Seychelles Completes Fourth Reviews of Economic Performance Under EFF and RSF Arrangements

Strategic Insights -

Seychelles has continued to demonstrate sound macroeconomic management and commitment to structural reforms, according to the International Monetary Fund (IMF). The country has completed the fourth reviews of its economic performance under the Extended Fund Facility (EFF) and Resilience and Sustainability Facility (RSF) Arrangements, which will allow for an immediate disbursement of about $13.7 million.

Economic growth for Seychelles in 2024 is estimated at 2.9 percent, reflecting lower dynamism in the tourism sector. Inflation remained subdued and fiscal performance was tighter than budgeted, driven mainly by underspending on capital expenditure. For 2025, economic growth is projected at 3.2 percent, reflecting slower growth projected for Europe, Seychelles' most important tourism source market.

Progress under the EFF has been strong with all quantitative targets and structural benchmarks for end-December 2024 met. However, two SBs scheduled for 2025 have encountered minor delays due to capacity constraints. The authorities remain committed to the programs' objectives, and the outlook suggests low but stable growth for 2025 and beyond but is subject to considerable uncertainty.

Key Takeaways:

  • Seychelles has demonstrated sound macroeconomic management and commitment to structural reforms.
  • Economic growth for Seychelles in 2024 is estimated at 2.9 percent, reflecting lower dynamism in the tourism sector.
  • Inflation remained subdued and fiscal performance was tighter than budgeted, driven mainly by underspending on capital expenditure.
  • For 2025, economic growth is projected at 3.2 percent, reflecting slower growth projected for Europe, Seychelles' most important tourism source market.
  • Progress under the EFF has been strong with all quantitative targets and structural benchmarks for end-December 2024 met.
  • Two SBs scheduled for 2025 have encountered minor delays due to capacity constraints.
  • The authorities remain committed to the programs' objectives, and the outlook suggests low but stable growth for 2025 and beyond but is subject to considerable uncertainty.
  • The IMF has agreed to the immediate disbursement of about $13.7 million for Seychelles.
  • The authorities aim to continue a steady fiscal consolidation to reduce the ratio of public debt to GDP while improving the efficiency of public spending.
  • Building capacity with respect to public financial management and financial sector supervision is a key focus.

Statistics:

  • Economic growth for Seychelles in 2024 is estimated at 2.9 percent.
  • Inflation remained subdued at 1.7 percent by end-2024.
  • Fiscal performance was tighter than budgeted, with a primary surplus equivalent to 3.2 percent of GDP in 2024.
  • The current account deficit widened to 7.9 percent of GDP in 2024.
  • Gross international reserves increased to $774 million, equivalent to 3.8 months of imports or 115 percent of the Assessing Reserve Adequacy (ARA) metric.
  • The EFF-supported program implementation has been strong, with all quantitative program targets and structural benchmarks through end-December 2024 met.
  • Real GDP growth is projected at 3.2 percent for 2025 compared to 4.3 percent at the previous reviews.
  • Year-on-year inflation is expected to moderate to 1.2 percent by end-2025.

Sources:

  • Central Bank of Seychelles;
  • Ministry of Finance;
  • IMF staff estimates and projections.