Friday, 11 December 2009 00:00   
Budget Address 09
budget delivered

Mr Speaker, it is a pleasure once again to present to this Assembly and the people of Seychelles our address for this year.

In contrast to past budget addresses, this year much has already been announced and implemented, prior to this address, that impacts on our economic and financial landscape for 2009.

Seychelles has experienced considerable changes during 2008 we have lived through a period of great instability in regard to prices, notably that of fuel, food and many other commodities.

We have seen the entire world financial systems go through what many describe as the worst since the great depression of the 1930’s. Some economies have almost collapsed, others
have been bailed out, many have struggled to survive and continue to face the harsh realities of the current world economic environment.
 
Mr. Speaker, in Seychelles, we have had our fair share of economic problems. We import most of our requirements and there is little we can do to reduce the impact of increased prices of imports other than smart sourcing and using whatever volume leverage we have.

This year, on one commodity alone and this being fuel, the Government and SEPEC have borrowed over $80m just to meet domestic energy needs. We have met most of our obligations despite our limited receipts and this has depleted our reserves to the point where borrowing has become unsustainable and to
the point where our credit rating internationally has been adversely affected.
 
Needless to say, such worldwide recession cannot pass by without some impact on little Seychelles, which is so dependent on the rest of the world, especially Europe, not only for imports but for its tourism, fishing and financial services. Mr. Speaker, it is my prediction that 2009, especially the first half, will continue to be a difficult environment in which to operate. It is expected that the world tourism industry will
contract further and even this year our final number of visitor arrivals is expected to be slightly lower than that of last year.

The euro zone, from where a large percentage of our visitors originate is also going through a difficult economic period and when this happens, long distance travel is often one of the first item to experience cutbacks.

Mr. Speaker, the Seychelles cannot ignore these realities. We have to address our specific situation and firstly assess what our constraints are, how we are likely to be affected given these international developments and then find solutions taking into account our people’s expectations, that of our
partners and of course fundamentally what we believe in as our core principles that have guided us as a State.

Mr. Speaker, Government has always put Seychellois at the centre of development and that is something that is enshrined in our Constitution. We are not about to abandon these policies of taking care of the less fortunate and most vulnerable in society and aiming for the best distribution of national wealth so as to allow the highest, affordable living standard for all of our people.
 
It is against this background that Government recently decided to re‐visit many of its economic policies, with the aim of putting in place a new economic model that will enable us to re‐launch ourselves into the future.
 
In order to move forward in the right direction we found that we needed to address a number of issues including the exchange rate which had come under extreme pressure with consequent foreign exchange shortages, the growing stock of debt and arrears and our credibility on the international front
which was being eroded.
 
Mr. Speaker, one cannot say of course that as a country we have not had successes. We cannot overlook the level of success we have obtained in areas of health, education and social welfare.

Seychelles has one of the highest literacy rates in this part of the world, our infra‐structure is sound, our people overall enjoy a good living standards and we continue to strive to further improve our quality of life.
 
There comes a point however, when one has to explore new paths in order to avoid obstacles and difficulties which may hamper our journey to further success whilst remaining conscious of our underlying principles and objectives. Such an approach is that any responsible Government, just as any responsible business would take decisions at any given moment when faced with changing economic conditions.
 
This is why we approached and undertook extensive discussions with international agencies such as the IMF, World Bank and the African Development Bank, in order to assist Seychelles in charting the way forward in this highly complex and dynamic environment we face today.
 
Mr. Speaker, today, we have commenced an extensive economic reform process that has been endorsed by the IMF and we have adopted policies which have been acclaimed not just by the IMF and these international institutions but also by many of our economic partners and by most of our international creditors. In fact, I am proud to say that our new economic policies have received an unprecedented level of support internationally.

It does not mean, however, Mr. Speaker that we as Government do not recognise the pressures that some of these new measures in particular are presenting to the people of Seychelles. As I said before, many of these economic measures are tough.
 
As part of these measures, in October and November we announced changes to some of our existing taxes and we introduced some new taxes, we have removed subsidies and we have floated our exchange rate.

We are also in the process of re‐deploying our people from the public service to the private sector so we can make a concerted effort to address the growing number of expatriates working in the private sector in positions that are capable of being filled by Seychellois.

 

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