Seychelles’ gross international reserves stands at US $588 million |04 July 2020
CBS Governor Abel
As at July 1, Seychelles’ gross international reserves stands at US $588 million and the country’s net international reserves is US $440 million.
The information does not include our reserves but the foreign exchange the Central Bank of Seychelles (CBS) sold directly on the market – which is US $9 million in April and US $1.8 million in June. It also includes payments for Seychelles Petroleum Company (Seypec) and Seychelles Trading Company (STC).
Central Bank of Seychelles (CBS) governor Caroline Abel yesterday gave these details to the press in the weekly update on the foreign exchange reserves policy and strategy and other issues at the International Conference Centre of Seychelles (ICCS).
Following previous guidance from the Central Bank of Seychelles (CBS), once again Governor Abel has called for collective responsibility, accountability and sharing of losses for a new sustainable economic landscape.
Governor Abel said with the tourism industry out of the equation, our foreign exchange has decreased considerably as we are not earning foreign exchange.
The present scenario is that the private sector is using its reserve to sustain its workforce and the amount of revenue has decreased by half.
In the last two weeks, the exchange rate remained stable and even showed a small appreciation.
It is still too early to say whether there will be a continuous reduction in the weeks to come. Governor Abel noted that we have to keep following what is happening in the world and in Seychelles to better understand the foreign exchange market.
Bonds – R1.3 billion collected out of the R1.5 billion
Regarding the bonds that were issued on June 15, Governor Abel said many investors sold some forex to buy these bonds. This, she said, was a good move and we were able to relieve the pressure on the market and keep our reserve.
“Our position as at July 1, 2020 shows that our gross international reserves is at US $588 million and our net international reserve is US $440 million. There is a reduction in our reserves as the government has to pay back our debts, where the biggest part includes the Eurobonds.
“If we are following international news, we are witnessing a gradual easing of lockdown measures. There is already uncertainty and downward growth forecasts according to the International Monetary Fund (IMF), United Nations World Trade Organisation (UNWTO). The IMF and UNWTO noted that the world’s financial state is bad. The role of aviation hubs and airline traffic will also define our reality. The more time it takes to reopen the borders, we will suffer. We have to take into account the different scenarios,” said Governor Abel.
She added that on the domestic level, it has been announced that commercial flights will resume in August.
“We have to consider our health and economic activities. Government has announced that the salary will be covered until the end of December 2020, but if the economy does not pick up quickly, we will face a difficult situation. In the second half of 2020, we will also see a rise in redundancies and the CBS wants the public to understand the consequences of our individual actions,” she said.
Governor Abel also said we will have to re-adjust our strategy if our economy does not pick up. “Another point to consider is whether our economy will be able to cover the 13th month salaries. The forecast made in March 2020 is that our economy will reduce by 10% or more. The private sector knows already that it does not have the ability to pay the 13th month salary. We know the 13th month salary is prescribed by law but we have to initiate discussions regarding this law. CBS wants to present this reality to the public. On top of paying the salary of the private sector, the government is borrowing money which it has to repay. The government needs to relook at its expenses and cut on the budget. We must have the capacity to repay our debts as well as to keep the economy working.”
“This week we also heard that the price of electricity will not increase, however we also heard of an increase in fuel prices. This will definitely impact the budget of families. The world’s reality is still very fragile and Seychelles’ reality is also fragile. Our economic environment is in transition and we urge for collective responsibility, accountability and sharing of losses for a new sustainable economic landscape,” she added.
Income from fisheries and financial sector
The tourism industry contributed around 76% of the US $721 million generated last year but this will not be the case in 2020.
Governor Abel noted that the fisheries and financial services sectors will not be able to generate as much revenue to make up for tourism losses.
“We see how the fisheries sector is sustaining our economy in this reality. We also have to bear in mind what happened with the mariners who work on the tuna vessels. It is a concern because if the fisheries sector is hit by this pandemic, IOT’s operations will definitely be affected. In regards to the financial sector, the Financial Services Authority (FSA) has already made a dividend payment of US $1.4 million. We have been accumulating reserves during the previous years through tourism, but right now, the fisheries and financial sectors are not able to generate that much money to sustain our economy and tourism remains our primary source of income,” explained Governor Abel.
Opening of banks on Saturday
Governor Abel explained that the decision to close banks on Saturdays started with the restriction period.
“CBS has already started to work on a plan on how to modernise our banks. Our goal is to minimise the face to face transactions. When COVID-19 forced us to close our doors and maintain social distancing, we took the opportunity to move our modernisation project sooner. We are urging people to use online services, and with that we are also looking at the different strata of the community and see their needs. We know that many like the physical interactions but, as an economy, we have to take advantage of the technology at hand.”
Vidya Gappy