustained recovery: real Gross Domestic Product (GDP) growth accelerated to around 3.5 percent in 2013, boosted by strong tourist arrivals. Inflation fell to 2.2 percent in March 2014. The external position improved thanks to a boom in tourism and tuna exports, and Foreign Direct Investment (FDI) flows remain strong. Reserve coverage reached an estimated 3.8 months of imports at end-2013, up from 3.0 months at end-2012. The 2013 fiscal outturn was largely in line with the authorities’ ambitious targets, although business and income tax revenues were somewhat weaker than expected.
Nevertheless, important risks and challenges remain. At 65 percent of GDP, Seychelles’ public debt remains high, as does the current account deficit (18.5 percent of GDP), —although the latter has been largely funded by FDI. Moreover, the balance of payments faces headwinds as debt service and investment income payments rise. Sustained GDP growth will require adequate infrastructure investment and an active reform agenda to enhance productivity. At the same time, fiscal policy faces pressures, as revenue and grants have been falling as a proportion of GDP.
Program Summary
The program is designed to strengthen macroeconomic stability, reduce vulnerabilities, and support wide-ranging structural reforms aimed at laying the foundation for sustained and inclusive growth. The macroeconomic framework is anchored on the authorities’ goal of reducing the debt-to-GDP ratio below 50 percent by 2018. This requires continued fiscal primary surpluses of 3 to 4 percent of GDP over the medium term, a fiscal path which strikes a balance between the pace of debt reduction and addressing vital social and investment needs. Revenue measures under the program will focus on improving tax compliance and administration, while enhancing the quality of fiscal spending will be a core priority of the program.
The monetary policy framework aims to maintain low and stable inflation. In advance of the new program, the excess liquidity problem has been largely addressed through the issuance of medium-term Treasury bonds. The adoption of average reserve money targeting will further strengthen the policy framework, supporting the move towards a more forward-looking framework. While reserve coverage has recently reached the desirable range, maintaining it will require continued reserve accumulation in the face of balance-of-payments pressures. Exchange rate flexibility remains key to ensuring external stability over the medium term.
Sustaining growth and tackling risks to stability will require the implementation of a new generation of ambitious structural reforms, including: the adoption of a Medium-Term National Development Strategy, a medium-term fiscal framework, and a financial sector development strategy, as well as measures to combat international tax evasion. A new framework for Public Private Partnerships will support infrastructure investment and promote the role of the private sector. Establishing a registry of state assets, including land, will help protect public finances and support more efficient land use. The oversight of state owned enterprises will also be progressively strengthened, building on past progress, to contain fiscal risks and focus them on their core missions.


  1. A few days ago an Article from NATION attempted to explain why Seychelles small and medium enterprises failed but without really given us a clear answer.

    I will tell you Why Prof.LAPORTER?
    Financing of small firms has so far been a emotive issue in Seychelles under Pp.High poverty,weak economy etc.. forced them to do so).Credits to small firms is used as a safety net and anti- poverty-initiative.

    Government credits to these small firms usually flow based on social needs rather than economic rationale,and in some cases poses a moral-hazard.Government subsidies are therefore ,an unprofitable and unsustainable way to finance small firms.


    Offering Credits through market-based schemes is the best way to ensure greater sustainability and efficiency in financing small firms.Market-based Credit schemes ,are not only able to sustain access to Banking services but also function as a catalyst in developing self-reliance and enterpreneurship of small scale enterpreneurs.

    ASSESSING small firm's financing option in our Cash-strapped economy------
    Seychelles economy has witnessed along period of MACROECONOMIC instability and anaemic economic growth,largely caused by irresponsible and profligate fiscal management.Pp government appetite for credit forces price of credit upward(interest rate on loans),and,therefore,prevents private capital investing in productive activities such as those small firms are engaged.In the jargon that is called "Crowding out).It is no surprise therefore that no small firms borrow from the private market.

    STRATEGIES FOR improving BANKABILITY--If small firms are to fulfill their mandate as creators of jobs and wealth for the masses,merely providing Credits Is not a sufficient condition to help achieve these goals.TECHNICAL ASSISTANCE IS CRUCIAL in order to help them to improve BANKABILITY.Government,multilateral instituions and strong private sector institutions should play a role in this regard.

    A few things can be done to improve bankability:
    1--Government and multilateral institutions should provide special training programs to address deficiencies in managerial capabilities,enterpreneurship thinking,marketing and production capabilities.(These programs do not have to be organic).
    2---Private institutions need to find creative ways to help those small sector.Providing concession loans in not enough.Special institional arrangements must be established to serve the credit needs of these small firms.

    3---Unused(if any left)Government Assets can be used to collateralize loans for small firms.Setting up a National collateral Agent,with clear rule and supervision would help small firms access credit in a timely manner.The moral-hazard once government is involved will have to be guarded against.

    Conclusion---Most small firms in Seychellois are not ready for sophisticated forms of investment capital such as Venture capital funding ,private equity and Stock Exchange.The major sources for capital,therefore the wholesale and retails market financed by government and private Banks.To access these capital small firms will require a lot of training to improve their BANKABILITY.Without TARGETED TECHNICAL ASSISTANCE ,lending to the sector will alawys be low ,and financing will always be a problem.Technical assistance will help to alleviate the risk to Banks and also help solve the problem of moral-hazard in the wholesale market.

    The strategies proposed above are ways to reduce the risks to Bank ,and ensure that increased lending is driven by commercial market forces,not government.Governement lending is less efficient than private capital.

    Wake up Prof.LAPOTER and Dr Fanny,shake your balls and stop borrowing and depending of foreign aid.

    Jeanne D'Arc

  2. We could ask,how reduce debt by taking more debt?

    What Pp needs to reduce Debt are___ more fiscal tightening,
    Reduce wastage and government spending,illiminating corruption,Divesting select public assets,,tax and public sector reforms..It is true that the decades of astronomic debt continues to crip our economy and damaging our country's future.Without the voodoo economy of Michel and Pp for the last decade we would not be there today.

    Jeanne D'Arc


    1. I.E Stop this marxsim policy and Seychelles will have a surplus in 5yrs. PL is the modern version of Oliver Twist........ Please Sir can I have some more?

  3. Again Again how much its make together seen IMF are bailing them VOLER out MAY BE ONE BILLION and who will pay those debts when those old crooks gone to hell the young generation ?

  4. More you get from IMF more you have to pay back Seychellios don't let old crooks foul you,you things those money from IMF is a gift or present like pp are getting from arabo?NO you will have to work harder and harder to those debts back.

    F**k IMF they say Seychelles GDP is growing but why bailing this small island like this with a population 90,000 over over again may be they heard Seychelles have a oil project they also want take get a bite of the cheery oil money to pocket.

    1. It's because Seychelles Government are spending more than they receive in taxes........ The feet might be growing, but the shoes is still too big....... Simple!


    1. Well said....... :-)

  6. IMF as the World Bank (who by the way never ask the governemnt they give millions in debt to be accountable and transparent)are two main sources that help keep us in Debt.a virtuous and vicious circle.

    The main cost associated with borrowing and the accumulation of a large debt is the DEBT SERVICE;the liquidation of principal and accumulated interests;which represents a contractual fixed charge on a country's income,saving and foreign Exchange reserves or as interest rates on accumulated borrowing rise,DEBT SERVICE,which must be paid in foreign exchange also rises.This implies that debt service ca only be met with export earnings---thus should exports decline,or exports fall,or inttrest rates rise significantly,and exceed the country's export capacity-----the country starts experiencing debt difficulties.

    Only dummies,see World Bank and Imf a solution to our country's fiscal problem.IMF and World Bank have over the years attempted to highlight their help to Seychelles.But in reality,these tow insitutions have gradually become the chief architects of polices which are responsible for the worst inequalities and poverty,corruption in our country.They have lutterly failed to reduce poverty and boost development in Seychelles

    every business person would tell you that a bank loan that is well-planned and utilized meaningfully can be beneficial to any business venture.However,if you paln to perpetually to live on loan,then it becomes a passport of plunging your business in the ditch. In a way The Imf and the World Bank with neocolonial mentality are forcefully demanding Pp to lower our standard of living in order to Pay them back,Imf policies has also worsen labour,level of social safety,and environment standari nour country(IMF ususlly dictates the course of polcies to be taken by boorower country..It is known that IMF revenues keeps increase each in billions---- from -interests on foreign aid given.

    When would IMf;WORLD BANk and Pp show us where have all those forieng loans,and aid money gone?No public accountability by Pp,but still IMF and WORLD Bank deliberately continue to throw millions to PP,WHY?

    Jeanne D'Arc

  7. Seychelles First7 June 2014 at 12:46

    Seychelles had years of socialist-oriented economic policy during single-party rule, characterised by price, trade and foreign exchange controls, a prominent role for parastatal companies, and robust debt-funded development spending. This led to rapid economic development, but also created serious economic imbalances. These problems included large fiscal and external deficits and mounting debt arrears, which contributed to persistent foreign exchange shortages and slow growth. Press reports indicated that high-level corruption contributed substantially to these problems. In October 2008, facing the near-depletion of official foreign exchange reserves, Seychelles defaulted on interest payments due on a U.S. $230 million Eurobond issued 2 years previously, severely damaging its credibility as a borrower. The government subsequently turned to the International Monetary Fund (IMF) for support, and in an attempt to meet the conditions for a stand-by loan, began implementing a program of radical reforms. These included a fundamental liberalisation of the exchange rate regime, involving the devaluation and floatation of the rupee, and the elimination of all foreign exchange controls. In light of the economic and financial reforms, the IMF approved a 2-year U.S. $26 million stand-by loan in November 2008, which represents the Fund's first-ever formal program in Seychelles. I hope this explains everything.

    1. And James Michel said he is proud of Albert Rene. Maybe money grows on trees somewhere around State House.


  8. 12.46

    PP wants to keeps inflation low,How low?,hope it does not become deflation.then Dr LAporte would be in shit.

    Proud because without REN coup ,the former bloodly act has allowed him to become President,Without RENE ,Michel today would be a street cleaner ..

  9. Seychelles First9 June 2014 at 03:49

    Top adviser at Seychelles Central Bank slams government economic policy calling it "snakes and ladders economics".

  10. Seychelles First9 June 2014 at 05:36

    The true cost of PL economic policies.......... The plight of Breadline Seychelles' destitute children is exposed today. A shocking 500 youngsters are living in poverty in this country - and we predict that figure will soar to a 1000 by 2020. In a devastating development, more and more desperate mothers are turning to parents, friends, prostitution and selling drugs in a bid to put food on the table. The survey was carried out by a network of volunteers


    Like you told Seychellios to stop living on welfare pp you stop surviving with IMF bail out.If IMF was not bailing you and arabo sponsoring you seen a long time Seychellios was in the street no food on the tabels,a**of those crooks are save by
    Moron develop your own resource,may be you don't what resource you have to develop.

    PP crooks should look themselves in the mirror and ask themselves a Q why their prison at Montagne Posse are getting crowded.
    Our youths are jobless and end up in crimes and end up behind bar don't blame the youths blame this jungle system our youths have no choice to survive.

  12. IMF you continuing feeding those big fat rats.IMF not the poor should pay the riches should pay,poor Seychellios are paying those debts you bailout.

  13. Seychellios should stand up for a basic salary not a minimum salary before their become poorer.

  14. IMF feeds the beast and keep Seychellois hungry ,thus help PP survival.IMF is right to say,is following a conspiracy strategy ,that officialized corruption.For instance,while IMF preaches about transparency and accoutnabality--to date there has been no call by IMF asking PP to make public how IMF money is being used and how in fact it should be by State.Ususal International aid should be directly goes into the hands of the people/help the people but IMF has decided that the people is Pp dictatorial system which does not represent the people but a gang of criminals.Should Seychelois accept to pay back money to IMF ,money they never seen and reiceived?I personally think NO----We cannot pay back money we did not borrow and therefore never received IMF?

    Setting up a minimum salary is a good thing -but salry must reflect Cost Of living and needs of the people.This applies to salary,wages and benefits .Under PP salary of public workers has increase twice by meager amount percent for the last 5 decades ,that has help make Seychellois poorer than they were 5 decades ago while the one-party system members increase their salary literally each years by triple digits and served themselves in the state coffers.....Voodoo economy is virtual and cannot work---it is base of falsification.manipulation of growth nembers not real and rational economic policies.End result--high poverty, banrupcy,astronomic debt,social collapse,etc...

    That is the result of the guy who named himself FATHER OF MODERN SEYCHELLES Prophet RENE the charlatan.

    Jeanne D'Arc

  15. Father of modern Seychelles dan son fes,this man is planning to live Seychelles and live Seychellios in a mess watch him Seychellios his move he make..

  16. Partilepep preaches ABOUT ALL KINDS of colored economy from BLUE,GREEN,GREY. to YELLOW ECONOMY ETC..what is it really?Normally all are supposed to be sustainability,but partilepep still seems to misunderstand what they are really.

    GREEN ECONOMY involves the clean,safe produce of goods,material and energy------So where are those clean energy Partilepep.
    BLUE ECONOMY(that where Partilepep misunderstanding is persistence) --involve the cyclical production of FOODS,INCOME AND JOBS FROM WASTE-----for instance,recycling --E-WASTE,CONVERTING USED COOKING OIL INTO BOI-FUEL,OR FINDING SOLUTION TO DEAL WITH TONS OF FISH DISCARD INTO THE SEA(A WASTE)BY FOREIGN TUNA SEINERS,ETC....For partilepep it seems Blue Economy is about exploitation of our EEZ...

    So the key idea underlining those colored economies is that sustainability can be solved with innovation,technology,rather than in social and cultural arena,while there is a clear association with growth,and earning money.

    hence,the reality is that it is clear economy thinking on any colour just donot work.We have to rid ourselves of the notion that PROFIT automatically means MORE MONEY,and that GROWTH can only be ECONOMIC.We have to realize that we have to put PEOPLE and ENVIRONMENT above PROFIT and CAPITAL.It would be better to replace our entire body of economic thought by a philosophy that dares to take a hard look at the complexity of our current social and environment issues.

    Jeanne D'Arc

  17. Butcher of the Nation fits best to his astrocities than Slef-proclamation of Father of Modern Seychelles-----butchering one own people has nothing modern to it,,importing foriegners to colonize and take one people land and job,is nothing modern.moderinity is about liberties,freedom,self -determination,democracy,human rights ,respect of Human dignity,one and so on.


Post a Comment

Popular posts from this blog

Who is it that really wants to remove Mathilda Twomey as Chief Justice?

Wavel Ramkalawan compromises independence of CAA and ACC