Seychelles Issues $ 72 Million of Solidarity Bonds to Help Cover COVID-Induced Deficit

Seychelles has issued three bonds worth $72 million in total to assist the government in covering a deficit of approximately $211 million in its spending.

The Ministry of Finance, Trade, Investment and Economic Planning (MoFTIEP) said the three Solidarity Bonds, each worth $24 million, are being issued as part of the government's effort to raise funds for additional spending, due to the impact of the COVID-19 pandemic on the island nation's economy.

Damien Thesee - Principal Secretary for Finance - told a press conference at the Central Bank of Seychelles on Wednesday that the issuance of the bonds was announced in March by the minister in the 2020 Budget Amendment speech.

"Following the approval of the budget amendment 2020 where we stated that we would come out with an overall deficit of 3.7 billion rupees as a result of the different measures, the government has announced as a relief as a result of COVID-19 pandemic," explained Thesee.

According to Thesee "these bonds will allow the government to meet its expenditure as a result of a decline in revenue as we are simply not really collecting taxes. We are short of around 1.8 billion Seychelles rupees in tax revenue according to our projections."

The issuance and management of the Solidarity Bonds will be done by the Central Bank. Both Seychellois and foreigners can invest in these bonds as long as they have a local currency account in any commercial bank on the islands.

Gina Rosette director financial markets division at the Central Bank explained that the 3-year, 5-year, and 7-year bonds will be available as of June 15.

"The 3-year Bond will be earning a fixed interest rate of 7% per annum, compounded semi-annually. Compounded interest means that the holder of the Bond will earn interest on the initial amount invested and also on the accumulated interest," Rosette said.

The director added that the face-value together with the compounded interest will be paid upon maturity of the Bond. The 5-year and 7-year bonds will be earning a fixed interest rate of 10% and 12% per annum, respectively. Interest for both bonds will be paid half-yearly, calculated over a year.

All three bonds will be issued in multiples of $57 with a minimum value of $57 and will be sold on a first-come-first-served basis. The bonds can be purchased by adults - individually or jointly, commercial banks, corporate bodies, institutions, clubs, societies, and other organisations.

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