Finance minister hails Seychelles’ projected economic growth by IMF |06 November 2015

The Minister for Finance, Trade and the Blue Economy, Jean-Paul Adam, has hailed the latest report by the International Monetary Fund (IMF) on the Seychelles economy.

The IMF has said Seychelles’ economic growth has been projected at 4.3 percent for 2015, up from the predicted 3.5 percent indicated in March.

Minister Adam said this confirms that even if there are certain persistent instabilities in the world economy related to the regress of the Chinese economy which is creating certain impacts on demand for commodity and hence developing countries, Seychelles has reinforced its resilience and has wisely used this opportunity to create other opportunities in the country’s economy to reinforce its performance.

The IMF cited strong tourist arrivals and expansion of credit to the private sector as main reasons for the new projected economic growth.

Minister Adam also commended the country’s recent upgrade to largely compliant status Peer Review Group (PRG) in Barbados last October in matters relating to tax transparency and exchange of information.

He said there are proof the country is forging ahead in its economic development  and also a sign we are on the right path in implementing the necessary standards set by the Global Forum Secretariat and the Organisation for Economic Corporation and Development (OECD) to help jurisdictions to efficiently implement the international tax standards.

Minister Adam, accompanied by finance officials in his ministry and those of the FSA (Financial Services Authority) and Seychelles Revenue Commission (SRC), was speaking to the press earlier this week.

The IMF statement published on its website last week came at the end of the visit of an IMF mission to Seychelles to conduct the third review under the Extended Fund Facility (EFF) arrangement with Seychelles. The EFF is aimed at reducing the country’s high debt levels while at the same time strengthening macroeconomic stability, reducing Seychelles’ vulnerabilities, and supporting wide-ranging structural reforms for sustained and inclusive growth.

Seychelles was upgraded to largely compliant status by the OECD in October after the country presented its supplementary review to the group in Paris in September after it was given non-compliant ratings in certain areas by the PRG in 2013, but it was allowed a review in March 2015.

To correct the deficiencies in relation to the availability of information, Seychelles amended the International Business Companies Act (IBC Act) to abolish bearer shares and to require all share registers to be kept at the international business company’s (IBC) registered office in Seychelles so as to enhance the effectiveness and efficiency of the FSA monitoring process. The IBC Act was also amended to increase the penalty fee in instances of non-compliance.

Reflecting on the positive forecast of the economy, Minister Adam said this reflects the very positive performances in the tourism sector but it also reflects the fact that Seychelles is also creating opportunities for businesses, both big and small, and are in conformity with the country’s strategy for small and medium enterprises (SMEs).

“This is what we want to consolidate in the budgetary process for 2016,” said the minister, adding that it is an opportune time for us to make maximum use of the current low cost of energy to consolidate this growth.

Even if the country’s economic performance is recording growth and therefore moving in the right direction and banks have made some improvements regarding access to credit through our SME scheme for example, Minister Adam remarked there’s still a challenge regarding access to credit from commercial banks.

He said they are not doing enough and therefore not moving on par with the economic growth.

Discussions are still ongoing with banks in that area for a compromise and mechanisms through the Central Bank will be put in place to make things move better.

He also talked on the ongoing discussions with parastatals which his ministry informed the IMF about, and where those companies are also consolidating their positions during this favourable low price of commodities and of energy.

The minister also talked about the Global Forum and OECD rating of 2013 relating to tax transparency and exchange of information and also when Seychelles started to review its legislation to be in conformity with the expectations and regulations of such organisations.

He also mentioned the period Seychelles became a signatory to the Multilateral Convention on Mutual Administrative Assistance in Tax Matters in 2015 and the FSA’s reinforcement of its surveillance on companies and corporate service providers.

“Therefore as a result of our hard work and amended regulations, legislation and the handing over of our supplementary report in September 2015 after the non- compliance rating one and a half years ago, it has allowed us to be confirmed as largely compliant during the last review meeting in Barbados in October,” said Minister Adam.

He added the country’s strategy is about offering a service on international standard which instills confidence in all businesses, be it local or foreign, which do business here.

He also informed all present that even if Seychelles has successfully passed the OECD Phase 2 review, a lot of countries have not done so.