Delegation from Saudi Fund for Development on working visit |22 May 2021

The delegation from the Saudi Fund for Development in discussion with their Seychellois hosts (Photo: Contributed)

Seychelles seeks help for capital projects

The Ministry of Finance, Economic Planning and Trade this week hosted a delegation from the Saudi Fund for Development.

The meeting, held on Thursday May 20 at Liberty House, was chaired by Minister Naadir Hassan.

Present were the Designated Minister and Minister for Fisheries and Blue Economy, Jean-François Ferrari, and the Minister for Lands and Housing, Billy Rangasamy.

The meeting is the first which the delegation from the Saudi Development Fund is having with the new government.

Discussions centered on how the Fund can provide assistance to Seychelles, especially in the area of infrastructure development.

Some priority areas have been identified, such as education, housing, and fisheries.

It was noted that while the government is pushing to diversify the economy, one of the biggest constraints it is presently facing is a lack of infrastructure, such as roads, and utilities.

The lack of these infrastructure due to financial pressures is impeding development of the economy.

All three ministers present at the meeting acknowledged the importance of the partnership between the Saudi Fund for Development and the government of Seychelles.

The Saudi Development Fund is already active in providing financial assistance to Seychelles.

It is currently co-funding the construction of the 33KV network for the southern region of Mahé. It has provided a loan of $20 million towards the financing of the project.

During the mission the Saudi Fund for Development delegation will be meeting with senior management of the PUC to discuss implementation of the 33KV south project as well as evaluate other projects in the utilities sector that could potentially be financed by the fund.

The Saudi Fund for Development was established in 1974 with the objective of providing development assistance to developing countries, by financing social and infrastructure projects.

The delegation of four, afterwards, held a meeting with senior technical staff of the Ministry of Finance, Economic Planning and Trade, who included the secretary of state (SS) within the Ministry, Patrick Payet; the principal secretary for Economic Planning, Elizabeth Agathine; deputy comptroller general, Astride Tamatave; and the principal secretary for Infrastructure within the Ministry of Lands and Housing, Yves Choppy.

Asked in a press interview yesterday afternoon why the country is borrowing additional money in this time of economic difficulties, SS Payet said that the country has some large capital projects in the pipeline for the next three to five years and in line with the macro framework put in place for the past six months with the International Monetary Fund (IMF) in relation to the country’s debt sustainability, such foreign loans for capital projects and budget support could be taken as it has a five-year grace period and with a twenty-year expansion debt repayment.

“As our economy is still fragile, we cannot rely on domestic financing because there is a lot of importation happening, and this puts additional pressure on the balance of payment as additional foreign exchange will be needed. This is why we’ve been discussing on how do we finance some of those large projects with external financing,” SS Payet said.

He noted that although the loan will add to the country’s deficit, it is better to borrow on the external market than to borrow on the domestic market to avert pressure on our debt sustainability.

SS Payet noted that as part of the country’s debt to sustainability analysis programme with IMF, there will be more discussions with the Saudi Development Fund in future for project financing and budget support which will be subject to more loans being taken.

“We know that at least we will be able to borrow because those funds we borrow is at a very concessionary rate and normally they have a five-year grace period and this assists us as well to complete that project before we can start the repayment,” SS Payet said, noting that external debt is less burdensome than domestic debt.

He stated that the loan amount for the capital projects has not been discussed yet as the Saudi Fund for Development will need to assess the projects to be funded further to visits to the sites where the projects are to be implemented and making feasibility assessments.

SS Payet said that some indicative proposals discussed with the delegation of theSaudi Fund for Development was the balance between social projects against projects that will assist in the diversification of the economy.

He mentioned that the top priority in regards to social projects is the reconstruction of the La Digue school and secondly with regard to the diversification of the economy are some of the infrastructure needed to be put in place for small and mid-size enterprises (SMEs) and for the fisheries development.

He added that housing is another project that has been discussed with the delegation.

Press release from the Ministry of Finance, Economic Planning and Trade / Patrick Joubert