The International Monetary Fund (IMF) Executive Board has completed the third reviews of Seychelles' economic performance under the Extended Fund Facility (EFF) and Resilience and Sustainability Facility (RSF) arrangements. This completion allows Seychelles to draw approximately $8 million under the EFF and about $4.1 million under the RSF, bringing total disbursements to around $32.1 million and $12.2 million, respectively.
Seychelles is experiencing slower economic growth than anticipated, attributed to reduced tourist arrivals and lower tuna production targets. Inflation rose to 0.6 percent by September 2024 due to higher utility tariffs, while fiscal performance was tighter than expected due to strong tax collection.
Program performance remains satisfactory with all quantitative performance criteria met by June 2024 and indicative targets achieved by September 2024. Structural benchmarks are progressing well despite some delays due to capacity constraints.
Looking ahead, real GDP growth is projected at 4.3 percent in 2025, stabilizing at around 3.5 percent in the medium term. Average annual inflation is expected to stabilize at around 3 percent after reaching 2.3 percent in 2025.
Deputy Managing Director of IMF, Mr. Bo Li, stated: "Seychelles continues to demonstrate sound macroeconomic management and progress on structural reforms under the EFF and RSF, despite volatility in the external environment and intensification of climate shocks."
He also highlighted that "while growth in 2024 is likely to slow moderately, macroeconomic stability has been maintained." The authorities should remain vigilant against inflationary pressures as monetary policy remains accommodative.
Mr. Li emphasized that "the outlook is broadly stable but there are risks" including a slowdown in tourism and global economic developments affecting near- and medium-term growth.
The IMF's EFF arrangement aims to protect macroeconomic stability while supporting stronger fiscal buffers through revenue gains and prudent spending improvements in public financial management.
The RSF focuses on strengthening climate resilience within public investment strategies by integrating climate change into budget processes for better risk management among financial institutions.