12.26.09

IMF approves USD 31 million for Seychelles reforms

Posted in International relations, Seychelles government at 8:02 pm by Robert Klien

On December 19, 2009, the Seychelles government said that a new USD 31 million loan from the International Monetary Fund (IMF) would support the 2nd wave of reforms on the heavily indebted Indian Ocean archipelago.

IMF approved the loan and cancelled an existing 2-year standby arrangement (SBA) for USD 26 million which had a year outstanding.

According to Finance Minister Danny Faure, the new Extended Fund Facility (EFF) would kick in immediately. He said: “The EFF will bring funds of $31 million to support our medium term reform strategy which is looking at debt restructuring, public sector reform and preserving the macroeconomic stabilisation”.

The Indian Ocean archipelago launched an exchange offer on the USD 230 million bond and 3 other debt instruments aimed to help place it on a more sustainable footing.

It should not be neglected that the impact of the global crisis and decades of unsustainable spending had left Seychelles close to collapse. It is expected that in 2009 the tourism-driven economy will contract by 7.5% before re-bounding to 4% in 2010.

According to Central Bank Governor Pierre Laporte, disciplined monetary policy and aggressive cuts in government spending had stabilised the economy faster than had been predicted.

It should be noted that Seychelles’ external debt topped USD 800 million at the beginning of 2009.

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