Seychelles: African Development Bank extends $10 million loan to support COVID-19 responses as economy reopens

The Board of Directors of the African Development Bank on Monday approved a $10 million loan to the Republic of Seychelles to support the government’s COVID-19 response program. The loan will be channeled 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 provides for an additional $ 3.6 million 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 Government has 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 the Bank’s East Africa Regional Office.

The crisis response program is aligned with the Bank Group Ten-Year Strategy-TYS (2013-2022) and the High 5s priorities, specifically “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% and 4.2 % to -10.5% and -7.7%, respectively.