Tanzania: Seychelles first to seek IMF’s non-financing instrument for monitoring reform agenda

Dar es Salaam, Tanzania (PANA) – Seychelles and the International Monetary Fund (IMF) have reached a staff level agreement on an economic programme which could be supported by a new 3-year IMF arrangement under the Policy Coordination Instrument (PCI), it was officially announced on Thursday.

Noting that the Seychellois authorities have implemented prudent macroeconomic policies, together with bold structural reforms that led to strong economic growth as well as noticeable improvement in fiscal and external position including debt reduction, the Fund said the agreement is due to be submitted to the IMF Executive Board for consideration in December 2017.

The PCI, which is available for all member countries, is the Fund’s new non-financing instrument that supports countries seeking assistance to develop and help monitor a reform agenda. It is designed for countries that are seeking to unlock financing from multiple sources and/or to demonstrate a commitment to a reform agenda.

Besides, the PCI enables a closer policy dialogue between the Fund and countries, more regular monitoring of economic developments and policies, as well as Board endorsement of those policies. Under the arrangement, Seychelles economic programme would be subject to semi-annual reviews.

“Seychelles has made considerable progress toward macroeconomic stability under the three consecutive IMF-supported programmes,” said Mr. Amadou Sy who led an IMF staff mission to Victoria, the Seychelles capital from 13-26 September 2017.

Since 2008, he said the Seychelles authorities have implemented prudent macroeconomic policies together with bold structural reforms, which led to strong economic growth as well as noticeable improvement in fiscal and external position.

“Consequently, Seychelles’ external reserve buffers have reached a comfortable level and the country does not need the IMF’s financial assistance now,” Mr. Sy affirmed in a statement made available to PANA in Dar es Salaam.

The authorities have requested a programme to consolidate macroeconomic stabilization, enhance resilience, and foster sustained and inclusive growth because the Indian Ocean island nation “still faces vulnerabilities and pressures, as a small island economy in a challenging global economic environment”. Mr. Sy explained, noting that Seychelles is the first IMF member country to request a PCI.

According to the statement, the country’s macroeconomic performance has been robust in 2017. The external current account deficit is estimated to have narrowed, supported by strong tourism arrivals.

Economic growth for 2017 is projected to reach around 4 percent. With the economy performing well, the primary fiscal surplus is expected to reach 2.5 percent of GDP this year in line with the authorities’ target.

The growth outlook for 2018 remains positive, buoyed by the tourism sector, the IMF team noted.

“While a strengthening in international commodity prices could have some negative impacts on the balance of payments, the country’s international reserves coverage is expected to remain at an adequate level, anchored by the authorities’ prudent policies. Downside risks to the outlook largely lie in the external factors which could dampen tourism performance,” said Mr. Sy.
-0- PANA AR/MA 28Sept2017

28 september 2017 10:16:49

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