12.12.06

Seychellois Budget 2007 Framed. Part 2

Posted in Business and Economy, Seychelles offshore jurisdiction at 10:05 am by Robert Klien

As it has already been discussed, on December 5, 2006 the Minister for Finance, Danny Faure, delivered his Budget Address for 2007, which was his first budget address. Framing the national budget 2007 provides new opportunities of growth and success of the country and its people.

It goes without saying that in his Budget Address the Minister touched discussed the budget outcome for 2006. So, according to him, the budget outcome for 2006 is a surplus of 5% of GDP or around SR 186.9 million, which about SR 9 million above estimates for the year of SR 177.9 million.

The Minister also indicated that this was the 4th surplus Budget since 2002. So, this is the longest unbroken string of surpluses since the establishment of the 3rd republic.

Mr. Faure discussed the government’s expectations to collect SR 2.32 billion in revenue this year, exceeding the projected revenue by over SR 389 million, or a 20% increase.

The 4 main areas where the collections exceeded the budget were in lease of land, dividends from parastatals, indirect tax and trades tax.

As to 2007 fiscal objectives, in accordance with the Minister’s address, the aim of the 2007 budget is to achieve a surplus of 7% of GDP in order to improve the fiscal position of government and to further sustain the debt reduction program.

The Minister said that for 2007, total revenue was budgeted at SR 2.42 billion, an increase of SR 105 million on the revised estimate for the current year. As to total outlays for 2007, they are estimated at SR 2.095 billion, a decrease of SR 32 million over the revised estimate of SR 2.13 billion for 2006, a 1.5% cut. According to Mr. Faure, the surplus for 2007 is estimated to be SR327.066 million, or 7% of GDP.

The 2007 Budget is based on several medium term assumptions, which are GDP growth of 4.5% for 2006 and 5% for 2007 (as per IMF estimates); tax revenue to be not more than 30% of GDP; Ministries/Departments outlays to be around 30% of total budget; Capital expenditure capped at SR 200 million; recurrent expenditure to be not more than 40% of GDP; primary surplus (surplus without interest) should be at least 12%; and overall surplus should be at least 5% of GDP to service all loans.

To conclude, the Budget Address was not just informative – Minister Faure really also addressed the numerous challenges which the Seychelles needs to confront to succeed with economic growth.

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