Central Bank of Seychelles won't restrict online shopping imports, despite exchange rate pressure

The CBS also presented the latest information with regards to different credit lines introduced to sustain the economy. (Seychelles News Agency)

(Seychelles News Agency) - The Central Bank of Seychelles (CBS) will not impose restrictions on online shopping even though increasing demand is putting pressure on foreign exchange, a top official said on Thursday.

The governor of CBS, Caroline Abel, told a press conference that if pressure continues on foreign exchange transactions through expenditures, Seychelles' reserve will drop further, and the exchange rate will depreciate even more.

"Today, I would like to make it clear that the Central Bank will not pronounce itself on any restrictions, but we are advising the public to look at their priorities when spending," she said.

Abel added that there will be consequences if CBS puts restrictions on foreign exchange transactions "but what we are saying is that economic activities have not returned to normal. Foreign currencies in our system are not sufficient. We are continuously saying that we need to look at our expenses as every component involves foreign currencies.".

She said that despite the opening of the international airport, economic activity remained subdued due to a sluggish recovery of tourism in terms of both tourist arrivals and tourism earnings.

The CBS also presented the latest information with regards to different credit lines introduced to sustain the economy and the enterprises of all sizes being affected due to the COVID-19 pandemic.

"For the past two months, we have injected more money into the system. Following analyses made, we have seen that the tourism sector is the main credit burrower. However, the appeal remains to reduce our expanse across the board," said Abel.

Abel said that the CBS will continue to monitor recent developments and external factors related to oil and food prices, European Union travel policies and implications, COVID-19 externalities as well as social instability events.

The CBS also presented the latest information with regards to different credit lines introduced to sustain the economy and the enterprises of all sizes being affected due to the COVID-19 pandemic.

As of Tuesday, Seychelles, a group of 115 islands in the western Indian Ocean, had a reserve of $567 million, out of which $427 million can be spent. Calculations show that this reserve can sustain the country for 18 months.

Meanwhile, CBS has taken a decision to maintain a tight monetary policy stance at 3 percent. The interest rate of 1 percent that will be transacted with commercial banks when depositing excess money with the Central Bank, and the credit facility at a rate of 6 percent when banks borrow money.

"This is in cognisant of the need to support the domestic economy. The broader set of policy measures implemented by CBS to address challenges of the COVID-19 pandemic is expected to assume a greater role in minimising economic loss," said CBS.