R500 million fund for MSMEs
The government has published as per the Public Debt Management (PDM) Act section 14, several Guarantee Orders, which relates to the R500 million fund that have been made available under the facility for micro, small and medium enterprises (MSMEs).
The publication for the R750 million facility for large businesses will be published shortly.
This is in line with the creation of the Private Sector Relief Scheme that have been set up to make funds available to members of the Seychelles Bankers Association (SBA), funded by amounts borrowed from the Central Bank of Seychelles (CBS).
Government has agreed to guarantee 70% and 50% of the funds borrowed by SBA members from the CBS under each credit line facility respectively.
With the exception of DBS, which a maximum of R75 million have been made available, no cap have been imposed on the maximum amount that can be borrowed from the credit line facility by other SBA members.
The Covid-19 pandemic has caused significant disruptions in the economic activities of MSMEs as well as large businesses in the country. Subsequent to this, following consultative discussions between the government, the Central Bank of Seychelles (CBS) and the private sector, the CBS and members of the SBA agreed on a relief scheme for the private sector.
The guarantee will have no impact on the government’s budget unless the businesses fail to repay their debt obligation thus calling on the guarantee. The only effect of this facility is that it will increase government’s guaranteed debt to GDP ratio by approximately 3.4% if both facilities are fully subscribed.
Additionally, to cope with the adverse budgetary impact of the Covid-19 pandemic, through negotiations with the African Development Bank, government borrowed USD 10 million through the ‘Covid-19 Crisis Response Budget Support Programme’ offered by the Bank. The facility has an eight-year grace period and is repayable over 12 years with interest rate calculated at the time of repayment as per agreement. Note that this facility increased the debt to GDP by 0.8%.
Since the start of this pandemic, many countries are providing relief to businesses and workers to safeguard their respective economies and prevent their population from entering into poverty.
Press release from the department of finance
