IMF-Extended facility fund approves $105 million for Seychelles to support economic stability

 IMF-Extended facility fund approves $105 million for Seychelles to support economic stability

IMF-Extended facility fund approves $105 million for Seychelles to support economic stability.

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The International Monetary Fund (IMF) executive board has approved $105 million under the Extended Fund Facility for Seychelles with an immediate disbursement of $34.26 million.

IMF stated that that the proposed programme is to support the authorities’ efforts to restore macroeconomic stability and debt sustainability.

In a press statement on sometimes this month August, 2021, the IMF said the aim is support the country to restore the macroeconomic stability.

“The key objective of the proposed programme is to support the authorities’ efforts to restore macroeconomic stability and debt sustainability while strengthening the post COVID-19 recovery. “Said IMF

The IMF’s deputy managing director and chair, Tao Zhang, added that although economic outlook is positive there is high risk due to covid-19 pandemic.

“The Seychelles’ economic outlook is positive, but risks remain high. Tourist arrivals since March 2021 point to a strong recovery.

“Nonetheless, the outlook is uncertain and contingent on the pandemic path, the effective rollout of vaccines in Seychelles’ key tourist markets, and the expected recovery in external demand.

“The new arrangement under the Extended Fund Facility will support Seychelles’ post-pandemic recovery, anchor reform implementation and catalyse additional external financing,” he added.

The IMF stated that the authorities reacted swiftly, by locking down the economy, thereby keeping infection and fatality rates low.

However, the travel restrictions and global economic downturn triggered unprecedented economic contraction.

The authorities responded with measures to mitigate the economic fallout on businesses and households.

The IMF added that as a result the public debt ratio increased sharply, reflecting the primary balance deterioration, exchange rate depreciation, and GDP contraction.

As soon as vaccines became available, Seychelles led the world in vaccination coverage and reopened its borders. With tourist arrivals bouncing back, a V-shaped recovery is now expected.

According to the Ministry of Finance, some of the measures to be taken under the economic reform include improving Seychelles’ debt sustainability, the business environment and reform of public administration.

The IMF stated that the key strategy focuses on maintaining the recovery momentum while reducing the risks to debt sustainability.

“Advancing the reform agenda through an ambitious fiscal adjustment, reinforced debt management, strengthened fiscal governance frameworks, and financial sector development and inclusion are essential priorities to sustain the post-COVID-19 recovery and generate high, sustainable, and inclusive growth,” said the IMF.

The last time Seychelles embarked on economic reform was in 2008, the macroeconomic reform programme with the assistance of the IMF was to primarily address the serious balance of payments and external debt

Seychelles, an archipelago in the western Indian Ocean, was hit hard by the COVID-19 crisis which caused a downturn in travel which affected the tourism industry, the nation’s top economic contributor.

Tafadzwa William Mutsika

Tafadzwa Mutsika is an award-winning print, broadcast, and online journalist with more than 10 years of experience in the field. Tafadzwa has experience in financial reporting and Public relations since 2010. He is also a part-time lecturer in journalism and media studies. Possess excellent communication and presentation skills. Areas of Interest: Mining, energy, tax law, insurance, and corporate governance. Hobbies include -painting and sculpture.

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