Seychelles' Central Bank unwinding COVID support measures
Tourism was severely affected when the island nation went into lockdown in April 2020 to curb the spread of COVID-19 and a major downturn in travel worldwide. (Joe Laurence, Seychelles News Agency)
(Seychelles News Agency) - The Central Bank of Seychelles (CBS) has begun removing policies and measures put in place in 2020 to assist businesses affected by the COVID-19 pandemic, the governor said on Thursday.
The unwinding strategy of the CBS, approved by its board on January 31, was presented to reporters in a press conference. CBS has re-opened access to the Private Sector Relief Schemes until March 31. The schemes had closed on December 31, 2021.
"Like all central banks in the world, there has been a lot of discussions and analysis as time went by and we are now looking at adjusting the measures, to ensure that the economic and financial systems can adapt to the current economic realities," said CBS Governor Caroline Abel.
Seychelles, an archipelago in the western Indian Ocean, is heavily reliant on the tourism industry, the top contributor to its economy. Tourism was severely affected when the island nation went into lockdown in April 2020 to curb the spread of COVID-19 and a major downturn in travel worldwide.
Several financial schemes were put in place to help businesses stay afloat, especially those directly related to the tourism sector.
Assessment of the various schemes started last year when the economy of the island state showed improvement since the reopening of the airport in March 2021 to visitors from all countries. This took place following a nationwide vaccination campaign in January 2021.
CBS said it prepared its unwinding strategy after work was completed and data collected to ensure the process covers all the outcomes of the move.
A financial surveillance analyst at CBS, Cyril Benoiton, spoke of the limitations encountered in preparing the strategy, including the availability of data, limited feedback and input from interested parties, uncertain cost implications and the dynamic nature of the pandemic.
He said that CBS has also decided to continue the purchase of government securities from the market in force majeure events, where a $3,851,686.90 (SCR50 million) limit was set for 2022 and is open to all categories of investors.
"As you will recall, in 2021, the Central Bank put a policy in place were SCR750 million was made available to investors, for them to re-purchase the investments they had made previously in Government Securities such as treasury bills and bonds. When we looked at how it went, where there was an uptake of nearly SCR 50 million in 2021, we decided to make a minimum of SCR50 million available for CBS to re-purchase this year," said Benoiton.
CBS said that it will also continue foreign exchange interventions with commercial banks only while non banks are required to seek assistance from the financial system for their foreign exchange needs.
The moratorium on loan repayments and debt restructuring measures offered to individuals and businesses by their respective credit granting institutions will also remain in 2022, but this assistance will be provided on a case-by-case basis.
Furthermore, the Seychelles Electronic Funds Transfer (SEFT) fee paid for online banking transactions will remain at zero charges for this year, the central bank said.