Seychelles' mid-year economic review 2024 lowers growth from 3.4% to 3.1%

The Minister said Seychelles soon expects the arrival of Russian airline Aeroflot and other airlines so that it can end the year on a positive forecast. (Tourism Seychelles)

Seychelles has revised the economic growth forecast for 2024, which was 3.4 percent of the GDP to 3.1 percent, based on the economic development, both domestically and internationally.

The Minister of Finance, Economic Planning and Trade, Naadir Hassan, made the statement when presenting a Mid-Year Economic Review for 2024.  

Hassan said the revision follows a lower prevision in the tourism industry as the visitor arrivals are expected to increase much slower than foreseen.

"We expect a growth of 2 percent for 2024 compared to the 5 percent that was forecast. The principal reason is the reduction in flight connections to Europe, mainly Russia and Israel. The government is discussing with several airlines to negotiate for them to offer flights to Seychelles year-round and instead of on a seasonal basis. Soon we expect the arrival of Russian airline Aeroflot and other airlines so that we can end the year on a positive forecast," he added.

Seychelles, an archipelago in the western Indian Ocean, depends largely on tourism, the top contributor to its economy.

Additionally, the manufacturing sector has seen a reduction of 5 percent as a result of the explosion of December 7, 2023, that took place and affected one of the key companies in that sector, Civil Construction Company Limited (CCCL), causing a reduction in the production of basic products used in construction.

The Minister said, "The donations we received for the first six months have been reduced by SCR32 million ($2.3 million), mainly due to the delay in implementation of different small community projects that the government of India was expected to finance.  As a result, we have reviewed our forecast for the year to reflect the delay, and we will see a reduction of SCR17.5 million ($1.2 million)."

Hassan said that after an exercise was done, there will be certain budgetary re-allocation that will need to be done and the government is asking for a supplementary budget for a sum of SCR 473,100,693 ($34.8 million). This will be financed by a reduction in the budget for spending for a sum of SCR 453,320,193 ($433.3 million).

For the year 2024, the National Assembly approved a budget of SCR 10,6 billion ($731 million).   

"Today, I am presenting with the National Assembly an increase of SCR SR 19,780,500 ($1.4 million) in the 2024 budget," he added.

In the Capital Projects allocation, a sum of SCR 329.5 million ($24.5 million) is being recommended given the projects that will not be completed in 2024 and those that will materialise this year. Most of the projects are being financed through grants and loans.

"The additional allocation will include a sum of SCR 279.6 million ($20.6 million) for the reclamation project that will start at the end of the year. Provision will also be made for a sum of SCR 14.7 million ($1 million) to finance a new project to stablilise big rocks to prevent landslides in specific areas on Mahe, the main island. This follows a study conducted after heavy rain caused landslides in the north of Mahe on December 6 and 7," said the minister.

The major reduction for capital projects was for projects that were expected to be financed by the government of Saudi Arabia, this is because their tender process is longer than was projected. The other project is the installation of solar panels on government buildings to be financed by the government of India.

Hassan said because of the delay in the implementation of those projects, the respective reduction in the budget has been made.

"Based on the performance of the six months and revision in the expenditure we will maintain a fiscal surplus of 1.1 percent of the GDP," said Hassan.