The government program aims to deepen reforms introduced through the Bank’s Covid-19 Crisis Response Budget Support Program, approved in June 2020 for $10 million.
The 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.
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 global downturn emanating from the Covid-19 pandemic has unfavorably impacted Seychelles’ economy, in spite of government interventions.
“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.
She 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, which underscores the timeliness of the Bank’s intervention and the strength of the partnership between the Bank and the IMF.
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 end-2018, is now projected at 87.7% by the end of 2021, according to the Bank’s appraisal report.
The Bank’s approved and ongoing portfolio in Seychelles as at July 2021 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.