African Development Bank has approved a $10m-loan to Seychelles to support the government’s COVID-19 response programme.
The loan will be channelled toward macroeconomic stabilization, strengthening national health responses to the COVID-19 pandemic, and safeguarding livelihoods and social safety nets.
Against a backdrop of declining revenues, the Seychelles government recently amended its budget to respond more effectively to COVID-19, taking on an immense financial burden as it works to enhance the country’s health systems, mitigate job losses, and redress lost business and household incomes.
The amended budget, according to a statement by AfDB, provides for an additional $3.6m to the health sector, which will help put in place robust early-detection surveillance systems and enhanced testing capability at points of entry.
The government is also readying isolation and quarantine facilities ahead of the resumption of international flight arrivals.
The statement disclosed that the government had committed to safeguard 37,409 private-sector jobs through provision of a six-month wage grant while also increasing allocations to the national Social Protection Agency to widen safety nets for informal workers and other vulnerable groups.
“The economic consequences of the COVID-19 pandemic have been more devastating than the disease itself in Seychelles. Tourism is one of the worst-hit industries globally, yet it is the main source of income for Seychelles, accounting for 25 percent of its GDP. The bank’s support will augment the government’s efforts aimed at cushioning the country against the impacts of the pandemic,” said Nnenna Nwabufo, Ag. Director General for AfDB’s East Africa Regional Office.
The crisis response programme is aligned with the AfDB Ten-Year Strategy (2013-2022) and the High 5s priorities, specifically to “improve the quality of life of the people of Africa.”
The operation is also aligned with the Bank’s Seychelles’ Country Strategy Paper (2016-2020), which aims at stimulating private sector activity in support of economic diversification though policy reforms.
Insufficient economic diversification, a small domestic market and vulnerability to external economic and environmental shocks are among the main development challenges the Seychelles economy faces.
The pandemic has seriously exacerbated these challenges and wiped out some of the country’s development gains. The Bank has revised the 2020 and 2021 GDP growth rate projections for the country downwards, from 3.3 per cent and 4.2 per cent to -10.5 per cent and -7.7 per cent, respectively.
