‘Let’s be vigilant of current world affairs’ ‒ CBS Governor |25 February 2022

“Let’s be vigilant of the current world affairs,” Central Bank of Seychelles Governor Caroline Abel has advised everyone during the bank’s regular press conference held at the ICCS.

This is because although our economy is still on the right track to recovery, the current Russian/Ukraine conflict will have an impact on our economy.

Loans for MSMEs and large enterprises

“As mentioned earlier, the Central Bank of Seychelles (CBS) re-opened the two lines of credit for this month to assist and we will decide if we will keep them open for this month. Regarding statistics dated February 11, 2022, 459 requests were received from micro, small and medium enterprises (MSMEs) – 304 were approved for the sum of R145,723,847.26, three requests are still pending and 97 have been rejected. Only 29.14% of the sum has been used,” said Ms Abel.

For large enterprises, Governor Abel noted that 35 requests were received with 28 approved for the sum of R312,223,464 and one request is pending. 41.63% of the sum approved has been used.

From these requests, 79 come from tourism sector, 65 from trade and 54 from transportation among others.

From CBS, as of February 22, 103 requests were received from MSMEs and all were approved for the sum of R137,125,913.31 and for large business 22 requests were received and approved from R279,911,979.

Governor Abel also mentioned that there has also been repayment of loans done by participating institutions – R10,890,129.69 from MSMEs and R11,435,691.05 from large enterprises.

For CBS, loans repaid by MSMEs amount to R14,202,850.86 and from large enterprises R13,870,820.20.

Talking about the foreign exchange market, in February a total of US $60.6 million were sold and demand was US $55.9 million.

“For January 2022, the country was able to retain US $4.7 million and for the month of February we were able to retain US $7.5 million. Despite all the uncertainties, the tourism sector brought in more income in the country in 2021. We have to remember that when the country was going through a difficult phase, it was the fishery sector that helped maintain the economy. Our exchange rate is stable and there is an appreciation in our rupee,” explained Governor Abel.

As of February 22, 2022, our gross international reserves stand at US $700 million and our net international reserves are at US $526 million.

“CBS had the opportunity to purchase US $2.45 million to put in our reserves in order to prepare for difficult times,” shared Governor Abel.

Following a question from the media, Governor Abel shared that our lowest reserve was in 2008 at US $15 million and the present US $700 million is the highest reserve we have ever had.

Recent domestic developments

CBS is continuously monitoring the development in the ongoing national Covid-19 immunisation campaign and the slowdown in community transmission of the disease. “There is resumption of physical learning in schools and easing of restrictions: extended shop opening hours, resumption of sports activities and group gatherings for workshops, seminars and meetings. The labour market is back to be dynamic. For fiscal purposes, the government has two bonds ‒ 3 years and 7 years ‒, totalling R500 million and the Development Bank of Seychelles (DBS) has issued a 5-year bond worth R200 million. We are also monitoring the evolution of more transmissible Covid-19 variants and negative impact on economic activity and shifts in individual and collective behaviour are critical. More emphasis should be placed on digital economy which helps to minimise disruptions to services and reduce community transmission. The financial system has to be enhanced to facilitate the evolution to a digital economy and finally CBS is looking at the unwinding of relief schemes and policy measures of CBS,” explained Governor Abel.

Cost of living

Governor Abel also said the cost of living is high in Seychelles.

“In general, inflation in the country has moderated compared to late 2021, however we want to caution the economy that inflation may remain high in light of world issues. What is being said is that in 2022, inflation will remain elevated globally in light of supply chain constraints, shipping costs and now with the recent development of the Russia/Ukraine issue. This will bring further increases in prices particularly in fuel prices. Given that we are dependent on fuel, an increase in price of such a commodity will also affect the prices of quite a number of other commodities such as electricity and transportation. As a country we need to be conscious of that and be prepared to make adjustments. Presently, the government is looking at income support and this exercise is expected to be completed in June and the government will be announcing its new position on that. But we want this alert to be understood as it is a real one and it is going to affect the whole world economy as Seychelles is very dependent on import,” concluded Governor Abel.

Vidya Gappy