The African Development Bank (AFDB) has approved a $20 million flexible loan to finance Seychelles’ Governance and Economic Reforms Support Program targeted at driving the country’s macroeconomic stability and recovery from Covid-19 in the medium-term.
The AFDB financing will argument funds from the World Bank and the International Monetary Fund in support of reforms that will benefit Seychelles’ private sector dominated by small enterprises. By ensuring that such businesses stay afloat during these challenging times, the operation will positively impact women and the youth, while creating employment and equal opportunities.
The government program is targeted at deepening reforms introduced through the Bank’s Covid-19 Crisis Response Budget Support Program, approved in June 2020 for $10 million. These reforms are expected to advance fiscal sustainability, improve the business environment and Seychelles’ climate change and environmental resilience.
The AFDB had earlier approved an ongoing portfolio in Seychelles as at July 2021 which comprises five operations in the public sector totaling $45.7 million. Of these 53% are in the water supply and sanitation sector, and 47% in the multi-sector.
Seychelles’ Minister of Finance, Trade, Investment and Economic Planning, Naadir N.H. Hassan, lauded the AFDB management 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 global downturn emanating from the Covid-19 pandemic has unfavorably impacted Seychelles’ economy in spite of government interventions.
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 end-2018, is now projected at 87.7% by the end of 2021, according to the Bank’s appraisal report.