(Seychelles News Agency) - The conflict between Russia and Ukraine and the increase in oil prices could have an effect on Seychelles' financial stability, said a Central Bank official on Thursday.

The statement was made by Sammia Marchesseau, a financial stability analyst at the Central Bank of Seychelles in a press conference on the island nation's financial state.

She said that the committee met recently and the discussions included local and international developments that could impact the country's financial stability. The current situation in Ukraine is a major concern.

"The current geopolitical tensions between Russia and Ukraine are a source of instability that can impact the tourism sector as well as oil prices," said Marchesseau.

Although the Seychelles tourism sector is now revitalised mainly through new markets, there still remains uncertainty from international events as well as the COVID-19 pandemic.

Seychelles, an archipelago in the western Indian Ocean, has established a tourism market from Russia and other eastern European countries. The current situation between Russia and Ukraine may have a negative impact.  

Furthermore, with Russia being one of the world's leading oil producers, the impact of its invasion of Ukraine is already causing oil prices to rise from $97.91 to over $105 in just a few hours. Seychelles is a country that depends on oil for electricity production along with transportation.

Marchesseau also talked about local factors impacting the island nation's financial stability.

"While the inflation rate in the country has gone down considerably from 7.62 percent in January 2021 compared to 3.87 percent in January 2022, it is not reflected in commodity prices on the local market," she said.

She added that this is because global prices continue to remain high.

The Financial Stability Committee was set up in 2016 and has since had to work on the country's financial steadiness amid the COVID-19 pandemic and is now looking at ensuring minimal impact in the future.

The committee is made up of various authorities, including the Central Bank, the Financial Services Agency, the Financial Intelligence Unit and the Ministry of finance.

"When we discuss the various issues that affect financial stability, each party takes up what they are concerned with. If there are things that we feel we cannot do on our own, we get other authorities on board so that they can address the issues discussed," said the Central Bank Governor, Caroline Abel.

Abel said that this year, the Central Bank is planning to formalise the Financial Stability Committee and put in place legislation that will govern its operation.