August 19, 2020

• All end-December 2019 quantitative targets for the 5th review under the PCI [1] were met.

• The heavy toll of the COVID-19 pandemic has pushed the fiscal target for end-June 2020 out-of-reach but progress in structural reforms continues to be made.

• Looking ahead, the authorities would need to identify fiscal saving measures to shore up medium-term fiscal consolidation in view of the substantial risks to debt sustainability.

Washington, DC: The COVID-19 pandemic has had an unprecedented economic impact on Seychelles through the implementation of strict domestic measures to contain the spread of the virus and the related global spillovers. The authorities have responded with measures to mitigate the economic fallout on businesses and households. To help address the urgent balance of payments need arising from the pandemic, the Executive Board approved on May 8, 2020 the authorities’ request for emergency financing under the Rapid Financing Instrument (RFI) of SDR 22.9 million, equivalent to 100 percent of quota (IMF Country Report No. 20/170) .

All end-December 2019 quantitative targets for the 5th review were met, including the inflation rate and the floors on the primary fiscal surplus and net international reserves. The heavy toll of the pandemic has pushed the fiscal targets for end-June 2020 out-of-reach but progress in other areas continues to be made. The reform target on the legal framework for a risk-based approach to Anti-Money Laundering/Combatting the Financing of Terrorism (AML/CFT) supervision was met in March 2020 and the one on the legal framew ork to strengthen entity transparency was partially implemented in April. Other review targets were delayed. The government is currently discussing the different financing options in regards to the large liabilities of Air Seychelles with the other shareholder with a view to minimizing fiscal risks. Looking ahead, the authorities would need to identify fiscal saving measures to shore up medium-term fiscal consolidation in view of the substantial risks to debt sustainability.