(Seychelles News Agency) - Seychelles and the International Monetary Fund (IMF) have reached a staff-level agreement on the third review under the Extended Fund Facility (EFF) and the Resilience and Sustainability Facility (RSF) arrangements.

The IMF mission is in Seychelles to conduct the review under the Extended Fund Facility (EFF), which was agreed in May 2023. The last review was done in April 2024

The three-year arrangement for Seychelles under the EFF in an amount equivalent to $56 million, as well as a three-year arrangement under the Resilience and Sustainability Facility (RSF), equivalent to $46 million.

An IMF team has been in Seychelles since September 18 and has observed that the government has made strong progress in implementing policies under the EFF and RSF programmes.

"I am happy to report that we have reached a staff-level agreement on the completion of the review, and subject to approval by the IMF executive board, we should be in a position to release the equivalent of about $12 million when I meet the board in December," said the mission chief of the IMF, Todd Schneider.

Schneider's end-of-mission statement said that good progress has been made on a range of macro-structural issues, although several measures still need to be completed before the end of the year.

"Economic growth appears to be slower than anticipated. Real GDP is projected to grow by 3 percent in 2024, compared to an earlier forecast of 3.7 percent," said Schneider.

This has been attributed mainly to the lower tourist arrivals after a reduction in the number of direct flights to Seychelles, as well as a decline in the average spending per tourist, although there is expected to be some recovery in the last quarter of 2024.

"Despite the slowdown in tourism, the external balance of payments is expected to strengthen in 2024," Schneider said.

He explained that weaker income from tourism is expected to expand the current account deficit to 10.7 percent of GDP in 2024, compared to 7.2 percent in 2023.

In a press conference on Tuesday, the Minister for Finance, Trade and Economic Planning, Naadir Hassan, said that the government is discussing with the various airlines to offer incentives to encourage airlines to continue flying to Seychelles, even outside the peak season.

"We are quite confident that this is a temporary issue and that we have taken the necessary measures, to address it," he added.  

Aside from the EFF, which provides financial assistance to countries facing serious medium-term balance of payments problems because of structural weaknesses that require time to address, Seychelles is also part of the RSF programme. This provides affordable long-term financing to countries undertaking reforms to reduce risks to prospective balance of payments stability, including those related to climate change and pandemic preparedness.

Schneider said, "The authorities are advancing in reform measures agreed under the RSF. Efforts in this area focus on climate-related public investment, developing a strategy for climate financing, and strengthening supervision to assess climate risks to the banking sector." 

Schneider met with President Ramkalawan on Monday. (Seychelles Nation) Photo License: CC-BY

The IMF Chief Of Mission also met with President Wavel Ramkalawan on Monday at State House, accompanied by the organisation’s resident representative Aissatou Diallo.