(RTTNews) - Thursday, the World Bank announced that its board of directors approved a $9 million loan to the Republic of Seychelles to assist the government’s reform efforts towards returning the island nation’s economy to a sustainable growth path.

The Seychelles, a middle-income country, is among the most indebted nations in the developing world and is heavily reliant on tourism and fisheries for its revenue, both of which are vulnerable to global and climate change shocks. The government has undertaken renewed efforts to establish a stable macroeconomic environment in the island. Proposed reforms include improving public administration, accelerating civil service reforms and a safety net for the most vulnerable households.

“The Bank’s intervention in the Seychelles comes at a critical time when the government is implementing significant reforms to stabilize the economy,” said Johannes Zutt, World Bank’s Country Director for Seychelles.

“The global economic crisis has particularly hit the Seychelles hard as it affected tourism, which has been the traditional driver of growth,” said Tracey Lane, the bank’s Senior Economist for Seychelles. “Gross domestic product could decline by as much as 10% in 2009 but should recover modestly to 3.5% in 2010.”

President James Michel’s reform strategy aims to remove constraints to growth and transform the economy by allowing the private sector to take the lead in commercial production activities while the state remains the provider of core public goods. Going forward, a liberalized foreign exchange regime and elimination of price controls over the medium term are expected to increase employment opportunities, particularly in tourism, banking and fishing industry, and also to enhance real incomes, the World Bank noted.

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