(Seychelles News Agency) - The Seychelles' cabinet of ministers has given its approval for the Ministry of Finance to start negotiations for a new Extended Fund Facility (EFF) with the International Monetary Fund (IMF), said the country's Vice President on Thursday.

Vice President Ahmed Afif made the statement in a briefing on the cabinet decisions with reporters.

Afif said that the cabinet gave its approval so that Seychelles can continue to remain under an EFF programme as the present one is about to end.

Seychelles and the IMF agreed on an economic reform programme under the Extended Fund Facility at the end of July 2021, because of the devastating impact of the COVID-19 pandemic on the country's economy. The agreement is for a 32-month extended arrangement under the EFF for a total sum of $105.63 million.

Afifi said that being under such a programme has benefits for Seychelles, an archipelago in the western Indian Ocean.

"When IMF stands beside us, every other country sees Seychelles as a country with a discipline established as per international standards," he said.

Afif said that international financing institutions have a set of criteria they use such as a country's fiscal performance, how much tax it collects, how much it spends and if debts are paid and on time among others.

"All of these are criteria that the World Bank and the IMF use to monitor a country. When you stand alone you do not have a standard and a measurement with a body outside of your system. The credibility that will be attached to the performance is not the same. When you are in a programme measured by IMF, your credibility is higher," the Vice President explained.

He added that having high credibility is good when a country remains in debt.

"With COVID-19 our debt to GDP ratio was very high at 90 percent. Our aim is that by 2026 we can lower it to 50 percent. I believe we are on the right track but to continue to do this, it is important that our creditors continue to have confidence in us," he said.

Afif added that another benefit of the EFF is that Seychelles is evaluated by an independent body and getting a good ranking that "allows us to get the best conditions when taking a loan from international banks. Today we have an external debt of around $550 million so if we can get a 1 percent reduction, this can save the country $3 million in a year."

The new EFF will also focus on climate change and actions from all institutions to help mitigate its effect.

"Three are two reasons why we have a focus on climate change. We are already talking about the way we are being affected by many things that have nothing to do with us as a nation. Like today if we see our ocean filled with plastics it has nothing to do with us because we know they are not from us but the cost to collect them falls on us. So if we believe that it is important for us to address these issues, we want to show that in our programme we will integrate all measures that have to do with taking action against them," he said.

Afif said that there are no further details on the structure for the next EFF but if all goes well it will be put in place between October to December this year.

Seychelles will also be getting the assistance of the World Bank and the African Development Bank and any projects they implement with Seychelles will also have elements addressing climate change.

"What Seychelles has to do is to show that among many other things that are priorities for the country, there is an element that shows that ministries are also playing a relevant role where the issue of climate change is concerned," he said.

"They want to see that our programme is serious and comprehensive and that everyone is in the picture and everyone is playing a role in mitigating the adverse effects of climate change," added Afif.