(Seychelles News Agency) - Seychelles is expected to repay its debt to Russia by 2027, after both nations agreed on the restructuring of a loan taken in 1987. 

Dick Labonte, the director general for the Debt Management Division within the Ministry of Finance, National Planning and Trade, said during a press conference on Tuesday, that there is $2.4 million left for Seychelles to repay. The island nation will have to pay partly in a lump sum and the rest will be paid up till 2027. 

“In 2008, with Seychelles facing a financial crisis, the island nation defaulted on its loan of $6.6 million with Russia, and following years of negotiations, it has finally been agreed that Seychelles will be given several reductions on this loan, which includes 35 percent, along with a further 22.5 percent and 29.03 percent reduction on the loan repayment,” explained Labonte. 

Labonte explained that the loan repayment negotiations were done through the Paris Club, where all the other countries involved agreed on all the discounts, but negotiations with Russia took longer and have only been finalised recently. 

The loan itself was taken to help with the country’s fiscal expenditures in 2008, and Labonte explained that “negotiations took a long time as it proved difficult to establish contact with Russia, especially with changes in ministers on both sides, meaning that the same letters had to be sent multiple times.” 

Labonte also explained that all of Seychelles other debts repayments are on course, with this being the last that was being re-negotiated so far. 

Last year, Seychelles also signed an agreement with Libya to settle a debt repayment from an original loan amounting to over $3 million, dated to 1981, with the principal debt amounting to $3.65 million is to be paid in one cash installment within three months of the signing of the document. 

Whereas the interest accrued on the debt amounting to $885,000, will be paid in two installments during 2023. 

In total Seychelles has R17.5 billion ($1.25 billion) in external debt. 

Seychelles underwent an IMF-assisted economic reform programme after the country’s 2008 debt crisis when total debt had reached 151 percent of GDP, with external public debt representing almost 95 percent of GDP (US$ 808 million). 

A large part of Seychelles' debt was towards its Paris Club creditors - an informal grouping of twenty industrialised nations - and 40 percent of that debt was in arrears.