IMF Finds Seychelles Economic Program On Track

By Editorial 23 March, 2011

An International Monetary Fund (IMF) mission, led by Jean Le Dem, has just completed a visit to the Seychelles to conduct discussions for the third program review under the Extended Fund Facility (EFF) Arrangement with the country.

The mission met with President James Michel, Vice President Danny Faure, Governor of the Central Bank of Seychelles Pierre Laporte, Principal Secretary of Finance Ahmed Afif, and other senior government officials as well as representatives of the private sector and parliamentarians.

According to Mr Le Dem progress continues to be made by the Seychelles authorities in their reform program. Economic recovery has strengthened in 2010: real gross domestic product (GDP) growth is likely to have exceeded 6% and consumer price index (CPI) inflation was almost nil. The program is on track despite some technical delays in government payments to one parastatal.

All end-December 2010 quantitative targets under the program were met and good progress has been achieved in the ambitious program of structural reforms. Over the last two years, the Seychelles has successfully restructured most of its public external debt in the context of the current and previous IMF-supported programs. As a result, external debt has been almost halved, to 48.7% of GDP at end-2010.

Mr Le Dem pointed out that the modernization of the tax system is continuing, including important steps toward the launching of a value-added tax (VAT), scheduled for mid-2012. The Seychelles government has said previously that the introduction of the VAT is aimed at “improving integration in the economy, broadening of the base, elimination of cascading, and increased efficiency and fairness.

The Seychelles has over the last year been implementing comprehensive tax reforms aimed at further rationalizing the tax system and harmonizing rates across sectors. The personal income tax rate was reduced from 18.75% to 15%, effective from October 1 last year, and from January 1, this year, there has been an increase from 10% in the personal income tax rate paid by expatriates, giving one harmonized rate of personal income tax for all employees in all sectors.

The IMF EFF arrangement was approved on December 22, 2009 for SDR19.8m (about USD30.9m), of which SDR9.2m has so far been disbursed. SDR3.52m should be available upon completion of the third review, which is expected to be in May of this year.

Tags: Expatriates | Tax | Value Added Tax (VAT) | Gross Domestic Product (GDP) | Employees | International Monetary Fund (IMF) | Offshore | Tax Rates | Tax Reform | Inflation | Individual Income Tax | Seychelles |


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