Seychelles’ financial woes may ease in the coming days as the International Monetary Fund (IMF) has approved the second disbursement of $34 million.
The announcement came as cabinet ministers decided that employees of state-owned enterprises will not receive any bonuses or incentives for 2021.
The disbursement by IMF is part of the 32 month extended arrangement under the Extended Fund Facility (EFF) for a total sum of $105.6 million. The Washington-based lender agreed to the disbursement after it had satisfactorily assessed Seychelles’ progress toward reducing budget deficit and ensuring debt sustainability.
“During IMF’s visit in November, they reported that Seychelles had reached all the quantitative targets that had been set as part of this programme and therefore as per the agreement, they have now agreed to disburse the second portion of this loan to Seychelles,” Patrick Payet, the Secretary of State for Finance, told reporters.
The first portion of the loan given to the archipelago island nation as part of this agreement was in July for $34 million and next year, a disbursement of $19 million is expected to be given, and the same amount is set to be disbursed in 2023.
This second disbursement of $34 million loan will go directly into the country 2022 budget.
Payet said that Seychelles took out the larger sum this year because of the huge budget deficit this year compared to what is being forecast for 2022 and 2023.
As part of the agreement with IMF, the country is expected to make numerous reforms across all sectors, with more targets set in order for the next part of the loan to be disbursed.
“One of the major reforms we are looking at is the review of the business tax regime as well as the value added tax (VAT), where we are working alongside IMF to ensure we can eliminate any loopholes that are limiting us in collecting maximum revenue,” said Payet.
On his side, the Minister for Finance, Naadir Hassan, said that since Seychelles needs to be prudent in its expenditures, the Cabinet of Ministers has decided that state-owned enterprises will not pay staff any bonuses or performance incentives for the year 2021.
“This has not been an easy decision and we know it is also not a popular one but it is one that the government had to take, in view of the economic situation of the country,” said Hassan.
