CBS: Seychelles' forex inflow 'significant', exchange rates stable

CBS said that as of January 19, the country's forex reserves stand at $703 million, out of which $528 million can be used. (Seychelles Nation)

(Seychelles News Agency) - With improving performance by the tourism sector and the significant amount of foreign exchange coming in, the Central Bank of Seychelles (CBS) has applauded the stability of exchange rates in the country.

During a press conference on Thursday, CBS said that as of January 19, the country's forex reserves stand at $703 million, out of which $528 million can be used.

"The improvement in economic activities mainly because the tourism sector is rebuilding itself, goes to show how dependent we are on tourism to run the economy," said CBS governor Caroline Abel.

In 2021, Seychelles welcomed a total of 182,849 visitors to its shores. For the same year, the tourism sector generated an estimate of $310 million and this represents an increase of 40 percent compared to 2020.

"As the amount of foreign exchange coming into the country is quite significant, it is giving us an exchange rate that remains stable. On average, up to January 19, a dollar was SCR14.69 and a euro was SCR16.47. This is good for the country as the stability helps, especially when it comes to the importation of commodities into the country," said Abel.

She noted that foreign exchange rates in Seychelles continue to be stable despite an increase in global inflation and an increase in COVID-19 cases both locally and internationally.

In 2021, Seychelles received a total of $621 million in foreign currency compared to $488 million in 2020. This represents an increase of 27 percent from 2020 to 2021 in terms of the sum sold. The demand for foreign exchange on the local market also increased going from $517 million in 2020 to $613 million in 2021.

"In December, the economy was able to retain $3.1 million. For us, after observing the development, this was one of the most significant months in terms of the amount of foreign exchange that entered the country," said Abel.

She added that from the start of the year, with data dating up to January 18, "we have sold $32 million with a demand of $31.6 million, meaning we have retained $0.4 million so far. Looking at 2022, we see that there has been an increase of 137.8 percent in terms of receipts, and 126.8 percent in terms of demands," said Abel.

She went on to add that, despite the pandemic intensifying since the start of the year, the country is still receiving enough foreign exchange to sustain itself.

Abel noted that as a means to minimise disruptions to services and reduce community transmission of COVID-19, there is the need to move faster towards a digital economy.

"We are continuously pushing the finance sector to give us solutions so that financial transactions can be made digitally. We recognise that not everyone will be able to use technology, but if the bulk of the population can, then we can create the space for those who cannot get this service. This will reduce the pressure that we have on the employment market," said Abel.

During the press conference, CBS said that as of January 19, the country's reserve is $703 million, out of which $528 million can be used.

In late December last year, Seychelles received the second disbursement of $33.56 million under the Extended Fund Facility of the IMF. On December 31, the country received $34.91 million from the World Bank as budget support, yet again reinforcing the position of Seychelles' reserves.

According to the World Bank, after a GDP growth of 6.9 percent in 2021, Seychelles should achieve growth rates of around 7.7 percent in 2022 and 6.8 percent in 2023. This is expected to erase the effects of the strong recession recorded in 2020, with a drop of -12.9 percent in GDP following a sharp contraction in tourism revenues due the global health crisis.

Seychelles has the highest GDP per capita in Africa and is classified as an upper middle-income country.