IMF publishes a statement for Seychelles

Posted in Business and Economy, International Organisations, Seychelles offshore jurisdiction at 3:12 am by Robert Klien

An International Monetary Fund (IMF) staff mission issued the Statement at the Conclusion of the 2008 Article IV Staff Mission to Seychelles. The statement was issued on January 30, 2008 in Victoria and published on IMF website on February 1, 2008.

The statement says that an IMF team, headed by Mr. Norbert Funke, visited Victoria, Seychelles on January 17-30, 2008 in order to conduct the Article IV consultation discussions with the jurisdiction. The team reviewed economic developments and prospects, as well as discussed the policies to achieve debt sustainability, external stability, and the goals of their “Strategy 2017” with the Seychellois authorities. According to the statement, the mission met with President Michel, the Minister of Finance Danny Faure, the Minister of National Development Jaquelin Dugasse, the Governor of the Seychelles Central Bank Francis Chang Leng, as well as with other government officials, non-government organizations, private sector representatives, and the diplomatic community.

In accordance with the IMF statement, economic growth continued to be robust in the jurisdiction in 2007, at over 5%, which was supported by strong foreign direct investment (FDI), mainly in the tourism sector. The IMF mission concluded the following: “Unemployment is at an historic low. Inflation rose in response to the gradual realignment of the Seychelles rupee, which is aimed at increasing Seychelles’ international competitiveness. Fiscal policy remained expansionary as a result of higher-than-budgeted spending and lower revenues. The current account deficit widened, partly reflecting imports related to record inflows of new foreign direct investment and the purchase of another oil tanker. Growth may ease somewhat in 2008, reflecting high international oil prices, an expected slowdown in global growth, and local capacity constraints. Inflation is likely to remain elevated in the near term, as one-off factors due to price adjustments feed through.”

The IMF mission welcomed the broad-based reform strategy of Seychelles authorities outlined in March 2007 and appreciated the positive steps towards closer relations with multilateral institutions. It noted that the 2008 budget breaks with the past and is an important step in the right direction being targeted at a sizeable primary surplus. It suggested that “a range of structural reforms are set to play an important complementary role in reducing macroeconomic imbalances” that include foreign exchange market liberalization measures, upward revisions of utility prices, and removal of price controls on imports. “The reforms will reduce subsidies to public enterprises, limit budgetary pressures, and improve market signals. The government’s announcement that privatization will continue strengthens the prospects for private sector development.”

In order to put the economy of Seychelles on the path of a strong and sustainable growth for the medium term, the IMF mission found it important to broaden and deepen reform efforts to restore macroeconomic balance and improving competitiveness.

As a conclusion of the statement, the IMF press release pointed out the following: “The IMF stands ready to assist the authorities in refining and implementing their reform program, and looks forward to continuing a close and constructive dialogue.”

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