SEYCHELLES – The Board of Directors of the African Development Bank Group has approved a US$20 million flexible loan to finance Seychelles’ Governance and Economic Reforms Support Program.

This fund is expected to help drive the island nation’s macroeconomic stability and recovery from Covid-19 in the medium-term.

The pandemic has severely impacted Seychelles’ macroeconomic performance. Real GDP growth, which averaged 4.2% in 2016-2019, contracted by 12.9% in 2020.

The overall fiscal deficit of between -1.4% and 0.7% of GDP in the 2016-2019 period widened to -19.5% in 2020, while public debt that stood at 62.3% of GDP at the end-2018, is now projected at 87.7% by the end of 2021, according to the Bank’s appraisal report.

The Covid-19 pandemic has devastated the tourism sector, which contributes about 25% of GDP and accounts for the largest share of total employment,” said Nnenna Nwabufo, Director General of the Bank Group’s East Africa Regional Development and Business Delivery Office.

Tourism and its related sectors account for about two-thirds of Seychelles’ GDP. As the COVID-19 pandemic affected the world in March 2020, global travel came to a halt, tourism receipts plummeted, and the Seychellois economy was badly hit.

African Development Bank’s financing will complement funds from the World Bank and the International Monetary Fund in support of reforms that will benefit Seychelles’ private sector, dominated by small enterprises.

Last month, Seychellois authorities and the IMF reached a staff-level agreement on economic and structural policies supported by IMF resources of SDR 74 million (about US$ 107 million) under the Extended Fund Facility (EFF) for the duration of 28 months, over 2021-2023.

These funds will work by ensuring that such businesses stay afloat during these challenging times, thus, the operation will positively impact women and the youth, while creating employment and equal opportunities.

Seychelles’ Minister of Finance, Trade, Investment and Economic Planning, Naadir N.H. Hassan, thanked the Bank for being a trusted partner in the country’s development.

The facility comes at an opportune time and will provide much-needed relief given the economic hardship we are faced with in light of the Covid-19 pandemic.

It will help the government meet the current budgetary financing gap and help achieve economic development targets as we steer the country on the path to recovery and debt sustainability,” Hassan said.

The Bank’s approved and ongoing portfolio in Seychelles as at July 2021 comprises five operations in the public sector totaling US$45.7 million. Of these 53% are in the water supply and sanitation sector, and 47% in the multi-sector.