Minister Faure explains debt cancellation terms |22 April 2009

He was answering a question by leader of government business in the National Assembly Marie-Louise Potter, who had asked him to give more details on the negotiations over these debts.
 
Mr Faure stressed that our bilateral debts with the Paris Club amount to $151.6 million, and this figure does not include other debts Seychelles has with countries that are not members of the Club.

He explained that the 45% debt cancellation will be applied in two phases. The first 22.5 % or $35 million will be wiped out on July 1 this year after the second International Monetary Fund (IMF) review of our reform programme, expected between May 3 and 15.

The second phase of the cancellation, the remaining $35 million, will take place on July 1 next year.
Mr Faure said once the cancellation has been completed, the rest of the country’s debt to the Paris Club will be restructured over 18 years, with a grace period of five years. This means repayments are due to start at the end of 2013.

He said other conditions set for debt cancellation are that Seychelles speeds up talks with other organisations that are not members of the Paris Club and that it has a good track record in repaying debts to them.

He noted that the second part of the debt cancellation will depend on:
• How other debt negotiations are carried out and finalised with private organisations and institutions that are not part of the Paris Club;

• The country’s economic performance based on the approval of the Extended Fund Facility recently announced in the assembly;  
• A good track record in relation to debt repayments to multilateral organisations.

Mr Faure also told the assembly that while Seychelles was carrying out its debt negotiations it made a commitment to pay $1 million to the Paris Club before June this year.

In a supplementary question, Mrs Potter asked what factors encouraged the Paris Club to consider a debt cancellation for Seychelles at this point, given the many years the country has been discussing the issue.

Mr Faure said Seychelles has succeeded in this process as a result of its comprehensive economic reform programme, which has the total support of international organisations and the IMF’s stamp of approval.

Meanwhile, in relation to future debts, Mr Faure said measures are being taken to ensure Seychelles does not find itself faced with a similar problem.

He thanked the assembly for a law approved late last year to protect the government where borrowing is concerned. Better management of public debts will also be enforced, he added.