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Tunis, 20 July 2009 – The Board of Directors of the African Development Bank (AfDB) Group on Monday, 20 July 2009 in Tunis approved a € 15 million loan to finance an Economic Governance Reforms Program (EGRP) in the Seychelles.
The EGRP is the Bank Group’s first budget support operation in the Seychelles. The Program will facilitate reform implementation with a view to promoting macroeconomic stability and sustainable growth, and rebalance the economy, by improving economic and financial governance. Expected outcomes 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.
It will support the government’s 2009-2010 macroeconomic and financial reform program, and in particular, 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.
Furthermore, the design of the Bank Group’s budget support loan is guided by a number of studies, including the 2009-2010 Seychelles Interim Strategy Note (February 2009); the 2008 Country Project Portfolio Review Report (CPPR) for Seychelles; the IMF Article IV Consultation and a Standby Arrangement Staff Report (2008); the IMF report “A Strategy for Strengthening Budget Management (2008); the EC-financed 2008 “Seychelles Public Financial Management Performance Report” (PFM-PR); and a UN Economic Commission for Africa (UNECA) 2007 report on the “State of Good Governance in the Republic of Seychelles”.
The Seychellois population, in general, will reap the benefits of resumed 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.
“The Seychelles are at a critical juncture” - said OSGE Director, Gabriel Negatu, while presenting the Economic Governance Reforms Program (EGRP) to the ADB Board of Directors. Mr. Negatu also highlighted how the 15 Million Euros of Budget Support “is an integral part of Seychelles’s debt re-profiling strategy and is helping support the Seychelles’ economic turnaround”.
* 1 UA Units of Account) = 1.58223 US$ = 1. 09822 on 20/07/2009