Cluster Country Program Evaluation on Small States
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World Bank, Washington, DC
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Between 1976 and the mid-2000s, Seychelles had transformed itself from a poor subsistence
economy into a high middle income country with low levels of poverty and many social
indicators comparable to Organisation for Economic Co-operation and Development (OECD)
countries. However, this growth could not be sustained and faced with a growing international
financial crisis, severe shortages of foreign exchange resulted in the government defaulting in
its international payment obligations in 2008. Starting that year, the government began
implementing a radical program of macroeconomic stabilization and structural reforms. The
centerpiece of these reforms was a strong fiscal adjustment to reduce the burden of external
debt and a progressive dismantling of the role of the state in allocating resources. These
reforms were supported by the Standby and Extended Fund Facility (EFF) arrangements of the
International Monetary Fund (IMF), and by the Bank through a series of development policy
loans (DPLs). Seychelles also benefited from debt relief provided by other official and private
international creditors. As a result of the reforms, macroeconomic imbalances were corrected,
the role of markets was enhanced, and economic growth restored. However, some important
measures such as privatization or SOE reforms (to improve their governance) were stalled or
progressing at a very slow pace and there are increasing pressures to reverse some key reforms
(such as reducing the size of government). The Bank played an important role in Seychelles’ successful turn-around.
Palabras clave
EXPORT COMPETITIVENESS, PRIVATE SECTOR DEVELOPMENT, BUSINESS ENVIRONMENT, INFRASTRUCTURE INVESTMENT, FISHERIES, FINANCIAL SECTOR REFORM, DEVELOPMENT POLICY OPERATIONS