African markets

Central Bank of Seychelles keeps rate on hold, economy yet to recover

The Central Bank of Seychelles (CBS) has kept its monetary policy rate (MPR) stable for the fourth quarter, saying the economy has yet to fully recover from the effects of the COVID-19 pandemic despite a recovery in the economic activity.

CBS left its key rate at 2.0% after cutting it, and the Global Interest Corridor, by 100 basis points at its last board meeting on June 30, the fourth rate cut by CBS. the bank since September 2019.

Since then, the rate has been lowered by 3.50 percentage points.

At its June meeting, the bank’s board also said it had approved lowering reserve requirements to 10.0% from 13.00% if liquidity conditions warranted such an adjustment.

In today’s statement, following a September 27 board meeting, CBS said reserve requirements on rupee-denominated deposits had been lowered to 10% effective July 14 and that they would be maintained at this level in the fourth quarter.

The bank’s board expressed disappointment that the general decline in interest rates has not been fully transmitted by the banking sector

While the country’s tourism sector has improved since visitor entry requirements were eased on March 25, CBS said visitor arrivals and revenue remain well below pre-pandemic levels. .

The Republic of Seychelles is made up of 115 islands off the east coast of Africa and relies heavily on tourism, which has been devastated by the pandemic.

“There are promising signs of a partial recovery, with some improvement in production statistics and overall domestic activity, although the effects of the pandemic are still being felt in various sectors of the economy,” he said. said CBS.

In late July, the Executive Board of the International Monetary Fund approved a 32-month extended arrangement for Seychelles of $105.6 million – 323% of the country’s quota – allowing immediate disbursement of $34.26 million of dollars.

The IMF projects gross domestic product growth this year of 6.9% after a 12.9% contraction last year and 7.7% growth in 2022.

Inflation is expected to average 10.0% this year, down from 1.2% last year and 3.7% in 2022.