AfDB’s $20 million loan is for budget support for this year

July 29, 2021

The Government of Seychelles will be getting a loan of $20 million from the African Development Bank (AfDB).

The Board of Directors of the Bank approved the loan last week.

When all the legal agreements have been signed, the loan will be disbursed.

Speaking to the media this afternoon, the Principal Secretary for Economic Planning, Elizabeth Agathine, explained that the loan will be disbursed in a one-off payment, which will go towards budget support.

“The loan is part of the economic reform programme we are undertaking with the support of IMF and it is be used to support the 2021 budget.”

She said the loan is specific for this year alone.

PS Agathine noted that a budget support loan is needed when there is a budget deficit as the money will go directly into the budget.

“We are not just taking this loan because we can, but because we have to, as we are experiencing a budget deficit, however, as the Government still needs to finance its programmes and the country and economy have to continue to operate, so it makes sense.”

The Chief Debt Analyst at the Ministry of Finance, Economic Planning and Trade, Dick Labonte, gave the details of the loan.

He said the $20 million loan is repayable over a period of 17 years, with a grace period of 8 years. 

“The loan is being taken in the context of our macro-economic and fiscal programme, to ensure it is inline with our debt sustainability framework.”

As part of its economic reform programme, the Government of Seychelles will be seeking new external loans from its development partners, as the loans carry a cheaper interest rate, compared to domestic loans.

Click on the link below for the press release from the AfDB about the loan.

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