Seychelles Accession into WTO

Posted in International Organisations at 4:41 pm by Robert Klien

On October 25, 2006, Seychelles made an important step towards the accession to the United Nations body when the Ministry of Finance with the World Trade Organization (WTO) renewed efforts regarding this.

A 3-day workshop opened at the Seychelles Marketing Board’s conference hall by the Minister for Finance, Danny Faure, has been organised by the ministry and the WTO. The conference was facilitated by Sajal Mathur from the WTO secretariat and attended by representatives of all government ministries, by non-governmental organizations as well as by the private sector.

Mr. Faure emphasized the significance of this workshop at a moment when the newly-elected government of President James Michel is aimimg at modernising the Seychelles economy and repositioning itself in a modern competitive global world economy. Working relationship of Seychelles with the WTO started a decade ago, and Seychelles has been working to comply with the many requirements of World Trade Organization. The WTO secretariat has always been supportive providing Seychelles with technical assistance including workshops, seminars and training.

The Minister said while trade is one of the driving forces of globalisation and economic integration, Seychelles is not an exception. Just recently, as part of the reorganisation of the Ministry of Finance, the Ministry created a new division of trade which is expeted to provide better negotiation, coordination and integration of trade issues for Seychelles.

Officials from the ministry said that the workshop is significant for Seychelles’ attempt to develop a roadmap for its accession process and to focus on various topical issues such as trading rights, general economic policies and legal framework.

Seychelles has been an observer of the WTO since 1995, the year of the establishment of a working party on WTO accession. By 1996, a memorandum on the Foreign Trade Regime was circulated, and in 1997 Seychelles made initial offers on goods and services. As far as Seychelles encountered human resource constraints, it has not become a full WTO member, however, it does hold observer status. Since then, Seychelles with the help of the WTO and other trading blocks has developed a human and technical base for negotiating its accession process. The Seychelles representatives say that now the country is in a position to assess the current situation and begin an evaluation of further changes necessary to be made to be in line with international best practice, whether the country does join the organization or it does not.


Foreign Exchange Control

Posted in Seychelles offshore jurisdiction at 1:28 pm by Robert Klien

All visitors in Seychelles are required to make payments in foreign currency – for lodging, hiring of cars and boats, tour operator and travel agent services, domestic and inter island services, visiting national parks and nature reserves. In most places credit cards are accepted as well.

Except with the permission of the Exchange Controller, exports from or imports into Seychelles of more than SR2,000.00 is a criminal offence.

Therefore, it is not obligatory for tourists to convert currency when entering the country. In fact, they can change only small amounts for their incidental expenses outside hotel and touristic places. The exchange of larger amounts of foreign currency, as well as traveler’s cheques, may be done only at Seychelles banks and at Bureau De Change and banks at the Seychelles International Airport.

The new foreign exchange laws were introduced by the Government in 2001. The Exchange Control Act and the Foreign Earnings Regulation Act were amended to decline the illegal foreign exchange activities and to ensure that all foreign exchange transactions are authorized and to a certain rate controlled by the Central Bank of Seychelles. From June 1, 2001 the Foreign Earnings Regulation Act (Cap 84A) established the Foreign Earnings Regulation Division of the CBS, which, in its turn, is headed by the Exchange Controller.

The division comprises of Auditors who are responsible for auditing the earners of foreign exchange. Auditing involves the analysis of information provided by the earners, as well as those obtained tfrom other divisions of the Central Bank and commercial banks, as directed by the Exchange Controller.

The main objective of the Foreign Earnings Regulation Division is to ensure that all foreign exchange entering the country legitimately goes through the banking system and allocation of the foreign exchange is fairly distributed by the commercial banks according to the directives issued to the banks.


Restoring Seychelles Credit with World Bank

Posted in International Organisations, Seychelles offshore jurisdiction at 2:54 pm by Robert Klien

On October 6, 2006, the Seychelles cleared all overdue payments to the International Bank for Reconstruction and Development (IBRD) also known as the World Bank.

Accordingly, all IBRD loans to the Seychelles or the ones guaranteed by the Seychelles have been restored to accrual status. Also, the Seychelles’ eligibility for new operations as well as for project preparation facility advances, disbursements under existing loans, Institutional Development Fund and other grants has been reinstated, which is subject to standard lending terms and conditions of the International Bank for Reconstruction and Development.

The Seychelles arrears to the World Bank amounted to around USD 770 thousand, about USD 631 thousand of which was overdue principal payments. As far as the Seychelles’s exposure to the International Bank for Reconstruction and Development is small, clearance of these arrears will increase net income of IBRD by less than USD 1 million in fiscal 2007.

Restoring credit is an essential step for the Seychelles in its program of economic reform.


Seychelles raises USD 383 milion on International capital markets

Posted in International Organisations, Seychelles offshore jurisdiction at 11:39 am by Robert Klien

According to Lehman Brothers, the international bonds issued for Seychelles last week had been oversubscribed almost twice. The international merchant banking firm Lehman Brothers International Europe was appointed the lead manager for the bonds issue.

Seychelles came out to international capital markets with the expectation to raise USD 200 million in bonds issue, however, USD 383 million had been raised.

This was announced by President James Miche after the round-up meeting in London in the end of September, in the course of which he was informed by senior executives of the international banking firm about the success of the bonds issue. President Michel was in London to have a meeting with Lehman Brothers and other institutional investors on this matter.

In accordance with what the President said, such results prove that economic and financial programmes Seychelles has chosen are right. The Bonds issue confirmed and underlined the new confidence among international investors in the new economic directions of the Seychelles.

Very soon, this news was posted on the respective websites of Reuters and the financial institution, Bloomberg by October 2. The same day USD 200 million Bonds issue was confirmed in Official Gazette.

According to Official Gazette, the so-called 2006 Bonds will be redeemed in October 2011, and the interest of 9.125% per year is payable semi-annually each year.

Despite the fact that the Bonds issue was oversubscribed almost twice, Seychelles Government had decided to cap it at USD 200 million in order to stick to its economic plans.


Seychelles and UAE sign Double Taxation Agreement

Posted in Double Taxation Agreements at 3:28 pm by Robert Klien

Recently it was announced that Seychelles and the United Arabs Emirates had signed a bilateral Double Taxation Avoidance Agreement.

In accordance with a statement of the Seychelles Ministry of Finance, the agreement was signed in Singapore by Seychelles Minister for Finance, Danny Faure, and UAE Minister for State Finance and Industry, Dr Mohammed Khalfan Bin Khirbash, on September 19, 2006.
The agreement will strengthen the existing good economic relationship between the Seychelles and the UAE. Also, it provides for certainty regarding taxes payable on incomes generated from investments made between the Seychelles and the UAE. The Double Taxation Avoidance Agreement also gives new opportunities in increasing employment, trade and investment. The UAE is interested in investment in the tourism, fisheries and services sectors in the Seychelles.

The Seychelles already has Double Taxation Avoidance Agreements in force with China, Belgium, Thailand, South Africa, Indonesia, Malaysia, Oman, Namibia and Zimbabwe, and is working on  discussing agreements with other trading partners.


Standard & Poors’ credit ratings for Seychelles

Posted in International Organisations, Seychelles offshore jurisdiction at 5:01 pm by Robert Klien

Standard & Poor’s Ratings Services has recently assigned its ‘B’ long-term and ‘B’ short-term foreign currency sovereign ratings, and its ‘B+’ long-term and ‘B’ short-term local currency sovereign ratings on Seychelles. Seychelles’ outlook is stable. This reflects a great boost which the economy and investments in Seychelles have experienced.

As Seychelles has over a long period of time been ahead of other countries in the region  concerning its economic, social and infrastructure development and has had very good indicators, in July its government decided to have an international credit rating agency assign it a rating.

Standard & Poor’s is  one of the top three players in this business, along with Moody’s and Fitch Ratings. It is a reputed international provider of credit ratings that for the past 6 weeks has been carrying out a sovereign rating for Seychelles. For the last 10 years, Seychelles’ economic and social performances have been observed by the credit rating agency.

These ratings are supported by many factors. One of the most important of them is the country’s recent strong fiscal performance – the country’s fiscal management has had firm surpluses connected with a strong administration’s commitment to maintain it in the future.

Also, the ratings are supported by high levels of human development – high per capita income, health, literacy and education and standards. Seychelles is the only country in Africa that the United Nations Development Programme (UNDP) ranks in high human development.

Social and political stability are other aspects that strengthen Seychelles’ position. Seychelles social indicators are advanced and political position is stable and strong.

As to the main constraining factors for the ratings, this is Seychelles’ level of high public sector debt and, accordingly, impairment of fiscal and external flexibility. Deficit financed growth, high levels of social spending as well as balance of payments gaps led to an accumulated public sector debt of 174 per cent of GDP on a net basis in the end of 2005. The macroeconomic policy mix resulted in the country’s high debt levels.

Also, the ratings are constrained by fixed administratively set exchange rate, which is at least 50 per cent above its market rate. As a result, the shortage of foreign currency has directly contributed to the arrears on public sector foreign debt to bilateral and multilateral lender and has been preventing the import of necessary inputs.

The vulnerability of the Seychelles’ economic growth and external position is another factor that  constrains the country’s ratings. This vulnerability is caused by relying on tourism and fisheries for output growth and foreign exchange earnings.

Seychelles is the 113th sovereign rated by Standard & Poor’s Ratings Services.

The ratings given by Standard & Poor’s are a remarkable achievement of the Seychelles government that could even improve in the future with solving the problems related to the exchange rate liberalization, the resolution of arrears as well as other issues.

It is also worth mentioning that John Esther, the Corporate Manager of the Barclays Bank, has congratulated the Seychelles government indicating that, with good ratings, Seychelles and its private businesses can get more access to loans from international financial institutions with good interest rates.


Seychelles takes a vice-chair at closure of EU conference

Posted in International Organisations, International relations at 4:14 pm by Robert Klien

On September 19, 2006, Ronny Jumeau, Environment and Natural Resources minister, joined colleagues from Africa, Asia, Europe and South America for a conference in Paris to discuss the integration of environmental protection with European Development Cooperation.

On September 19-21, Seychelles participated in the conference on Biodiversity in European Development Cooperation (BEDC). The conference was organized by the World Conservation Union (IUCN), the world’s largest and most important conservation network, and the European Commission (EU). Seychelles had been chosen to take one of the 2 vice-chairs of the closing session, at the adoption of the declaration called “The message of Paris”.

Being one of the smallest countries at the conference, Seychelles was the only one state among the chairs of the closing ceremony. The other vice-chair was taken by the head of the Convention on Migratory Species (CMS), while the chairman will be the director-general of the World Wide Fund for Nature (WWF), one of largest and most experienced independent conservation organizations in the world.

The conference was aimed at ensuring the integration of the environment protection and biodiversity in EU assistance to developing countries. The conference was important for Seychelles as it substantially benefits from EU cooperation.

The conference was attended by the heads of the United Nations Environment Programme (UNEP), the World Conservation Union, the Convention on Biological Diversity (CBD) , the International Plant Genetic Resources Institute (IPGRI), the European Investment Bank (EIB) and others.