- The International Monetary Fund (IMF) has urged Seychelles 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 IMF mission noted at the end of its recent visit.
“Seychelles' public debt remains unsustainable. Good progress is being made in advancing public external debt restructuring discussions and the mission encourages the authorities to press ahead with their debt restructuring strategy,” said the IMF, further noting that the economic downturn, reflecting primarily a sharp drop in tourism earnings for Seychelles, was easing and the decline in real GDP is likely to be somewhat less that earlier feared.
Seychelles was approved in November last year under the IMF arrangement for about US$24 million, of which about $12.3 million has been disbursed.
The IMF mission said about $1.4 million was available with confirmation that the end-June performance criteria have been observed. The next programme review mission (the third), based on end-September performance, is expected in October 2009, and will coincide with discussions on a medium-term structural reform programme to be supported by a 3-year arrangement under the Extended Fund Facility (EFF).
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