AfDB and Seychelles Sign € 15 Million Budget Support Loan Agreement

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Tunis, 25 August 2009 – The African Development Bank (AfDB) Group and Seychelles on Monday, 25 August 2009 in Tunis signed a €15-million loan agreement to finance the country’s Economic Governance Reforms Program (EGRP).

The agreement was signed by the AfDB’s Sector Operations Vice President, Kamal Elkheshen, and Seychelles’ Ministry of Finance Principal Secretary, Ahmed Abdoulla Didi, in the presence of the Bank Group’s Executive Director for Seychelles, Peter Andrew Sinon.

Speaking at the signing ceremony, Vice President Elkheshen underscored the historic dimension of the event, noting that the program was Bank Group’s first budget support operation in the country designed to assist the government’s 2009-2010 macroeconomic and financial reform program,

For his part, Mr. Didi said the facility was timely and extremely helpful as it would help the government meet current budgetary financing gap and help achieve economic development targets.

He expressed the gratitude of the people and government to the AfDB for the assistance and the confidence it has in  Seychelles, adding that the government looked forward to improved relations and greater cooperation with the Bank group.

The expected outcomes of the program would include an improved budget formulation process and execution; a reinforced budget oversight and transparency; improved efficiency and transparency in public procurement; improved public debt management and business climate.

The loan approved by the Board of Directors on 20 July 2009, will be deployed in the implementation of reforms related to Public Finance Management (PFM) as well as increase the role of the private sector as a driver of growth. The program will be implemented through two principal components, namely: strengthening the PFM, and enhancing private sector development. The first component aims at consolidating the gains achieved in reversing fiscal weaknesses through better public finance management. The second component aims at further reducing the role of the public sector as a direct agent in economic production and trading activities and in becoming a facilitator for private sector development.

The program is aligned with the Bank Group’s 2009-2010 Interim Strategy Note (ISN), which is consistent with the government’s macroeconomic and financial reform program. The ISN is designed to “support the reform program with a view to achieving sustainable growth” with the lending program focusing mainly on a policy-based operation.

The Seychellois population, in general will benefit from the resumption of growth and employment opportunities in the private sector. In addition, they will benefit indirectly from the transparent and efficient management of public resources.

Ongoing Bank Group operations in Seychelles comprises three studies: A water Development Plan, financed under the African Water Facility to the tune of €955,000; an Environmental and Social Impact Assessment study for a Submarine Cable System linking Seychelles to the East Africa project estimated at US$ 500,000, under the Middle Income Countries’ (MIC) Technical Assistance Fund; and a study on human resources development (UA 600,000), also financed by the MIC Technical Assistance Fund.

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