Seychelles: 2024 Article IV Consultation, Second Reviews Under the Arrangement Under the Extended Fund Facility and the Arrangement Under the Resilience and Sustainability Facility, Requests for a Waiver of Nonobservance and Modification of Performance Criteria-Press Release; and Staff Report; and Statement by the Executive Director for Seychelles

2024 ARTICLE IV CONSULTATION, SECOND REVIEWSUNDER THE ARRANGEMENT UNDER THE EXTENDEDFUND FACILITY AND THE ARRANGEMENT UNDER THERESILIENCE AND SUSTAINABILITY FACILITY, REQUESTSFOR A WAIVER OF NONOBSERVANCE ANDMODIFICATION OF PERFORMANCE CRITERIA—PRESSRELEASE; STAFF REPORT;AND STATEMENT BY THEEXECUTIVE DIRECTOR FOR SEYCHELLES June 2024 Under Article IV of the IMF’s Articles of Agreement, the IMF holds bilateral discussionswith members, usually every year. In the context of the 2024 Article IV consultation withSeychelles, the following documents have been released and are included in this package: •APress Releasesummarizing the views of the Executive Board as expressed during itsJune 3, 2024, consideration of the staff report that concluded the Article IVconsultation with Seychelles. •TheStaff Reportprepared by a staff team of the IMF for the Executive Board’sconsideration on June 3, 2024, following discussions that ended on April 3, 2024, withthe officials of Seychelles on economic developments and policies. Based oninformation available at the time of these discussions, the staff report was completedon May 15, 2024. •AnInformational Annexprepared by the IMF staff. •AStatement by the Executive Directorfor Seychelles. TheIMF’s transparency policy allows for the deletion of market-sensitive information andpremature disclosure of the authorities’ policy intentions in published staff reports andother documents. Copies of this report are available to the public from International Monetary Fund•Publication ServicesPO Box 92780•Washington, D.C. 20090Telephone: (202) 623-7430•Fax: (202) 623-7201E-mail: publications@imf.org Web: http://www.imf.org International Monetary FundWashington, D.C. IMF Executive BoardCompletesSecondReviewsUnder theExtended Fund Facility andtheResilience and SustainabilityFacilityArrangementsand Concludesthe 2024Article IVConsultationwith Seychelles FOR IMMEDIATE RELEASE •The Seychellois economy continued to recover in 2023,thoughat a slowerpace than in2022. Tourist arrivalscontinued to rise,and sectorssuchas IT and construction werestrong. However,flooding and an industrial explosion in December2023dampenedoverall growth. •The governmenthasmadeconsiderableprogress under the ExtendedFundFacility (EFF)and Resilience andSustainabilityFacility (RSF)Arrangements—strengtheningfiscal andexternal buffers,reducing public debt, and enhancing the policy framework to addressclimate change.The Executive Board’s approval of the reviews will allow for a totaldisbursement of SDR 9.2 million ($12.2 million). •Long termchallenges center on the limits tosustainabletourism-based growth, economicdiversification, and Seychelles’ high vulnerability to the effects of climate change. Washington, DC–June3, 2024:The Executive Board of the International Monetary Fund(IMF)completed today thesecondreviewsof Seychelles’ economic performance underthe 36-month EFF andRSFArrangementsapproved on May 31, 2023. The completion ofthe reviewsallowsfor theauthorities to draw the equivalent ofSDR6.1million(about $8.1million)under the EFF and SDR 3.1 million(about $4.1million) under the RSF, bringingtotal disbursements toSDR18.3million (about$24.3million) andSDR6.2million (about$8.2million) under the EFF and RSF, respectively. Seychelles’ real GDP growthisestimated at 3.2percent in 2023compared to15 percent in2022.Tourist arrivalsrosetoabout91percent ofthepre-pandemic high(2019)butspending per touristwasflat.Information technologywasthe main impetus ofnon-tourismgrowth, along with fishing and construction. However,unseasonably heavy rainsand flooding combined with an industrial explosion in December contributed to acontraction in manufacturing.Year-on-year headline inflation was-2.7 percent byDecember, reflecting lower global commodity prices and a broadly stable exchange rate.Grossinternational reservesincreasedto $682million(3.2months of imports)by end-2023. Thegovernment’sprimary fiscal surplus of 1.7 percent of GDPwas higher thanexpected, due mainly to lower thanprojectedcurrent and capital spending. Looking ahead, real GDP growth is projected to rise to 3.7 percent in 2024, andannualaverageinflation is expected to reach 1.2 percent. While the external current account isexpected to remain broadly stable, gross foreign exchange reserves are projected to reach $751 million by end-2024, equivalent to 3.4 months of imports.Potential downside risksinclude Seychelles’ high vulnerability to external shocks (such as volatility in commodityandshippingprices), climate-related events, or disruptions to tourism. The Executive Board also concluded the 2024 Article IVConsultation1with Seychelles. Following the Executive Board’s discussion,Mr. Bo Li, Deputy Managing Director, andacting Chair, issued the following statement: “The Seychellois economy has continued to demonstrate resilience, despite continuedvolatility in the external environment and the intensification of climate shocks. Theperformance under the Fund-supporte