President addresses special CBS event
04.11.2009
Economic reform ‘for the future of our children’
The economic reform – whose success we are now seeing – has always been about the future, about our children and the vision of Seychelles we want to provide for them.
President James Michel said this yesterday at a special event that marked the 31st anniversary of the Central Bank and also coincided with the one-year mark since the reforms were launched.
The event was also attended by Vice-President Joseph Belmont, cabinet ministers, members of the diplomatic corps and representatives of government, private and non-governmental organisations, 10 of whom gave presentations and answered questions from guests.
“As the leader of the country, I knew that the future I envisaged for the children of Seychelles could not be realised unless we were prepared to act quickly,” said Mr Michel.
“And I was always convinced of the ability of the Seychellois people to turn a challenge into an opportunity.”
He expressed his appreciation to all the individuals in government and the private sector who have put much effort into ensuring that each milestone has been reached. Through consultation and teamwork, Seychelles has achieved so much in this last year, he added.
Mr Michel said the success of the reforms has been thanks to the hard work and determination of the Seychellois people.
“The reforms have been symbolic of the unity of spirit of our nation,” he said.
“I have been touched to see how so many have answered the call to put differences aside and join in the efforts to take our country forward in the spirit of Koste Seselwa.”
The President specifically thanked the staff of the Central Bank and the Ministry of Finance who have been on the front line of the reform process.
“They have been undaunted by the scale of the challenge and have worked tirelessly with their counterparts from multilateral agencies to put forward the best case for Seychelles,” he said.
“The Seychellois people join me in conveying our appreciation for your diligence and hard work.”
He outlined the specific areas in which the economy has seen a complete turnaround in just 12 months.
“We all know too well that for over 15 years, Seychelles’ economic growth was hampered by an acute foreign exchange shortage. Against all odds, the situation turned around in just a few months as the black market for foreign exchange disappeared, and our banking system was soon flooded with foreign exchange,” said Mr Michel.
“This policy was so successful that it also led to a short period of overshooting, where the rupee was appreciating too fast. The situation was quickly reversed as the exchange rate appreciated to near pre-reform levels, thanks largely to the CBS’ tight monetary stance.
“We recognise, though, that this strong appreciation has brought about its own challenges. I observe with satisfaction that the CBS has reacted swiftly and stabilised the market.
“Other indicators have evolved in an equally impressive manner. When we took the decision to launch into the reform programme last year, our reserves were only sufficient to buy us a few days of imports. As I speak today, our gross external reserves stand at US $135 million, which translates into one and a half months of imports.
“But perhaps the most crucial of all has been the success in containing inflation. As the leader of our country, I was fully aware that inflation would pose the biggest challenge to the welfare of our people in the immediate months following the float of the rupee. Annual inflation jumped to 63% in the aftermath of the float.”
The President recalled that we adopted a series of measures to try to contain the cost of living, including the creation of the Social Welfare Agency designed to cushion the blow for the less fortunate in our society.
To achieve the growth projected by the International Monetary Fund (IMF), Mr Michel said we need to change certain mindsets to go beyond “business as usual”.
He listed five major areas he feels need to be addressed on the way forward, saying access to affordable credit is crucial to developing a business-friendly landscape.
“The Concessionary Credit Agency has played a critical role on behalf of government to keep up a flow of affordable credit during the most difficult part of the reform,” he said.
“My government is committed to continuing to provide support in this manner next year. However, more needs to be done in terms of access to credit by the banks themselves.
“We must also rethink our approach to government investment and look more at public-private partnerships. For example, there is a clear market for housing that could be met through a joint venture between government and the private sector.”
Mr Michel said we must be prepared to invest in new technology to bring about more efficiency in key areas, for example in green energy solutions to reduce our dependence on fossil fuels.
We must also do our utmost to improve the efficiency of government service delivery, reminding ourselves that the government is there to serve its people.
He said the next step in our reform process involves a review of our taxation structure, which will be elaborated on in the presentation of the 2010 Budget. We will put in place a tax structure based on the principle of everyone contributing to the development of the country and sharing the burden in an equal manner.
“In this process, the core rate of tax will also be expected to reduce substantially,” he said.
Seychelles Nation will come back on yesterday’s CBS event.