Seychelles Set for $45 Million IMF Disbursement Pending Executive Board Approval
An International Monetary Fund staff team has reached a staff-level agreement with the authorities of Seychelles on policies to complete the final reviews under the country’s Extended Fund Facility (EFF) and Resilience and Sustainability Facility (RSF) programmes.
The agreement, which follows a mission to Victoria from March 4 to 19, 2026, is subject to the implementation of agreed reforms and approval by the IMF Executive Board, tentatively scheduled for May 2026.
Head of the mission, Todd Schneider, noted that upon approval, Seychelles will access a disbursement of about SDR 32.9 million (approximately $45 million), bringing total disbursements under the programmes to SDR 76.7 million (about $105.1 million) since May 2023.
Strong 2025 performance
According to the IMF, Seychelles’ economy recorded strong growth in 2025, with real GDP expanding by 5.1 percent, largely driven by record tourist arrivals. Inflation remained subdued, averaging slightly below zero over the period.
Fiscal performance also improved, with the government posting a primary surplus of 2.5 percent of GDP, contributing to a reduction in public debt to 53.6 percent of GDP.
Externally, higher tourism receipts helped narrow the current account deficit to 6.5 percent of GDP, while foreign exchange reserves rose to just over four months of import cover.
Programme performance and reforms
The IMF indicated that performance under the EFF arrangement has been largely satisfactory, with all quantitative targets for end-June 2025 achieved and most end-December targets met.
On structural reforms, authorities have implemented most measures, although some have faced delays. These include the planned launch of a retail-oriented window for banks to purchase government securities, which requires the establishment of key financial infrastructure such as a real-time gross settlement system and a central securities depository.
In addition, functional reviews of key ministries—including finance, education, and health—have been delayed and are now expected to be completed by end-2026 with support from the World Bank.
Under the RSF, climate-related reforms have progressed, particularly in managing and reporting financial sector risks linked to climate change. Remaining measures, including a climate risk exposure assessment of the banking sector, are expected to be completed before the programme ends.
Growth outlook to moderate in 2026
The IMF projects a slowdown in economic activity in 2026, with real GDP growth expected to ease to about 1.5 percent, reflecting potential disruptions to tourism amid evolving geopolitical developments in the Middle East.
Inflation is forecast to rise to 2.6 percent, driven by higher global prices for oil and food, alongside increased freight costs.
The external position is also expected to weaken, with the current account deficit projected to widen to 7.8 percent of GDP, while foreign exchange reserves may decline modestly.
On the fiscal front, reduced tourism-related revenues and higher spending pressures are likely to result in a wider overall fiscal deficit.
Policy recommendations
The IMF has advised the Seychellois authorities to consider contingency measures on both revenue and expenditure fronts to cushion the impact of external shocks. It emphasised that any additional spending should be targeted at vulnerable populations and remain temporary.
The Fund further underscored the importance of exchange rate flexibility in supporting external adjustment and preserving reserve buffers.
Over the medium term, the IMF highlighted the need to sustain structural reforms aimed at improving the business environment, promoting economic diversification, and strengthening resilience to climate-related risks.
The Fund reaffirmed its commitment to supporting Seychelles as it concludes its EFF and RSF programmes and navigates emerging economic challenges.
