Seychelles shares its reform experience as platform for sustainability |13 October 2015

The Seychelles delegation attending the annual meetings of the World Bank and the International Monetary Fund (IMF) in Lima, Peru has shared the country’s experience on building a sustainable economic model through reform.

In the Commonwealth finance ministers meeting, the Seychelles Minister for Finance, Trade and the Blue Economy Jean-Paul Adam briefed his counterparts on reforms that Seychelles are implementing to ensure that its economy is on track in terms of both economic and environmental sustainability.

He underscored the importance of debt restructuring undertaken in 2009, and subsequent policies that ensured that the benefits of consistent budget surplus and growth were reinvested to continually reduce debt while also strengthening the potential for growth.

The minister also highlighted that in the new phase of reforms, the Seychelles government was aiming to further strengthen and empower Seychellois to invest in growth opportunities through diversification strategies which include the move towards an inclusive Blue Economy.

"Pairing the Ministry of Finance with the development of the Blue Economy is reflective of what we want to achieve in our next stage of reforms; strong local ownership of strategies that use sustainability as a unique selling point,” the minister stated.

The Commonwealth meeting also addressed concerns of its members relating to international taxation matters and the need to protect countries’ revenue base.

The minister reflected that the Commonwealth was uniquely placed to provide a voice for small states in issues that were highly technical such as taxation.

“We continue to count on the Commonwealth to help its membership -- the majority of which are small states -- to better prepare themselves to adopt global standards, while also ensuring that they can develop their own industries and capacities in the context of the ever increasing burdens linked to international tax cooperation and regulation. The Commonwealth can help us better adapt, and ensure that we can use these standards for our own development and not just to avoid loss of revenue to developed nations,” he said.

The meeting also considered new opportunities for infrastructure finance based on the emergence of new financing institutions (for example, the New Development Bank being launched by BRICS* countries).

The Seychelles delegation highlighted the importance of ensuring that appropriate financing mechanisms were available to small island developing states (Sids) noting that they are currently marginalised from most affordable finance due to restrictions linked to GDP per capita thresholds.

Minister Adam stressed that Sids and other small states need mechanisms that could help absorb the risk which is inherent when vulnerable states seek international financing.

He cited the opportunities presented by 'Blue Bonds' whereby money could be raised from capital markets to find sustainable blue economy projects, provided partner institutions such as the World Bank would be willing to offer a partial guarantee.

The meeting also considered options for establishing a 'small states trade financing facility' to reduce the cost and risk of trade financing for these countries.

The minister also presented the option of Blue Bonds at a special side meeting of the Caribbean Regional Dialogue with the G20 jointly convened by the Central Bank of Trinidad and Tobago and the Turkish Presidency of the G20. Caribbean countries and the G20 presidency recognised that innovative financing is required to meet the challenge of climate change and also welcomed initiatives such as Seychelles' debt for adaptation swap which was presented to the meeting jointly by the Seychelles delegation and the representative of the Nature Conservancy, Robert Weary. It is to be recalled that the Nature Conservancy is financing the buyback that will lead to the establishment of the Seychelles Conservation and Climate Change Adaptation Trust (SEYCCAT).

During the IMF and World Bank meetings, the Governor of the Central Bank of Seychelles, Caroline Abel, also shared Seychelles’ experience in protecting correspondent banking relationships in the face of increased regulation at the global level requiring additional responsibilities on small jurisdictions.

Seychelles’ proactive stance in addressing these issues through robust policies and legislation, while also acting quickly to address concerns such as those that developed following the loss of correspondent banking services by BMI in 2014, has been widely recognised at the annual meetings.