WASHINGTON, September 20, 2012 - The World Bank approved today a US$7 million loan to the Republic of Seychelles to improve the business climate and public financial management as well as help the government to better target social assistance.
The Sustainability and Competitiveness Development Policy Loan (DPL1) is the first of three operations.
Seychelles has a high gross national income (GNI) per capita (US$ 9,710 in 2010), high standards of living, good levels of human development, and better governance indicators than many similar countries.
Since the 2008 crisis, Seychelles has strongly pursued reforms supported by the World Bank and International Monetary Fund programs. The economic restructuring program focused on a fundamental liberalization of the exchange regime, significant and sustained tightening of fiscal policy (backed by a reduction in public employment). The reform program also included a monetary policy framework aimed at improving liquidity management, and the reduction in the state’s role in the economy to boost private sector development.
These achievements aside, a number of challenges remain.
Seychelles confronts the challenges of a small and remote island state that is vulnerable to a range of potential shocks, including a high dependence on external markets. “Authorities should be commended for implementing a far-reaching reform agenda since the 2008 crisis,” said Haleh Bridi, the World Bank Country Director for Seychelles. “To reap the long-lasting benefits of these reforms, it is key to further pursue policies which support the development of a vibrant private sector. The need for such reforms is even more urgent in light of uncertainties in the global economy, especially in Europe, given the predominance of tourism,” concludes Bridi.
This programmatic operation is aligned with the World Bank strategy for Africa: It aims to improve governance in two key economic sectors, namely petroleum and fisheries, and enhance public financial management. It also aims to improve Seychelles’ business environment.
By the end of this programmatic series, it is expected that the number of days to register a business will decline from 39 to 3 days; monitoring of financial performance will be strengthened by the Public Enterprise Monitoring Division; welfare assistance will be better targeted; and the Public Utility Company will operate on a sound financial basis. The program builds on the achievements and lessons of preceding operations, and aims to consolidate reforms supported by analytical work and technical assistance, as well as an International Monetary Fund (IMF) program under the Extended Fund Facility (EFF).