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Reclaiming a Policy Role for Economists JUNE 2025  (Credit: Chantal Jahchan) Economists have long helped shape policy by offering analysis to guide decisions on trade, taxation, regulation, and economic stability. At times, mainstream economic expertise has led major policy debates, influencing governments around the world. Today, however, economists are increasingly sidelined, Harvard University’s Karen Dynan writes in F&D.   “While they still dominate the staff of central banks and multilateral institutions, political leaders are more likely to prioritize ideology and expediency over economic analysis. Meanwhile, public trust in economists has been eroded by high-profile policy failures, growing political polarization, and mounting challenges to expert authority from new and often unreliable information sources.”   Yet economic expertise remains critical to improving policy outcomes, according to Dynan, a former assistant secretary for economic policy at the US Treasury Department. “The crises of the 21st century have shown how macroeconomic mismanagement can create widespread hardship and social dysfunction, with profound political consequences,” she writes. Read more Point of View (Credit: Chantal Jahchan) We Need a New Growth Compact | Innovation and integration can revive growth amid sweeping geopolitical change | Pierre-Olivier Gourinchas   Europe’s Future Hinges on Greater Unity | But first the EU must overcome distrust between its member states and in its institutions | Simon Nixon Europe: From Adversity to Advantage (Credit: Brian Stauffer) Europe’s Integration Imperative | The case for closer economic union has become more compelling as external challenges multiply | Alfred Kammer   Europe’s Elusive Savings and Investment Union | An integrated capital market must be accompanied by regulatory reforms to attract substantial investment | Ravi Balakrishnan and Mahmood Pradhan   Europe’s Innovators Are Waking Up| The continent’s innovation success stories and renewed sense of purpose defy criticism of overregulation | Alessandro Merli   Making Germany Grow Again| Long-term, future-focused investment can rescue Europe’s largest economy from stagnation | Ulrike Malmendier and Claudia Schaffranka   Plus, government ministers from three of Europe’s fastest-growing economies share their perspectives on how to revive growth:   Europe’s Economic Revival | Poland’s economic transformation can inspire Europe today | Andrzej Domański   Greece’s Remarkable Recovery | Strong reforms have turned it into one of Europe’s fastest-growing economies | Konstantinos Hatzidakis   Spain’s Shift to Success | Our balanced and sustainable growth is overcoming traditional dilemmas | Carlos Cuerpo “The European Union must unite to shape today’s global economy, rather than be shaped by it.”— F&D editor-in-chief Gita Bhatt Read more Also Featured (Credit: Hadley Hooper) The Debate over Falling Fertility | A decline in global population later this century may threaten human progress, or it may lead to better lives | David E. Bloom, Michael Kuhn, and Klaus Prettner   The Longevity Dividend | Aging populations should be embraced, not feared | Andrew Scott and Peter Piot   Sustaining Growth in an Aging World | Older populations need not lead to slumping economic growth and mounting fiscal pressures | Bertrand Gruss and Diaa Noureldin   A Moving History | Migration has propelled human progress for hundreds of thousands of years | Ian Goldin   Machine Intelligence and Human Judgment | AI could reverse the widening inequality driven by technology, or aggravate it | Ajay Agrawal, Joshua Gans, and Avi Goldfarb   Stanley Fischer (1944–2025)| His storied career at the IMF, at central banks, and at universities shaped the study of macroeconomics and the next generation of macroeconomists | James Boughton Our Regular Departments (Credit: iStock/erhui1979) Kevin Fletcher explains why productivity, not competitiveness, is the better path to prosperity for Back to Basics.   When controlled by a select few, tech innovation can be self-serving and undermine the institutions that make it possible, Simon Johnson says in Café Economics.   Andreas Adriano profiles Agustín Carstens, finance minister, head of the BIS, and central banker with a start-up mentality, for People in Economics.   Picture This shows how stalled trade and rising tariffs are testing global economic resilience.   For books, Mouhamadou Sy reviews Our Dollar, Your Problem: An Insider’s View of Seven Turbulent Decades of Global Finance, and the Road Ahead by Kenneth Rogoff.   Volker Wieland reviews Crisis Cycle: Challenges, Evolution, and Future of the Euro by John H. Cochrane, Luis Garicano, and Klaus Masuch.   And Vivek Arora reviews Entropy Economics: The Living Basis of Value and Production by James K. Galbraith and Jing Chen   For Currency Notes, Salsa Mazlan tells how Macao SAR’s unique history has yielded different yet equally elegant versions of the same banknote.   Nick Owen  Managing Editor | Finance & Development   nowen@IMF.org Stay connected with the International Monetary Fund:

SEYCHELLES Seychelles' Path to Macroeconomic Stability and Resilience (Credit: Dark_Eni/iStock by Getty Images) Seychelles—a nation of 115 islands in the Indian Ocean—today enjoys a comparatively high degree of economic stability. Inflation is below 2 percent, real GDP has largely recovered from the pandemic, public debt is on course to reach the government’s target of less than 50 percent of GDP before 2030, and per capita income is the highest in Sub-Saharan Africa. But this stands in stark contrast to the country’s fortunes twenty years ago when it faced an economic crisis. What’s behind this turnaround?   From times of crisis   In the mid-2000s, Seychelles faced significant macroeconomic challenges stemming from expansionary fiscal policies and a rigid state-led economy. Large fiscal deficits were driven by high public spending on capital projects, subsidies, transfers to state enterprises and high debt service payments, while government revenues were constrained by significant tax concessions to foreign investors in the growing tourism sector. An expansionary monetary policy within a fixed exchange rate framework and extensive exchange controls led to external imbalances and depletion of foreign reserves. By 2008, gross public debt exceeded 192 percent of GDP and reserves had dwindled to just 2 weeks of import cover. The global financial crisis exacerbated these vulnerabilities, and the crisis came to a head in mid-2008 when the Seychelles authorities missed payments on the nation’s private foreign debt and Standard & Poor’s downgraded Seychelles to selective default.   Changing course   In response to this crisis, the government launched a comprehensive reform program with support from the IMF and other development partners. Key actions included abolishing all exchange restrictions and floating the rupee, consolidating public finances, reforming state enterprises, and abolishing indirect product subsidies in favor of a targeted social safety net. Paris Club creditors agreed to a debt stock reduction. These measures quickly yielded positive outcomes: inflation fell, foreign reserves were restored to over 3 months of import cover, and public debt declined to below 70 percent of GDP within five years. This turnaround rebuilt investor confidence, and the restoration of macroeconomic stability allowed policymakers room to shift from crisis management to macro-structural reforms in support of sustainable growth.   Resilience and commitment tested   The COVID-19 pandemic, which caused a sudden collapse in global tourism, was another tremendous shock. But its years of macroeconomic stability enabled Seychelles to face this new challenge from a position of strength. Confronted with an economic contraction of nearly 12 percent in 2020, the government implemented timely fiscal and monetary measures to support households and businesses, utilized emergency financing from the IMF, and moved quickly to resume tourism. As tourism rebounded in 2021 and 2022, economic growth surged to nearly 13 percent in 2022, helping to regain lost ground. Foreign exchange reserves were maintained above 3 months of import cover, and the exchange rate was allowed to move to facilitate adjustment. Key to managing the effects of the pandemic and the international commodity shock that followed were the fiscal and foreign exchange buffers built up in prior years and a commitment to macro fiscal discipline demonstrated by the government.   Staying on course   Given highly volatile global economic and financial conditions, Seychelles’ hard-won macroeconomic stability will likely be put to the test again. Environmental pressures limit scope to expand tourism, while vulnerability to external shocks argues for continued strong fiscal discipline and external buffers. To ensure continued economic growth and resilience, vital investments in infrastructure will be necessary, together with deeper development of human capital, more efficient public services, and financial sector deepening and inclusion. Concerted efforts are also needed to strengthen the social safety net and address critical social ills that hamper productivity and economic development. Some of these areas fall within the reform agenda under the current IMF-supported Extended Fund Facility and Resilience and Sustainability Facility, but others will require new policy commitments.   Seychelles’ economic record highlights the importance of sound macroeconomic management and institutional strengthening in achieving and sustaining economic prosperity. Its journey offers valuable lessons for other small economies aiming at building resilience in an increasingly uncertain global landscape. **** Todd Schneider is IMF mission chief to Seychelles and an advisor in the IMF’s African Department, where Hany Abdel-Latif is an economist, Pedro Maciel is a senior economist, and Henry Quach is a research analyst.   —The IMF Executive Board recently completed the fourth review of Seychelles’ economic performance under the Extended Fund Facility (EFF) and Resilience and Sustainability Facility (RSF).  Related Links Press Release Seychelles and the IMF We'd love to hear your thoughts and suggestions. Feel free to contact us.   Peter Walker  Managing Editor | IMF Country Focus  pwalker@IMF.org Stay connected with the International Monetary Fund:       This email was sent to politikimx@gmail.com on behalf of: International Monetary Fund 1900 Pennsylvania Ave NW · Washington, DC · 20431