In the National Assembly-Central Bank to return confiscated foreign currency |01 July 2009

This follows the unanimous approval by the National Assembly of the Foreign Exchange Bill 2009, which among its provisions seeks to repeal Cap 76 of the Exchange Control Act 1954 and replace it with a new Foreign Exchange Act.

The new Act shows the more liberal foreign exchange regime that the country has now adopted, where foreign exchange transactions can take place freely subject to qualifications designed to regulate and provide for an orderly market.

The Foreign Exchange Bill when it becomes law will also:

■ Authorise only banks and bureaux de change to deal in foreign currency, and they are also the only parties authorised to set the exchange rates for buying or selling foreign currency;

■ Allow for payments, receipts and transfers for international transactions to be made through the authorised dealers;

■ Allow for payment for goods and services provided in Seychelles to be in the domestic currency;

■ Allow for all transactions in Seychelles to be advertised in the domestic currency;

■ Allow for the minister for finance to ensure compliance with the Act.
Presenting the Bill to the assembly, Finance Minister Danny Faure said with the repeal of the Exchange Control Act 1954 the post of exchange controller will also be abolished.

With the introduction of the economic reform programme in October last year, the foreign exchange regime underwent some changes that were followed by a total liberalisation of exchange rates, hence the need for new regulations, he added.

He said the Bill forms part of the structural benchmark under the economic reform programme. Today, eight months into the economic reforms, many changes have taken place – the black market has been eliminated, there is foreign currency in the banks and the Central Bank’s reserves have reached $83 million.

As a result the government has recently paid back $20 million of multilateral debts, 25 bureaux de change are in operation, four of which are class A, and fiscal measures have been strengthened.

But Mr Faure said there have been many complaints from visitors and locals alike regarding high and exaggerated pricing by business operators who have been fixing their own exchange rates.

Other complaints are from tourist operators who say some practices are undermining marketing strategies to get more visitors.

He noted that all these cases have been closely studied by the Central Bank authorities and the time has come to move forward through new economic and financial policies supported by the National Assembly.
 
He stressed that the new policy does not mean the Central Bank will interfere with the market, which will continue to determine the exchange rates.

He said it is important to encourage and support the new policy as it will bring more fairness, eliminate bad practices picked up over time and increase competition. He said through the approval of the Bill the Central Bank, the Ministry of Finance and the government are seeking to change old practices and mindsets associated with the foreign currency issue.