The African Development Bank (AfDB) has approved a $20 million loan to support the Seychelles' government budget, said a top official on Thursday.
The loan, payable over a period of 17 years, with an eight-year grace period, is part of economic reform Seychelles is undertaking with the support of the International Monetary Fund (IMF).
The chief debt analyst at the Department of Finance, Dick Labonte, told a press conference that the Seychelles' annual budget is currently running at a deficit, which means the country's expenses are more than its revenue.
"This loan will therefore go towards the national budget and will enable the government to have the finances to support the expenses laid out in the budget for this year," said Labonte.
The 2021 budget approved in April by the National Assembly is for a sum of SCR 11 billion ($519 million) and it gives more attention to the fisheries sector and relaunching the tourism industry.
The support from the African Development Bank is expected to be repeated each of the next three years, but Labonte said that if the economic situation improves, further loans may not be taken.
"We expect that we will be needing this support for the next three years, but should the country's economy pick up due to increase in tourism activity and other factors, then we will have to assess and not take a similar loan for the next two years," he added.
The principal secretary for Economic Planning, Elizabeth Agathine, said that the loan has been approved recently so disbursement of will take place once an agreement has been signed.
She said that the support programme has the aim of enforcing economic governance and Seychelles had to fulfil a number of actions in order for the loan to be approved.
"The actions included matters relating to government policies and other ongoing programmes that the bank saw were relevant to the support they intended to give Seychelles," she added.
As part of its economic reforms, Seychelles also recently reached an agreement with IMF for a $107 million arrangement under the extended fund facility to help support the reform programme.