Seychelles has received a loan of $10 million from the African Development Bank (ADB) to support the government's COVID-19 response programme.
The loan, approved on Monday in Abidjan, Cote d'Ivoire, will be used for macroeconomic stabilisation, strengthening the national health responses to the COVID-19 pandemic, as well as safeguarding livelihoods and social safety nets.
With the shutdown of the tourism industry -- the main pillar of the island nation's economy -- the Seychelles' government is facing major challenges to keep the economy afloat.
In a communique released by the bank on Tuesday, the acting Director-General for the Bank's East Africa Regional Office, Nnenna Nwabufo, said 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 per cent of its GDP."
Nwabufo added the Bank's support will augment the government's efforts aimed at cushioning the country against the impacts of the pandemic."
Seychelles - 115 islands in the western Indian Ocean - recorded its first case of COVID-19 on March 14, and had 11 confirmed cases, all of which have fully recovered with no new cases or deaths.
Faced with declining revenues, the Seychelles government in March 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 also committed to safeguarding 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 crisis response program is aligned with the bank's ten-year strategy and its five areas of high priorities, specifically "improve the quality of life of the people of Africa".
The communique from the ADB said insufficient economic diversification, a small domestic market and vulnerability to external economic and environmental shocks are among the main development challenges 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 percent and 4.2 percent to -10.5 percent and -7.7 percent, respectively," said the statement.
The loan from the African Development Bank is the latest assistance received from international financial institutions. In April and May this year the World Bank and the International Monetary Fund also assisted the island nation in the form of a line of credit and emergency assistance totalling to $38 million.