Seychelles to Complete Russian Debt Repayment by 2027
VICTORIA, Seychelles, Seychelles is set to complete the repayment of a long-standing debt owed to the government of Russia by the year 2027. The announcement follows the signing of a new restructuring agreement between the two governments, ending more than a decade of negotiations over the terms of the original 1987 loan. The settlement closes one of the longest-running debt cases in the country recent fiscal history.
As per the new agreement, Seychelles will settle the USD $2.7 million through a lump-sum upfront payment of $1.9 million this year, with the remaining $800,000 to be paid between 2024 and 2027. The Cabinet approved Finance Minister Naadir Hassan to sign the settlement on behalf of the government of Seychelles, and the funds for the initial payment will be sourced from the government own accounts. The schedule was designed to align with the country medium-term debt strategy.
Dick Labonte, director general of the Debt Management Division at the Ministry of Finance, National Planning and Trade, said the agreement brings to a close one of the longest-running debt cases in the country history. During the period when agreement terms were unsettled, interest accumulated. With the upfront payment, the accrued interest is included and subject to a 4.5 percent interest rate, while the remaining balance will incur normal rates rather than accumulated interest.
The original loan, amounting to 4 million Russian Rubles, was granted in 1987. Despite initially servicing the loan during the 2000s, the Seychelles government eventually defaulted on all major loan obligations during the 2008 economic crisis. Negotiations with the Paris Club of creditors in 2009 paved the way for a restructuring agreement with several countries, including Germany, France, Belgium, Italy, the UK, and Russia.
However, discrepancies emerged regarding the upfront discount offered by Russia compared to other nations. While other countries agreed to a 45 percent upfront discount, negotiations with Russia have been ongoing since 2010. Mr Labonte said that after many years of negotiation, the two sides have finally agreed that Russia will give an 18 percent upfront discount, aligning with the Paris Club terms. He added that the new agreement means Seychelles has now addressed both cases cited as pending in the Auditor General report.
