Paris Club cuts Seychelles’ debts by 45% |17 April 2009

In a statement yesterday, the Ministry of Finance said the deal was reached after in-depth talks between the government delegation and the Paris Club on Wednesday.

The talks, which lasted over 15 hours, ended with a statement from the Paris Club confirming the debt reduction, which will be applied in two phases – 22.5% on July 1 this year and the remaining 22.5% on July 1, 2010.

This is subject to completion of the first review under this new arrangement with the International Monetary Fund and comparability of treatment with other creditors.

The balance of the debt will be restructured over an 18-year period, including a grace period of five years, at very low interest rates, which will generate a net value reduction well in excess of the face value write-off.

In a statement from Paris yesterday, Finance Minister Danny Faure said he is pleased with the outcome, which ties in with the government’s forecast debt servicing ability.

He said while this is a formidable achievement, the next phase of the debt reduction strategy will involve securing comparable treatment from other creditors, including private sector creditors.

Mr Faure added that the success of the talks was largely attributable to the early successes of Seychelles’ current macro-economic reform and the country’s commitment to it.

He acknowledged the support of the Paris Club member countries, especially those to which Seychelles is indebted – France, the United Kingdom, Italy, Germany, Belgium, Japan, Spain and Russia.

Mr Faure also hailed the invaluable support of the Bretton Woods institutions, whose support has been key in helping Seychelles secure this deal. 

This achievement, he added, represents yet another milestone in Seychelles’ quest to substantially transform its economic landscape and to stabilise its economy.

The Seychellois delegation was led by Mr Faure. The other members were Central Bank governor Pierre Laporte, principal secretary for Finance Ahmed Afif and director of public debt in the Ministry of Finance Brian Charlette. They were helped by the government’s London-based financial advisers Houlihan Lokey.

Formed in 1956, the Paris Club is an informal group of creditor governments from major
industrialized countries. It meets on a monthly basis in Paris with debtor countries in order to agree with them on restructuring their debts.

The members of the Paris Club which participated in the reorganization of Seychelles’ debt
were representatives of the governments of Belgium, France, Germany, Italy, Japan, the Russian Federation, Spain and the United Kingdom.

Observers at the meeting were representatives of the government of Canada, Finland, the Netherlands, Norway and the United States of America, as well as the International Monetary Fund (IMF), the International Bank for Reconstruction and Development (IBRD), the Secretariat of UNCTAD and the European Commission. South Africa also participated in this reorganization.