02.05.09

Central Bank says inflation will fall

Posted in Business and Economy, Foreign investments, Seychelles banking, Seychelles offshore jurisdiction at 5:50 pm by Robert Klien

The high inflation that hit Seychelles in November 2008 was caused by one-off factors and December figures will most likely show similar trends. Nevertheless, prices in Seychelles are expected to come down soon.

On January 19, Central Bank governor said that inflation figures for December are not yet available. Central Bank governor Pierre Laporte was summing up the main messages at a press conference with Finance Minister Danny Faure and principal secretary in the ministry Ahmed Afif.

According to unofficial indications, generally, December prices remained at the same level as in November. Laporte noted that the reasons for high inflation in November were such factors as the exchange rate depreciation, new taxes (GST), and speculative factors. He also noted that the Central Bank is keeping liquidity tight, so, inflation should start coming down soon.

Laporte said that the Central Bank was aware of the hardship on the population and businesses that were caused by higher interest rates on loans but he noted that they were expected. According to the Central Bank governor, “However, there are indications that the interest rates could have reached its peak as evidenced by more competitive bidding on government treasury bills. With more competition for these securities and inflation likely to start falling soon, interest rates should follow”.

It is important that the higher interest rates could attract more foreign investment to Seychelles, one of the leading offshore jurisdictions of the region.

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