The Seychelles’ government has opened discussions with the Saudi Fund for Development on possible financial support for infrastructural development in the education, housing and fisheries sectors.
The Secretary of State for Finance, Trade and Investment, Patrick Payet, told the press that a first meeting held Friday concentrated on balancing social projects versus projects that will assist in the diversification of the economy.
“At the moment, the top priority social project is the La Digue school. For the diversification of the economy, it is the infrastructure that we need to put in place for SMEs (small medium enterprises) and fisheries development. These are the discussions that we have had with them. They will now follow their internal process and we will be doing the same once we receive an indicative envelope of how much they will be willing to finance,” said Payet.
The Saudi Fund for Development was established in 1974 to provide development assistance to developing countries, through the financing of social and infrastructure projects.
The Fund is already assisting Seychelles and is currently co-funding the construction of the 33KV network for the southern region of the main island of Mahe. It has provided a loan of $20 million toward the financing of this project.
Three Seychellois ministers were present at the meeting with the Fund’s delegation of four: the Minister for Fisheries and Blue Economy, Jean-Francois Ferrari; the Minister for Lands and Housing, Billy Rangasamy; and the Minister for Finance, Economic Planning and Trade, Naadir Hassan.
A first meeting held Friday concentrated on balancing social projects versus projects that will assist in the diversification of the economy. (Ministry of Finance) Photo License: CC-BY
All three ministers acknowledged the importance of the partnership between the Saudi Fund for Development and the government of Seychelles, an archipelago in the western Indian Ocean.
It was noted that while the government is pushing to diversify the economy, one of the biggest constraints is a lack of infrastructures, such as roads and utilities due to financial pressures which are impeding the development of the economy.
Payet outlined that Seychelles has been discussing a programme with the International Monetary Fund (IMF) for the past six months and external and foreign financing are some of the indicators that have been included.
“This is mainly because we cannot rely just on domestic financing. As you know, in regards to project financing, there is a lot of importation and if you just rely on domestic financing, it will put additional pressure on your balance of payment because you need additional foreign exchange. This is why we’ve been discussing how to finance some of those large projects using external finance,” explained Payet.
He said that this is a part of the debt-to-sustainability analysis that the Ministry of Finance has done so that “we know that at least we will be able to borrow as the funds that we borrow are at a very concessionary rate and normally they have a five-year grace period. This allows us to complete the project before we can start the repayment.”
The Secretary of State also indicated that aside from acquiring foreign finance from the Saudi Fund for Development, there will be more loans in the future for financing projects and budget support.
During the mission in Seychelles, the Saudi Fund for Development delegation will also meet with the senior management of the Public Utilities Corporation (PUC) to discuss the implementation of the 33KV south project as well as evaluate other projects in the utility sector that could be financed by the Fund.