The African Development Bank (AfDB) has approved a $20 million flexible loan to finance the Governance and Economic Reforms Support Programme in Seychelles.
Development Diaries gathered that the government programme aims to deepen reforms introduced through the AfDB’s Covid-19 Crisis Response Budget Support Programme.
The 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, with real GDP growth, which averaged 4.2 percent from 2016–2019, contracting by 12.9 percent in 2020.
According to the AfDB’s appraisal report, the overall fiscal deficit of between -1.4 percent and 0.7 percent of GDP in the 2016–2019 period widened to -19.5 percent in 2020, while public debt that stood at 62.3 percent of GDP at the end of 2018 is now projected at 87.7 percent by the end of 2021.
‘The Covid-19 pandemic has devastated the tourism sector, which contributes about 25 percent of GDP and accounts for the largest share of total employment’, AfDB’s Director General, East Africa Regional Development and Business Delivery Office, Nnenna Nwabufo, said.
The bank said in a statement that its financing will complement funds from the World Bank and the International Monetary Fund in support of reforms that will benefit Seychelles’ private sector, which is dominated by small enterprises.
Nwabufo noted that on the same day the loan was approved, the IMF and the Seychelles government reached a staff-level agreement for a $107 million arrangement under the fund’s Extended Fund Facility.
‘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 AfDB statement read.
Seychelles’ Minister of Finance, Trade, Investment and Economic Planning, Naadir 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’, Hassan said.
‘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’.
Source: AfDB
Photo source: Marco Verch