Seychelles has seen a pickup in tourism after vaccinating a bigger proportion of its population against the coronavirus than any other nation.
The number of visitors to the Indian Ocean island archipelago plummeted 92% to 6,785 in the first quarter as international travel ground to a near-halt. Seychelles has since reopened its borders and several airlines have resumed flights. The country saw a recent surge in Covid-19 infections, although it abated this week.
The tourism numbers “are not pre-Covid numbers but it is a significant improvement,” Naadir Hassan, the minister of finance, economic planning and trade, said in an interview on Thursday. While the government banned intermingling of households and sporting events in response to the increased virus caseload, the minister said the economy couldn’t cope with another border closure regardless of whether there was another surge.
“When we close down our main sector, that is tourism, is impacted,” Hassan said. “That means we do not have revenues coming in, impacting immediately our exchange rate, and the government will not be able to sustain its economy.”
Read more: Seychelles Covid Outbreak Eases, Booster Shot Considered
Plummeting tourism revenues have placed the government’s finances under severe strain. That will require it to be more disciplined in its spending and significantly reduce support for Air Seychelles Ltd., the Seychelles Public Transport Corporation and other state entities, according to the minister.
The fiscal deficit is projected to fall to 15.3% of gross domestic product this year from 18% in 2020, the budget released in February showed. Seychelles is currently in talks with the International Monetary Fund about providing budgetary support.
The nation’s debt equates to about 100% of its gross domestic product. It owed 18.1 billion rupees ($1.1 billion) at the end of last year, just over half of it to external creditors.
The government plans to reorganize its debt, replacing some domestic loans with more external financing, a move it hopes will bring down its interest bill, Hassan said.
Read more: Seychelles Sees 2021 Budget Deficit Narrowing
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