The destruction of the economy through excessive demands
The Central Bank of Seychelles has again warned against the high demand for foreign exchange in the local economy, which the market place is finding difficult to match.
The CBS Governor, Caroline Abel repeated her appeal to the citizens’ sensibility, in the latest of the press conferences her institution holds to keep people updated about the country’s foreign exchange reserves, as well as the developments in the economy, generally.
This is not the first time that CBS has launched such an appeal to members of the public, as its latest figures show that the main earner in the country’s economy – tourism – has been severely affected by the distinct lack of visitors brought about by the pandemic situation of Covid-19, yet the demand for foreign exchange has not curbed.
“The market is still demanding the same amount of foreign exchange as it was this time last year, although we are not earning anywhere near the same income as we were at that time,” explained Ms. Abel.
“Should this trend continue, we will find ourselves in a situation where we have exhausted our resources, and the market will then have to determine the worth of foreign exchange, which we have to admit will no longer be SCR18 for a dollar, but it could climb up to SCR 200 for a dollar if the demand remains high,” she explained.
At the moment, CBS is not imposing any control on foreign exchange transactions, as it says its mandate is to monitor the economy and keep it as stable as possible. A decision that allows the market to function freely, with people at the helm deciding how to spend and having the power to either improve or completely ruin the economy.
Despite CBS continuously warning people that they have to curtail their spending habits, this week’s warning was a bit more ominous, as the institution has explained that its figures show the demand constantly exceeding the supply of foreign exchange.
To recall, CBS has always maintained that it had enough reserves to sustain the country for 18 months, provided that the money it had was only used to pay for necessities such as food, medicine and fuel.
Despite having an injection of USD 10 million from a grant from the African Development Bank, the rate at which it is being used has caused enough alarm resulting into the always calm governor to emphatically state her institution’s concern at the rate of demand.
Meanwhile, as Seychelles is still looking for ways to entice tourists from its usual markets to come to its shores for their vacations, the other pillars of the economy are yet to bring in the same earnings as the now flailing tourism sector.
It is with this in mind that CBS has also advised people to have a leaner Christmas period this year, keeping the spending to strictly essentials so as to help the local economy remain stable.