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IMF Praises Seychelles Fiscal Progress

by Lorys Charalambous, Lowtax.net, Cyprus
29 December, 2014

In the first review of its three-year extended finance arrangement for the Seychelles, the International Monetary Fund (IMF) said that, although 2014 has been a very challenging year, the country's economic and fiscal fundamentals continue to be strong.

With continued global uncertainties, projected economic growth for 2014 in the Seychelles has had to be revised down due to weaker demand for Seychelles' two main exports of tourism and canned tuna.

The IMF also noted that, while strong growth in personal earnings and private sector credit fueled a surge in imports in 2014, and put pressure on the balance of payments, there was a consequent increase in import duty and value added tax collections and overall tax revenues exceeded budget projections.

However, with lower imports expected to constrict revenues in 2015 due to tighter credit policies, the Government is planning measures to buttress tax collections in 2015 through a number of revenue measures, including an increase in vehicle fees and road tax, and in excise duties on tobacco and spirits, while postponing a planned reduction in corporate tax rates and introducing measures to improve tax compliance.

Overall, the IMF therefore welcomed the Government's demonstration of a continued commitment to achieve its primary target of reducing the Seychelles' debt-to-gross domestic product (GDP) ratio to below 50 percent by 2018. This will require continued fiscal primary surpluses of three to four percent of GDP over the medium term.

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