- The Executive Board of the International Monetary Fund (IMF) completed today the fifth and sixth reviews of Seychelles’ economic performance under the Extended Fund Facility (EFF) and Resilience and Sustainability Facility (RSF) Arrangements. Completion of the reviews allows for an immediate disbursement of about US$41 million intended to strengthen macroeconomic stability, sustain growth, and reinforce fiscal and monetary policy frameworks, while also supporting efforts to strengthen resilience to climate change.
- Seychelles has made strong progress toward key economic objectives, including a reduction of public debt, rebuilding foreign exchange reserves, strengthening the monetary policy framework and financial sector supervision, and advancing climate related reforms.
- Supported by strong economic outturns in 2025, these achievements have left Seychelles in a stronger position as it confronts new shocks emanating from ongoing war in the Middle East.
Washington, DC: The Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation[1],[2] and completed the fifth and sixth (final) reviews of Seychelles’ performance under the Extended Fund Facility (EFF) and Resilience and Sustainability Facility (RSF) with Seychelles. Completion of the reviews allows for an immediate disbursement of about US$41 million intended to strengthen macroeconomic stability, sustain growth, and reinforce fiscal and monetary policy frameworks, while also supporting efforts to strengthen resilience to climate change, exploit synergies with other sources of official financing, and catalyze financing for climate-related investments.
Seychelles’ economic performance has been strong. Real GDP growth for 2025 is estimated at 5.1 percent, driven by record tourist arrivals. Headline inflation (CPI) was just below zero at end-year. The fiscal outturn was tighter than targeted at a primary surplus of 2.5 percent of GDP, while the ratio of public and publicly guaranteed debt to GDP declined to 53.6 percent. The external current account deficit dropped to 6.5 percent of GDP, and foreign exchange reserves rose to over 4 months of import cover.
The Middle East war poses significant challenges for Seychelles. About 60 percent of tourist arrivals in Seychelles come through Doha, Dubai, or Abu Dhabi. Seychelles also imports about 95 percent of its energy, much of its food, and most if its industrial inputs—prices for which are now rising either directly or through higher freight and shipping costs. Under a baseline set of assumptions, real GDP growth is expected to fall to 1.5 percent in 2026, inflation to rise to 3.1 percent by end-year; the primary fiscal surplus to fall to about 0.9 percent of GDP (compared to 1.5 percent in the budget); and the external current account deficit is projected to expand to 7.8 percent of GDP.
Program performance under the EFF was strong. All but one of the quantitative targets for the 5th and 6th reviews were met. Most structural benchmarks (SBs) under the EFF were met. Only two SBs have not been met but will likely be finished after the program ends. For the RSF arrangement, all but one of the reform measures (RMs) slated for the reviews were implemented. Implementation of RMs has broadly been in line with expectations and has adhered to good practices and recommendations from Fund TA.
Following the Executive Board’s discussion, Mr. Bo Li, Deputy Managing Director, and acting Chair, issued the following statement:
“Seychelles has continued to demonstrate sound macroeconomic management and commitment to structural reforms. Economic performance in 2025 was strong, supported by record tourist arrivals, low inflation, and improved fiscal and external positions. Fiscal outcomes exceeded projections due to strong tax revenues and lower-than-expected public investment execution. Public debt declined further, while international reserves increased beyond program targets. Monetary policy remains appropriately accommodative amid uncertain global conditions and low inflation thus far. Progress on key macrostructural reforms has also been notable.
“Program performance under the EFF was strong. All but one quantitative target for the fifth and sixth reviews were met. All but two structural benchmarks were completed, with these remaining reforms expected to be finalized after program completion. Implementation under the RSF also progressed well, and remained broadly aligned with Fund technical assistance recommendations. Only one reform measure was not fully completed, but work will continue after the end of the program. The authorities have continued to pursue prudent macroeconomic policies and an ambitious reform agenda despite a more challenging external environment.
“Near- and medium-term risks have increased following the war in the Middle East. Seychelles remains vulnerable to disruptions in air travel and tourism activity, as well as higher commodity prices and shipping costs that could fuel inflation and weaken the external position. Flexibility will be needed in the short-run to adjust to these shocks. Over the medium-term, continued gradual fiscal consolidation—supported by revenue mobilization, expenditure rationalization, and strong SOE oversight—remains important to safeguard debt sustainability and rebuild policy buffers. Sound monetary policy and exchange rate flexibility will also remain essential to contain inflation, absorb external shocks, and preserve reserve adequacy. Continued steps to strengthen financial sector supervision, regulation, and resilience remain important.
“Over the past three years, the EFF and RSF have played an important role in helping Seychelles navigate successive shocks, strengthen macroeconomic fundamentals, and enhance climate resilience. Continued implementation of the reform agenda will support sustainable growth, reduce vulnerabilities, and strengthen Seychelles’ capacity to adapt to climate-related risks. Given the outstanding credit to the Fund, Post Financing Assessments will be conducted.”
Executive Board Assessment[3]
Executive Directors agreed with the thrust of the staff appraisal. They commended the authorities for their strong program performance which has supported macroeconomic stability, strengthened buffers, and advanced structural and climate-related reforms despite heightened external challenges stemming from the war in the Middle East. Recognizing the highly uncertain near-term outlook and elevated downside risks, Directors underscored the importance of continued prudent policies and structural reforms to boost competitiveness, economic diversification, climate resilience, and inclusive growth.
Directors welcomed the government’s continued commitment to fiscal consolidation, including strengthening revenue mobilization and improving spending efficiency, and the gradual reduction of public debt toward the medium-term anchor of 50 percent of GDP. They, however, noted the potential risks to the fiscal trajectory from further planned increases in social welfare spending. They underscored the importance of careful calibration of such measures, and of making increases in social spending contingent on gains from revenue mobilization efforts. They highlighted the need to create fiscal space and strengthen capacity to ensure sufficient public investment to support growth and climate resilience. They supported efforts to strengthen public financial, investment, and debt management, and enhance SOE oversight.
Directors agreed that monetary policy should remain data-dependent and the CBS should closely monitor monetary and financial conditions, enhance communication, strengthen the monetary policy framework, and stand ready to tighten as needed to anchor inflation expectations. They welcomed the authorities’ efforts to build international reserves while preserving exchange rate flexibility as an important shock absorber.
Directors welcomed the continued resilience of the financial sector. At the same time, they highlighted the need for close monitoring of rising household credit and sectoral concentration risks. They encouraged continued strengthening of risk based supervision, full implementation of the bank resolution framework, and further steps to reinforce crisis preparedness and financial safety nets. They also encouraged further improvements to the AML/CFT framework, beneficial ownership information, and oversight of virtual asset service providers.
Directors congratulated the authorities on the successful completion of the EFF and RSF arrangements, and welcomed their commitment to completing the outstanding reform measures, including the electricity tariff framework, post program. Directors looked forward to the initiation of a Post-Financing Assessment and continued Fund engagement with Seychelles through policy advice, surveillance, and capacity development.
It is expected that the next Article IV consultation with Seychelles will be held on the standard 12-month cycle.
read more: https://www.imf.org/en/news/articles/2026/05/26/pr26171-seychelles-imf-concludes-2026-aiv-consultation-completes-5th-6th-rev-under-eff-and-rsf
