The head of the International Monetary Fund (IMF) mission Jean Le Dem said this during a press conference held yesterday at the end of the third programme review under an Extended Fund Facility (EFF) arrangement with Seychelles.

“Over the last two years, Seychelles has successfully restructured most of its public external debt in the context of current and previous IMF-supported programmes so external debt had been almost halved to 48.7% of gross domestic product (GDP) by end-2010,” he said.

The Ministry of Finance told Nation the debt stood at 93.7% of GDP in 2008.

Those present at the press conference were Vice-President Danny Faure – who is also Minister for Finance – principal secretary in the ministry Ahmed Afif and Central Bank of Seychelles governor Pierre Laporte.

Mr Le Dem said his team will bring the programme review to the attention of the IMF’s executive board in May when the fund is expected to release US $5.5m.

The EFF arrangement for US $30.9m was approved in 2009, of which US $14.3m has so far been paid out.

 “Progress continues to be made by the Seychelles authorities in the reform programme, and economic recovery has strengthened in 2010,” said Mr Le Dem.

“Real GDP growth is likely to have exceeded 6% and consumer price index inflation was almost nil.

“The programme is on track despite some technical delays in government payments to one parastatal.”

He said all end-December 2010 quantitative targets under the programme were met and good progress has been made in the “ambitious” programme of structural reforms.

Prospects remain good in 2011 despite a volatile global environment, including surges in commodity prices.

“Real GDP growth is projected at 4%, supported by the tourism industry,” he said.

Mr Le Dem said the 12-month inflation figure, which was zero in 2010, is expected to be driven by rising global food and fuel prices to 5.5% by the end of 2011. This will raise prices, but he said this will be mitigated by the stabilisation fund created by the government to shield vulnerable citizens from such shocks.

This, however, could delay “ongoing fiscal consolidation” so the IMF welcomes the increases in fuel prices since the beginning of this year.

He noted, however, that the government intends “to cap the use of the stabilisation fund to the equivalent of 0.4% of GDP in 2011”.

Mr Le Dem said the public, including the country’s opposition parties, continue to support the reform programme.

He said the IMF sees the need to support Air Seychelles, which brings in more than half the tourists who come here, supporting the industry Seychelles’ economic growth largely depends on.

Mr Faure said there was no indication when the airline was audited under the programme that it was heading for financial difficulties, but he assured Seychellois its new management is renegotiating unsuitable contracts.

He said the Seychelles Tourism Board is countering negative media reports that incorrectly say the archipelago has been hit by a tsunami, which could harm tourist arrivals.