Seychelles: 2017 Article IV Consultation and Sixth Review Under the Extended Arrangement


Seychelles: 2017 Article IV Consultation and Sixth Review Under the Extended Arrangement

Relations with the Fund

(As of March 31, 2017)

Membership Status: Joined 6/30/1977. Article VIII member since 01/03/1978.

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Outstanding Purchases and Loans:

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Financial Arrangements:

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Projected Obligations to the Fund (SDR Million: based on existing use of resources and present holdings of SDRs):

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Implementation of HIPC Initiative: Not applicable

Safeguards Assessments:

An update assessment of the Central Bank of Seychelles (CBS) in relation to the successor Extended Fund Facility (EFF) was completed in September 2014. The update assessment confirmed that the CBS has made further progress in developing its governance and control framework and that its operations are subject to independent oversight and accountability. The key remaining vulnerability is in internal audit, which lacks capacity. The CBS is working with an external consultant to develop this function in the medium-term. In addition, certain provisions of the CBS legal framework need strengthening. An updated review by LEG against evolving international benchmarks identified areas for improvement, particularly to safeguard the CBS Act’s integrity and further ensure the central bank’s autonomy. IMF technical assistance will be needed to draft the amendments and provide examples of leading practices.

Exchange Rate Arrangement:

The exchange market was liberalized in November 2008, which resulted in the elimination of all restrictions on the making of payments and transfers for current international transactions that are subject to Fund approval under Article VIII Sections 2, 3, and 4. The de jure exchange rate regime is floating and its de fact exchange rate regime is classified as floating. On March 31st, 2017 US$1 = SR 13.5817 (mid-rate).

Article IV Consultations:

Seychelles is currently under a 24-month consultation cycle.

Technical Assistance (November 2016–April 2017):

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Resident Representative: None

Joint World Bank-IMF WORK Program, 2017

(As of April, 2017)

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Relations with the African Development Bank

The Bank commenced operations in Seychelles in 1978 and has since approved 34 operations, comprising 15 projects, 3 lines of credit and 1 partial credit guarantee as well as numerous studies, capacity building, technical assistance and emergency relief operations (15 in total). The cumulative value of approvals, net of cancellations, as at April 2017 is UA 135.4 million, of which 82.5% from the ADB, 7.9% from the ADF, 7.9% from the NTF, and the remaining 1.6% from the AWF and the Fund for Africa Private Sector Assistance (FAPA).

In addition to Budget Support (Policy Based) operations, the Bank supported the Seychelles East Africa Submarine (SEAS) cable ICT PPP project, amounting to USD 39 million, of which the Bank financed US$12million, which was successfully implemented and completed in 2012. The Bank also provided in 2009 a partial credit guarantee of USD 10 million to help the Government of Seychelles restructure its commercial debt whilst reinforcing financial governance. The most recent investment project approved by the Bank, on 1 April 2015, is for a US$20.6 million loan in support of the Mahe Sustainable Water Augmentation Project (MSWAP).

The on-going non-lending operations include five (5) technical assistance packages in support of the reforms targeted by the Budget Support Operation, including support to Private Sector Development, particularly enhancing access to finance and skills development for small and medium enterprises (MSMEs), as well as a project jointly financed with the Investment Climate Facility (ICF) to support the preparation of a PPP legal, regulatory and operational framework. The Bank’s TA package also includes support to the Development of Quality of Service Standards and Regulations to ensure reliable and efficient delivery of high quality communication broadcast services and ensure the protection of the welfare of all classes of consumers for all services (voice, data, and Broadcasting services) in Seychelles.

The current Country Strategy Paper (CSP 2016–20) – was approved by the AfDB Board in March 2016 and is articulated around two mutually reinforcing pillars: Pillar 1 – Enhancing energy infrastructure to promote inclusive and green growth; and Pillar 2 – Stimulating private sector activity in support of economic diversification though policy reforms. The overarching objective of the CSP is fostering a more diversified economy with greater resilience to external shocks and to create jobs, notably for the youth. To achieve this objective, the CSP is based on a two-pronged approach that focuses on the private sector as the main engine of diversified, inclusive economic growth: investments in energy infrastructure and support of policy reforms towards a more conducive business environment. Bank’s Support under Pillar 1 will boost private sector activity and enable economic diversification through improved access to energy, reduced energy cost, and more reliable energy supply; while under Pillar 2, Bank’s support will stimulate private sector activity and enable economic diversification through policy reforms that improve Seychelles business environment by facilitating access to finance and strengthening competitiveness.

The Bank’s Indicative lending program for the first 3 years of the CSP 2016–20 is estimated at UAC 28.7 million (USD 39 million) and includes an energy project and a 3-year Policy Based Operation under a programmatic approach. These will be financed from the ADB window, and will be complemented with Trust Fund resources, climate funds as well as resources mobilized through leveraging (parallel and co-financing). The CSP 2016-20 mid-term review will be prepared in 2018, and will provide the opportunity to prepare, in close consultation with the Government, the lending and non-lending programs for the remaining CSP period, assess implementation progress, and, if necessary, adjust the strategy’s focus for the remaining CSP period.

Statistical Issues

Seychelles—Statistical Issues Appendix

As of May 18, 2017

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Seychelles: Table of Common Indicators Required for Surveillance

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Any reserve assets that are pledged or otherwise encumbered should be specified separately. Also, data should comprise short-term liabilities linked to a foreign currency but settled by other means as well as the notional values of financial derivatives to pay and to receive foreign currency, including those linked to a foreign currency but settled by other means.

Both market-based and officially-determined, including discount rates, money market rates, rates on treasury bills, notes and bonds.

Foreign, domestic bank, and domestic nonbank financing.

The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments.

Including currency and maturity composition.

Includes external gross financial asset and liability positions vis-à-vis nonresidents.

Daily (D); weekly (W); monthly (M); quarterly (Q); annually (A); irregular (I); and not available (NA).