Seychelles: Technical Assistance Report-Stress Testing the Central Bank Balance Sheet

A Technical Assistance (TA) mission was conducted in Victoria, Seychelles, from July 17 to 27, 2023, to assist the authorities in stress testing the balance sheet of the Central Bank of Seychelles (CBS). The TA mission focused on: (i) reviewing the CBS financial reporting from an International Financial Reporting Standards 9 Financial Instruments point of view; (ii) stress-testing the CBS balance sheet for several deterministic scenarios, as well as for credit, interest rate, and exchange rate risks; (iii) evaluating the CBS operating expenses based on an international comparison, and (iv) helping the CBS to prepare the communication around a possible recapitalization. The technical assistance report provides an overview of the results emanating from these tasks and provides key recommendations on recapitalization, as well as on the implementation of measures to improve financial reporting and financial risk management. Moreover, the report provides a detailed summary of the technical components of Central Bank Operations Division of the IMF Monetary and Capital Markets Department’s central bank stress-testing model – which in conjunction with a three-day workshop conducted during the mission on running the model – provides guidance to authorities on institutionalizing this model to routinely conduct stress-testing of the CBS balance sheet.