African Development Bank approves $20 million loan to support COVID-19 recovery
The Board of Directors of the African Development Bank Group (www.AfDB.org) has approved a $20 million flexible loan to finance the Seychelles Governance and Economic Reforms Support Program, which is expected to contribute to boost the island nation’s macroeconomic stability and recovery from Covid-19. medium term.
The government’s program aims to deepen the reforms introduced under the Bank’s budget support program in response to the Covid-19 crisis, approved in June 2020 for an amount of 10 million dollars. These reforms are expected to advance fiscal sustainability, improve the business environment and Seychelles’ resilience to climate change and the environment.
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, which is dominated by small businesses. By ensuring that these businesses stay afloat in these difficult times, the operation will have a positive impact on women and young people, while creating jobs and equal opportunities.
Seychellois Minister of Finance, Trade, Investment and Economic Planning, Naadir NH Hassan, thanked the Bank for being a trusted partner in the development of the country. “The installation comes at an opportune time and will provide much needed relief given the economic difficulties we are facing in light of the Covid-19 pandemic. This will help the government close the current fiscal financing gap and achieve economic development goals as we lead the country on the path to recovery and debt sustainability,” Hassan said.
The global downturn resulting from the Covid-19 pandemic has had an adverse impact on Seychelles’ economy, despite government interventions.
“The Covid-19 pandemic has devastated the tourism sector, which contributes around 25% of GDP and accounts for the largest share of total employment,” said Nnenna Nwabufo, Director General of the Regional Development and Delivery Bureau. of services in East Africa of the Bank Group.
She noted that on the same day the loan was approved, the IMF and the Government of Seychelles reached a staff-level agreement for a $107 million deal under the Fund’s Expanded Financing Facility, which which highlights the rapidity of the Bank’s intervention and the solidity of the partnership. between the Bank and the IMF.
The pandemic has severely affected Seychelles’ macroeconomic performance. Real GDP growth, which averaged 4.2% in 2016-2019, contracted by 12.9% in 2020. The overall budget deficit, ranging between -1.4% and 0.7% of the GDP over the period 2016-2019, widened to -19.5% in 2020, while the debt which amounted to 62.3% of GDP at the end of 2018, is now projected at 87.7% at the end 2021, according to the Bank’s appraisal report.
The Bank’s approved and ongoing portfolio in Seychelles as of July 2021 comprises five public sector operations totaling $45.7 million. Of these, 53% fall under the water and sanitation sector and 47% under the multi-sector.
Distributed by APO Group for the African Development Bank (AfDB) Group.
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