Seychelles' Central Bank maintains monetary policy rate at 2% into third quarter of 2022

The CBS policy has not changed since the start of the year and it is mainly due to the rebound of the tourism industry. (Betymie Bonnelame, Seychelles News Agency)

(Seychelles News Agency) - The Central Bank of Seychelles (CBS) has maintained a relaxed monetary policy at an interest of 2 percent for the third quarter of 2022, said the governor on Tuesday.

The policy has not changed since the start of the year and it is mainly due to the rebound of the tourism industry that was badly affected by the COVID-19 pandemic in 2020 and 2021.

"The CBS board met yesterday [Monday] to discuss all developments that have taken place since the start of the year until May, where the aim was to make the best decision in the interest of Seychelles," said Abel.  

She however warned that external factors could have an impact on the economy of Seychelles, especially the ongoing conflict between Ukraine and Russia. 

"When looking at Seychelles' major trade partners, their economic forecast for the coming months shows that things could worsen, which in turn has a direct impact on Seychelles," added Abel.

These include the rising fuel prices, prices of commodities, supply chains, and shipping constraints, as well as elevated global inflation and tighter financial conditions that are being affected globally.

She said that there is some good news where tourism arrival is concerned and the revenue from the tourism sector continues to increase despite projections that it could have been lower due to the conflict in Ukraine.

A press statement from CBS on Tuesday said that "the implications of the conflict were expected to aggravate the seasonal decline in visitor arrivals, however, an increase in the number of tourists from traditional western European markets has helped to partially offset this reduction. As travel and health requirements were being phased out globally, a robust rebound in tourism activity was observed, although it was not at the pre-pandemic level." 

For the inflation rate of the Seychelles rupee, Abel said that the estimated inflation rate for the second quarter of 2022 projected at 2.5 percent is on a downward trajectory.

On the foreign exchange market, in June, a total of $65 million was sold compared to an expenditure of $69 million resulting in a loss of $3.6 million.

"It is important to understand that this loss is because of the rising prices of food, fuel and transport globally. In the last two months, Seychelles has spent more foreign exchange than it has earned," said Abel.

She added that in line with its objectives and the many uncertainties, especially globally, CBS remains vigilant and stands ready to adjust its policies if necessary.