(Seychelles News Agency) - The Seychelles' financial system remains stable, although various risk factors could impact it in the remaining months of the year, according to the Central Bank of Seychelles (CBS).  

This follows two meetings of the Financial Stability Committee on August 12 and 20 to discuss matters that could potentially impact the country's financial stability observed during the second quarter of 2024.

According to Nadine Boniface, the financial stability analyst at CBS, "This is as a result of the conflicts and geo-political tensions, as well as discord between countries in relation to global commerce."

Boniface said, "Since the inflation rate is expected to remain high, that also means that interest rates will likely remain high for a longer time and create some uncertainty about monetary policies."

In regards to local development, a reduction in tourism arrival has also had its impact and the CBS governor, Caroline Abel explained that as a consequence of a reduction in economic activities, it creates some uncertainty around the repayment of loans from bank clients.

"This creates a financial problem for the banks, the CBS, and the Financial Stability Committee in general, where we have to ask if the financial system will remain resilient enough to continue its function if the economy does not perform on the level that it is supposed to," she added.

Tourism is the top contributor to the economy of Seychelles, an archipelago in the western Indian Ocean.

Another issue that could affect the local financial system is the fact that there has been a bond default during the second quarter of 2024, where the issuer of the bond has been unable to grant the bondholders a return on their investment.

Virginie Quatre, director of Capital Markets and Collective Investment Scheme Supervision Section in the Financial Services Authority (FSA), said, "This has numerous implications, including legal, as well as creating some uncertainty for the investors, who are not getting a return on their investment and interests."

Abel reiterated that Seychelles needs to remain vigilant and keep a keen eye on the various issues going on in the world to ensure that the financial sector can react quickly to anything that happens. This is to reduce its impact on the government and members of the general public.