04.12.07

Michel’s State of the Nation address. Seychelles reduces debt

Posted in Business and Economy, Seychelles offshore jurisdiction at 4:49 am by Robert Klien

On March 20, 2007, at his annual State of the Nation address, President Michel was talking not only about expanding offshore sector in the Seychelles and restructuring the tax system, but also about the progress achieved by the Seychelles in reducing its national and international debt and further plans to reduce the government’s borrowings considerably.

According President James Michel, last year the Seychelles enhanced its credibility as the government mobilized a USD 200 million bond, which evaluated by international financial markets and a positive rating was assigned to it.

The President said that the government has introduced a rational strategy for the next 10 years concerning Seychelles’ international and national debt. President Michel informed that a substantial reduction of debt, which is now only 60% of GDP, has been experienced by the country.

However, Michel emphasized the necessity of effective fiscal policies, in accordance with which the surplus goes toward reimbursement of Seychelles’ debts and growth rate.

After launching the bond in 2006, the government has cleared a considerable amount of its arrears – especially arrears with the World Bank, African Development Bank, European Investment Bank as well as with Paris Club Creditors. Michel noted that the government is continuing to negotiate with its remaining international creditors and to pay off the existing debts as FDI enters the country. The President added that the government has also reduced its short-term loans, accordingly, more financial resources become available for private sector investment.

Central Bank of Seychelles has provided statistics about the country’s GBP. According to it, GDP increased by 3.3% in 2005, and by 7.6% in 2006; and growth in excess of 5% is expected in 2007 to 2008. At the annual State of the Nation address, the President made the announcement about the plans to double the country’s GDP in 10 years.

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