Seychelles marks 5 years of successful economic transition

Posted in Business and Economy, Seychelles government, Seychelles offshore jurisdiction at 5:14 pm by Robert Klien

With the approval of the final review of its IMF-backed economic reform program, Seychelles marks a major milestone in its transition from a crisis economy to the economy led by more stable and private sector.

The Seychelles was struggling with serious problems 5 years ago such as an overvalued fixed exchange rate, plummeting foreign exchange reserves, a bloated and pervasive public sector, and an unsustainable debt burden-all within the global financial crisis.

On October 31, 2008, President James Michel announced a reform program that liberalized the exchange rate regime, slashed public spending and employment, and redefined the role of the state in the economy.

At a conference on the anniversary of the announcement in 2013, Michel described the reform program as “one of the most complete and comprehensive macroeconomic and structural reform programs that the world has experienced in recent times.”

At this conference, IMF African Department Deputy Director David Robinson declared Seychelles’ achievement as a “tremendous turnaround.” The incoming IMF mission chief, Marshall Mills, highlighted that “Seychelles’ ability to implement such a wide-ranging program of reform while preserving social stability is truly impressive.”

The current 4-year Extended Fund Facility came to an end, but the IMF will continue to support Seychelles on its development and growth stage.


Seychelles’ GDP grows, debt reduction on track

Posted in Business and Economy, Seychelles government, Seychelles' statistics, Tourism industry at 3:32 pm by Robert Klien

According the Seychelles’ finance minister, a recovery in tourism will help the country’s economy grow by a faster-than-expected 3.5% this year and then accelerate to 4% by 2015.

The Seychelles’ tourism sector has been working to fill hotels during the global economic slowdown. The jurisdiction has been turning to Asia in search of new business.

Finance Minister Pierre Laporte told parliament in his 2014 budget reading that this stronger growth will be supported primarily by continued recovery of European tourism markets and expansion of new markets.

He said that the Seychelles’ public debt would fall to 69% of national output. He forecast a primary surplus of 4.4% of gross domestic product in 2014, after a revised 5.2% in 2013. Public debt at 69% of GDP would put the Seychelles on track to reach its long-term debt objectives. The government of Seychelles aims at reducing its debt-to-GDP-ratio to 50% by 2018.

The finance minister announced a 3% cut to business tax, excluding banks, telecommunications firms, insurance companies and breweries, to leave it at 30%.

Laporte said that the minimum wage will rise by 20% for all workers apart from casual labourers.

Maintaining reforms to public enterprises, the government was selling a 27% stake in Seychelles Commercial Bank, its 50% share in Bank of Muscat International Offshore and its shares in the State Assurance Corporation of Seychelles.


Seychelles has nothing to hide as regards tax transparency

Posted in Financial Services, International Organisations, International relations, Seychelles offshore jurisdiction at 3:40 pm by Robert Klien

Seychelles rejected charges that it was one of the world’s 5 most secretive tax havens for the very rich, saying that it had nothing to hide.

In November, the Global Forum on Transparency and Exchange of Information for Tax Purposes listed Seychelles among 5 states that either failed to share taxpayer details with other countries or to gather information on beneficial ownership of corporate entities registered on their territory.

The Organisation for Economic Cooperation and Development (OECD) that oversees the forum stated that the Seychelles failed the test because its legislation does not work well enough.

Foreign Minister Jean Paul Adam said: “Despite there being no concrete examples of non-compliance, the assessment perhaps judged that the smallness of our jurisdiction, and our capacity to regulate in relation to the fast rise of our financial services sector, represented a risk”.

He emphasized that Seychelles had a wide network of tax exchange information agreements including with 15 European jurisdictions and had complied with every request for information.

“We have made clear we have nothing to hide and have opened ourselves to the widest scrutiny possible,” said Adam.

The OECD said that international companies, banks and agencies might think twice about investing through the 5 jurisdictions. Apart from Seychelles, the list included the British Virgin Islands, Luxembourg, Switzerland, and Cyprus.