Seychelles growth rate has slowed to 2.8 per cent this year,
compared to 5.3 per cent in 2013. This is according to the International Monetary Fund (IMF)
who led a staff mission to the island for its first review under the IMF’s
Extended Fund Facility (EFF) arrangement.
Seychelles’ tuna and tourism revenues remained weak after
reporting exceptional results in 2013 while
domestic demand and imports has grown strongly following a 13 per cent
boost in earnings an a 16 per cent growth in credit to the private sector.
“The combination of weak export earnings and rising imports
has led to pressure on the balance of payments,” said Marshall Mills, mission
chief at the IMF. “The authorities have the tools and determination to manage
these short-term pressures. Monetary and fiscal policies are being tightened,
with lower reserve money targets and higher primary surplus targets than
envisaged in the program.”
Overall, the IMF is confident that the Seychellois
government is on track to meet its key objective of reducing public debt below
50 per cent of GDP by 2018. Also, inflation is projected to be at 2.3 per cent
for this year.
“The Seychellois authorities continue to strengthen the
fundamentals of the economy, as well as the conditions for its sustained
growth. The authorities successfully met all their quantitative program targets
for end-June. The sizeable fiscal primary surplus and increase in international
reserves this year bolster the resilience of the economy, in line with the
objectives of the IMF-supported program,” added Mills.
For 2015, the IMF expects economic growth to increase
slightly to three per cent due to policy adjustments and a gradual recovery in
tourism and tuna exports.
“Fiscal policy will remain on track to meet the debt
reduction target, while monetary policy is expected to steer inflation back to
low single digits by the end of 2015, despite pressures from depreciation.
International reserves are expected to remain stable in 2015, with adequate
import coverage, according to staff assessments,” he added.
The IMF noted that wage levels need to also stay compatible
in order to preserve gains made in macroeconomic stability and to ensure
international competitiveness.
“The authorities’ structural reform agenda continues to
advance. The authorities are on track to implement all structural measures
planned for the first review in a timely manner. Staff highlighted the risks
that public enterprises can pose to the public finances and development of the
private sector and stressed the importance of pursuing plans to strengthen
their oversight and governance, while enlarging the private sector’s role in
the economy.”
Source:CNBCAFRICA
