Front Matter Page
IMF Country Report No. 15/201
SEYCHELLES
2015 ARTICLE IV CONSULTATION, SECOND REVIEW UNDER THE EXTENDED ARRANGEMENT, AND REQUEST FOR WAIVER AND MODIFICATION OF PERFORMANCE CRITERIA—PRESS RELEASES; STAFF REPORT; STAFF STATEMENT; AND STATEMENT BY THE EXECUTIVE DIRECTOR FOR SEYCHELLES
July 2015
In the context of the Staff Report for the 2015 Article IV Consultation, Second Review Under the Extended Arrangement, and Request for Waiver and Modification of Performance Criteria, the following documents have been released and are included in this package:
A Press Release including a statement by the Chair of the Executive Board and summarizing the views of the Executive Board as expressed during its June 17, 2015 consideration of the staff report on issues related to the Article IV Consultation and the IMF arrangement.
The Staff Report prepared by a staff team of the IMF for the Executive Board’s consideration on June 17, 2015, following discussions that ended on March 26, 2015, with the officials of Seychelles on economic developments and policies. Based on information available at the time of these discussions, the staff report was completed on May 26, 2015.
An Informational Annex prepared by the IMF staff.
A Staff Statement of June 17, 2015 updating information on recent developments.
A Statement by the Executive Director for Seychelles.
The documents listed below have been or will be separately released.
Letter of Intent sent to the IMF by the authorities of Seychelles*
Memorandum of Economic and Financial Policies by the authorities of Seychelles*
Technical Memorandum of Understanding*
*Also included in Staff Report
The IMF’s transparency policy allows for the deletion of market-sensitive information and premature disclosure of the authorities’ policy intentions in published staff reports and other documents.
Copies of this report are available to the public from
International Monetary Fund • Publication Services
PO Box 92780 • Washington, D.C. 20090
Telephone: (202) 623-7430 • Fax: (202) 623-7201
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Price: $18.00 per printed copy
International Monetary Fund
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© 2015 International Monetary Fund
Front Matter Page
SEYCHELLES
STAFF REPORT FOR THE 2015 ARTICLE IV CONSULTATION, SECOND REVIEW UNDER THE EXTENDED ARRANGEMENT, AND REQUEST FOR WAIVER AND MODIFICATION OF PERFORMANCE CRITERIA
May 26, 2015
Key Issues
Context: The robust recovery from the 2008 balance of payments and debt crisis has resulted in improved economic and social outcomes. Continued policy discipline and reforms are needed for the microstate to mitigate its geographical and population constraints and maintain momentum in developing a diversified and resilient economy.
Focus: With the fiscal stance anchored by the authorities’ debt reduction objective, macroeconomic discussions concentrated on the smooth functioning of monetary and exchange rate policies. On the structural agenda, the dialogue focused on policies to promote sustained and inclusive growth, particularly on the appropriate role for state-owned enterprises (SOEs).
Review: The program is on track. The authorities met the end-December quantitative performance criteria except for narrowly exceeding the ceiling on reserve money. The structural agenda remains broadly on track despite some delays. Staff recommends completion of the second review under the Extended Arrangement and modification of the performance criteria for end-June and end-December 2015, and supports the authorities’ request for a waiver for the end-December 2014 performance criterion for reserve money.
Outlook and risks: With the external position having stabilized since the last review, fundamentals are strengthening. However, the economy remains highly vulnerable to global developments, including weakness in the key European markets, while domestic risks center on the role of the SOEs.
Recommendations: The authorities’ objective of reducing public debt below 50 percent of GDP by 2018 remains an appropriate and attainable anchor for fiscal policy. The monetary policy framework should be further enhanced by increasing its forward orientation in the context of a flexible exchange rate. Structural measures should focus on fostering inclusiveness and private sector-led growth, while improving economic governance and the focus of SOEs.
Data: Data provision is broadly adequate for surveillance. Priority areas include improved GDP statistics, strengthening external sector statistics, and extending coverage of the international investment position.
Approved by
David Robinson and Luis Cubeddu
Discussions were held in Victoria during March 11-26, 2014. The staff team comprised Mr. Mills (head), Messrs. Dallari, Jammeh, Roy, and Thornton (all AFR). The mission met the President, Vice President, Finance Minister, Governor of the Central Bank, other senior officials, banks, private sector representatives, civil society, and parliamentarians. The three-year Extended Arrangement under the Extended Fund Facility (EFF) for SDR 11.445 million (105 percent of quota) expires on June 4, 2017. The program aims to bolster the foundations for sustained and inclusive growth, while addressing remaining vulnerabilities.
Contents
CONTEXT: MICROSTATE RECOVERING FROM CRISIS
RECENT DEVELOPMENTS, OUTLOOK AND SPILLOVERS
GOOD PERFORMANCE UNDER THE EFF
MACROECONOMIC POLICY: BUTTRESSING STABILITY
STRUCTURAL REFORMS: REDUCING RISKS AND PROMOTING GROWTH
OTHER ISSUES
STAFF APPRAISAL
BOXES
1. Risk Assessment Matrix, 2015
2. External Stability Strengthening Despite Continuing Vulnerabilities
3. Seychelles’ Debt Buyback For Conservation And Climate Adaptation
FIGURES
1. Macroeconomic Developments and Projections
2. Monthly Indicators of Economic Activity
TABLES
1. Selected Economic and Financial Indicators, 2012-20
2. Balance of Payments, 2012-20
3. Consolidated Government Operations, 2012-16
4. Monetary Survey and Central Bank Accounts, 2012-15
5. Financial Soundness Indicators for the Banking Sector, 2011-14
6. Indicators of Fund Credit, 2013-22
7. Schedule of Reviews and Purchases Under the Extended Arrangement, 2014-17
ANNEXES
1. Public Debt Sustainability Analysis
2. External Debt Sustainability Analysis
3. Inward Spillovers and the Tourism Sector
4. External Stability and Competitiveness Assessment
5. The Medium-Term Fiscal Challenges
6. Sources of Growth
7. Establishing a Macroprudential Framework
APPENDIX
I. Letter of Intent
Attachment 1: Memorandum of Economic, Financial and Structural Policies for 2015-16
Table 1. Quantitative Performance Criteria Under the Extended Arrangement, 2014-2015
Table 2a. Structural Benchmarks Under the Extended Arrangement, 2014
Table 2b. Structural Benchmarks Under the Extended Arrangement, 2015-2016
Attachment 2: Technical Memorandum of Understanding
Front Matter Page
SEYCHELLES
STAFF REPORT FOR THE 2015 ARTICLE IV CONSULTATION, SECOND REVIEW UNDER THE EXTENDED ARRANGEMENT, AND REQUEST FOR WAIVER AND MODIFICATION OF PERFORMANCE CRITERIA—INFORMATIONAL ANNEX
May 26, 2015
Prepared By
The African Department
(In consultation with other departments)
Contents
RELATIONS WITH THE FUND
JOINT WORLD BANK-IMF WORK PROGRAM, 2015
RELATIONS WITH THE AFRICAN DEVELOPMENT BANK GROUP
STATISTICAL ISSUES
Front Matter Page
Press Release No. 15/294
FOR IMMEDIATE RELEASE
June 23, 2015
International Monetary Fund
700 19th Street, NW
Washington, D. C. 20431 USA
Telephone 202-623-7100
Fax 202-623-6772
Front Matter Page
Press Release No. 15/280
FOR IMMEDIATE RELEASE
June 17, 2015
International Monetary Fund
700 19th Street, NW
Washington, D. C. 20431 USA
Telephone 202-623-7100
Fax 202-623-6772
