The International Monetary Fund said Tuesday it had completed the fifth and sixth reviews of Seychelles’ economic reform programme, paving the way for an immediate disbursement of about US$41 million to support macroeconomic stability and climate resilience efforts in the Indian Ocean archipelago.
The IMF Executive Board concluded its 2026 Article IV consultation and final reviews under the Extended Fund Facility (EFF) and the Resilience and Sustainability Facility (RSF), citing strong economic management and progress on structural reforms by Seychelles.
The Fund said the new financing would help sustain growth, strengthen fiscal and monetary policy frameworks and support reforms aimed at improving resilience to climate change.
“Seychelles has continued to demonstrate sound macroeconomic management and commitment to structural reforms,” IMF Deputy Managing Director Bo Li said after the board meeting.
The IMF said Seychelles posted robust economic growth in 2025, with real gross domestic product expanding by an estimated 5.1 percent, driven largely by record tourist arrivals.
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Inflation remained subdued, with headline consumer prices slightly below zero at the end of the year, while the government achieved a tighter-than-expected primary fiscal surplus of 2.5 percent of GDP.
The ratio of public and publicly guaranteed debt to GDP fell to 53.6 percent, the IMF said, while foreign exchange reserves rose to cover more than four months of imports.
The external current account deficit also narrowed to 6.5 percent of GDP.
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Despite the strong performance, the IMF warned that Seychelles now faces mounting risks linked to the ongoing conflict in the Middle East.
About 60 percent of tourists visiting Seychelles transit through hubs in Doha, Dubai or Abu Dhabi, making the country highly vulnerable to disruptions in regional air travel.
The island nation also imports around 95 percent of its energy needs, as well as much of its food and industrial inputs, leaving it exposed to rising global commodity prices and higher shipping costs.
Under the IMF’s baseline projections, Seychelles’ economic growth is expected to slow sharply to 1.5 percent in 2026, while inflation is forecast to rise to 3.1 percent by the end of the year.
The Fund also projected the country’s primary fiscal surplus would decline to about 0.9 percent of GDP, lower than the 1.5 percent anticipated in the national budget, while the current account deficit is expected to widen to 7.8 percent of GDP.
The IMF said programme performance under the EFF had remained strong overall, with all but one quantitative target met during the fifth and sixth reviews.
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Most structural benchmarks were also completed, although two reforms remain unfinished and are expected to be implemented after the programme’s conclusion.
Under the RSF arrangement, all but one planned climate-related reform measure were implemented, the Fund added.
Executive Directors at the IMF praised Seychelles’ commitment to fiscal consolidation and welcomed measures aimed at strengthening revenue mobilisation, improving public spending efficiency and reducing public debt toward a medium-term target of 50 percent of GDP.
However, they cautioned that planned increases in social welfare spending could place pressure on the fiscal trajectory if not carefully managed.
The board also urged authorities to continue strengthening financial sector supervision, crisis preparedness and anti-money laundering controls, including oversight of virtual asset service providers.
Directors welcomed the resilience of Seychelles’ financial sector but highlighted concerns over rising household credit and sectoral concentration risks.
The IMF said monetary policy should remain data-dependent, with authorities ready to tighten policy if necessary to contain inflation and preserve foreign exchange reserves.
The Fund noted that over the past three years, the EFF and RSF programmes had helped Seychelles weather successive shocks, strengthen macroeconomic fundamentals and advance climate resilience reforms.
It added that post-financing assessments would now be conducted because of Seychelles’ outstanding credit exposure to the IMF.
