08.31.09

IMF reports progress in Reform Program in Seychelles

Posted in International Organisations, International relations at 1:54 pm by Robert Klien

On August 4-15, 2009, a mission from the International Monetary Fund was held in Victoria in order to assess performance at end-June under the Stand-By Arrangement with the Seychelles.

The IMF mission was led by Paul Mathieu. It met with President James Michel, Minister of Finance Danny Faure, and Governor of the Central Bank of Seychelles Pierre Laporte. Also, the mission met with representatives of the private sector, parliamentarians, and civil society.

The statement was issued by the IMF delegation at the conclusion of the Mission that said that strong progress is being made by the authorities of the Seychelles in their reform program. The IMF announced that “the program is on track and is achieving its economic stabilization and reform objectives”. According to the statement, “ Aprudent and well-balanced monetary and fiscal stance has been effective in rapidly reducing inflation to the low single digits. All end-June 2009 quantitative targets under the program were met with margins and structural reforms are being implemented with determination. The economic downturn, reflecting primarily a sharp drop in tourism earnings, is easing and the decline in real GDP is likely to be somewhat less than earlier feared.”

The following was noted in the statement: “Looking ahead, the key objectives are to consolidate macroeconomic stability by maintaining tight fiscal policy, and progressively putting in place supporting structural reforms to remove constraints to growth and improve the performance of the public sector. Strong progress on inflation reduction and the appreciation of the rupee has permitted a gradual easing of monetary policy. The preparation of a fundamental reform of the tax system, a major reinforcement of control over parastatal performance, and strengthening of the financial system are proceeding. The tax reform aims to harmonize rates, broaden the tax base, and raise self-compliance, while maintaining the overall tax take.”

USD 12.3 million out of the USD 24 million IMF arrangement approved on November 14, 2008, has been disbursed. About USD 1.4 million is available with confirmation that the end-June performance criteria have been observed.

It is worth mentioning that the 3rd program review mission is expected in October 2009.

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