Mr Speaker
Leader of Government Business
Leader of the Opposition
Honourable Members of the National Assembly
Distinguished Guests
Seychellois Brothers and Sisters

1. Introduction and pre-amble

Mr Speaker, it is an honour and privilege for me once again to present to this assembly and the people of Seychelles our Budget address for 2010.

Last year when I addressed you, the issues at the forefront of our minds were our new exchange and monetary regime, rising inflation and interest rates, the volatility of prices of goods, the collapse of international financial systems and its negative impact on our tourism industry.

We took a decision to redress the economy so that we could, once and for all, change the way that Seychelles undertakes its future development.

The majority of the Seychellois people placed their confidence and hope in the President’s wisdom.

It is evident that the series of reforms introduced have put us on a sustainable growth path. Had it not been for this, growth would have been sharply negative, resulting in lower personal income, increased unemployment and dire prospects for our people.

Today, a year after the start of our historic economic reforms of November 1 2008, I am satisfied with the results and I can tell you unreservedly today that our reforms are well on track and that we continue to make headway despite turbulent times, amid unpredictable domestic and international conditions.

Most importantly, we have succeeded in recalibrating our economic strategy and have placed the country on a course towards a more modern economy, and in 2010 we shall continue to build on what we have started and go further in refining it.

That includes continuing our work to further improve the efficiency of government and to improve our service delivery, reduce and better manage government spending, give the private sector a bigger role in, and better tools to contribute to, the country’s economic growth and, furthermore, make available to it a larger and better skilled labour force to help it achieve this.

We will go further in 2010 to improve the fiscal environment in which businesses operate, and in doing so create a more level playing field so that everyone who wants to go into business can do so, with the same opportunities and incentives, and those who need help to do so can get the necessary assistance.

The bottom line, Mr Speaker, is that we have taken on board more of the aspirations, needs and wishes of the Seychellois people and we have redefined the directions of Seychelles and the Seychellois in order to achieve sounder and stronger economic progress and give ourselves and the next generation greater opportunities for a better life.

Following the economic shocks of 2008, the economy has regained a level of stability during 2009 and we now firmly believe that we will start on a path of sustained recovery from 2010.

Real GDP growth is projected to grow by 4% in 2010 and inflation is expected to remain in the low single digits. Tourism and related services, the main drivers of our economic growth, have already begun a gradual recovery in the second half of 2009.

There has been, and will continue to be, positive domestic and external debt restructuring, which will reduce our country’s credit risk and support foreign direct investment.

In the absence of any new major external shocks, our currency is expected to remain stable and foreign reserves, which today represent almost two months of imports, are projected to rise gradually to nearly three months of import coverage by the end of 2012.

Having said this however, I must also say that we should never sit back and rest on our laurels. There is more to be done.
Only recently we negotiated an Extended Fund Facility with the IMF as part of our medium-term plan. This facility will usher in many of the remaining reforms that need to be carried out in Seychelles if we are to become more efficient and make further economic progress.

All in all, this budget address gives me the opportunity to share with the Seychellois people how far we’ve come since last year and where we’re heading.

I will touch on the impact of the economic reform programme on our people and will review various sectors of the budget as well as our monetary and fiscal position.

I will explain the nature of the second generation of reforms, which comprise mainly taxation, public administration and the public sector.

I will go into detail on the tax reform that we are introducing and the various types of taxes that will apply as from January 2010. I will also explain the structural changes that are planned in ministries and departments from next year.

I will also announce the objectives of our medium-term programme, our various agreements with our multi‐lateral partners and the assistance that we are benefiting from.

I will then detail the Budget’s expenditure and revenue items, and I will explain our negotiations aimed at restructuring our external debt. I will also inform you of new policies that will take effect from January 2010.

I will run through a list of our priorities in terms of spending for capital projects, what we need to contribute and how we will maintain our social gains.

And last but not least, I will speak about what we will be doing to continue to improve the lives of our Seychellois people and the economic health of our country.

2. Budgetary performance 2009

The government is expecting to complete the year with a total revenue collection of R3.7 billion, exceeding the original revenue projection by almost R168 million, or a 5% increase.

This has been achieved mainly as a result of additional revenue collected from business tax, other taxes, dividends from parastatals and other non‐tax revenues. In addition, government has benefited from a total of R309 million in support and grants from bilateral partners.

The Seychelles Revenue Commission has reinforced its efforts on tax collection, and this year we are starting to see the results of it. In 2009 total revenue collected from business tax is projected to surpass budget by almost R109 million, or 20%.

The government is also generating higher returns on its investments. This year we are forecasting that the total dividends to be collected from public enterprises will be R163 million, which represents almost R40 million more than budgeted. These increases in dividends have come mostly from Siba and Nouvobanq.

With regard to total expenditure, but excluding public debt interest, government is expecting to complete the year with an expenditure level of almost R2.5 billion, which is R400 million or 14% less than the original budget estimate.

Mr Speaker, this lower than expected expenditure is mainly because we anticipate using only R2.8 million of the R300 million Contingency Fund that was budgeted for in the event that there was a need for government to step in and help government financial institutions, as has been the case in many countries around the world. The use of only R2.8 million of the
Contingency Fund has demonstrated that the government financial institutions have been able to withstand the impact of the global financial crisis and our economic reforms.

Furthermore, we anticipate using only R36 million of the R100 million that
government budgeted for as part of the social safety net.
The total government wages and salaries bill for 2009 is anticipated to be R768 million, which is R21 million, or 3%, more than what was originally budgeted.
As for total interest payments for 2009, government is anticipating to pay almost R1.1 billion compared to our original forecast of R1.2 billion. This is 10% below our original estimate and has been possible due to the appreciation of the rupee, debt rescheduling with the Paris Club and lower than expected interest rates in the second half of 2009.

3. Monetary and financial sector developments in 2009
The primary objective of monetary policy in Seychelles is price stability.

Today, a year on since the financial sector was liberalised, one of our biggest success stories has been our ability to bring down the inflation rate to a level that no one would have expected when we began our reform process in November 2008.

At the end of 2008, annual inflation had reached an historic high of 63%, but since then we have come a long way. I am pleased to report that when inflation data is released within the next two weeks we expect it to be only around 2% year on year.

Following the liberalisation of the financial sector last year, some volatility in the key financial indicators was observed, as had been expected. In particular, there was an overshooting in some key financial indicators.
From the time we floated the rupee in November 2008 until the first half of 2009, the exchange rate was higher than the level that had been anticipated.

During this period, savings interest rates also rose to reflect real interest rate levels, thus helping to stabilise the exchange rate.

However, due to disciplined fiscal and monetary policy being implemented throughout 2009 and the impact of the other wide-ranging reforms reaching all areas of the economy, clear signs of improvement have been evident.

Since the exchange rate reached a peak of R18 to the US dollar in December
2008 and short‐term treasury bill interest rates hit a high of 30% in January 2009, these rates have gradually fallen to much lower levels. The Seychelles rupee is now trading at an average of R10.9 against the dollar while short‐term treasury bill interest rates have fallen to below 2%.

To complement these economic gains that we have experienced, our country has been able to accumulate foreign exchange reserves to more satisfactory levels. One year on, the net international reserves of the Central Bank stand at US $156 million, equal to just under two months of imports. We expect that by end‐2009 gross reserves will reach close to US $170 million.
Our key objective is to maintain macroeconomic stabilisation in order to secure more benefits for the average Seychellois, and grow a new wave of entrepreneurial spirit.

4. Outlook for 2010

With expectations that the world economy will begin to recover in 2010, the Seychelles economy is forecast to grow by 4% next year.

This, Mr Speaker, is assuming that the global recovery will translate into increased tourism activities as well as an improvement in foreign direct investment levels.

Domestically, the conditions have gradually improved, allowing for economic recovery to resume. The faster than planned macro‐economic stabilisation has made it such that there is room for further easing of monetary policy on the part of the Central Bank through a further relaxation of the reserve money target.

Moreover, excess commercial bank reserves built up as a result of government’s domestic debt repayment will provide greater scope for further reductions in commercial bank interest rates. This reality should encourage all banks
to lend to the private sector at much lower lending rates, which will help to grow the economy and create more jobs.

Our exchange rate policy for 2009 will continue to be based on a floating regime, which to date has served Seychelles well, and we remain committed to a market‐determined exchange rate regime. However, we will rely on the Central Bank to remain alert to the risk of excess volatility and an overvalued exchange rate for the rupee.

I want to assure the assembly, as well as the business community, that government is well aware of the risks that an overvalued exchange rate for the rupee would pose for our economy, notably the tourism industry. We have lived through this experience and its adverse impact.

Government has been encouraged by the effectiveness with which the Central Bank has been able to intervene to eliminate the excess volatility in the exchange rate and to calm the market when the exchange rate appreciated sharply in recent months.

We are also confident that the effectiveness of the Central Bank in containing inflation and in maintaining financial stability will continue. The bank today has modern policy instruments to cater for the demands of the banking system, and this has been key to successful monetary policy implementation.

I am certain that Central Bank will continue to explore options for developing better instruments to ensure further development of the financial sector.

5. Sectoral overview
Our economic reform programme has had a strong impact on our education and health systems. But it is in these very sectors that we have seen how our firm principles of free access to education and health have cushioned our children from the toughest impacts that this economic reform could have had on them.

Health

In the health sector there was a need to relook at how best to maximise resources and facilities in the light of budget constraints.

Last year I informed this assembly how much it cost government to provide the level of healthcare for our citizens. It is worth noting that the pattern of sicknesses and health problems in Seychelles is comparable to that in the industrialised European countries, and treatment for such cases is generally very costly.

As a result of such high costs, a significant allocation has been made in the budget to meet the everyday costs of operating the health system. In the 2010 Budget we have provided R34.9 million for medicine, R27.7 million for medical supplies, R12.4 million for laboratory supplies and R7.5m for specialised overseas treatment.

Education

The Ministry of Education used 2009 to consolidate its new programme and to prepare for new challenges ahead.
That is because we needed to reorientate our educational system in line with new plans for development of our human resources.

It’s important that our educational system and the new University of Seychelles prepare our young people better for the world of work with more skills, better competence, a better attitude and, of course, greater knowledge.

The structure and role of government that we have known until now is changing. Our economy is transforming very fast and it is therefore necessary that our youth can master technology better and that in this new attitude that we are seeking in our youth, as well as in their parents, they are able to realise that every job has its value and every job is important.

Government for its part will continue to make the necessary resources available to develop this quality level of education.
The 2010 Budget makes provision for R10 million for this first phase of education reforms.

Community development

President Michel’s recent consultations in the districts gave an opportunity to residents to talk about the future of Seychelles as well as to make critiques and suggestions in areas where they believed things were not working well and to offer solutions for improvement.
The government’s policy is to continue with its district programme to reinforce community values and the spirit of volunteering.
We have therefore provided for R20 million for the 25 districts to finance small projects in an effort to make a difference in the lives of our communities.
In doing so, Government will be helping districts to achieve self-sufficiency and, at the same time, go some way to decentralising government, through smoother cooperation between ministries and the agencies that serve these districts.

Youth

Many programmes have been implemented with and for the youth through the Department of Youth.
In August this year, government took a major decision concerning the youth, within its programme of ongoing reforms in the public and administrative sectors. From January 2010, the National Youth Council will be strengthened legally. All staff of the current Youth Department will be transferred to the National Youth Council (NYC), and all youth programmes will come under the NYC.

This change in the management structure will create a new synergy and coordination between the ministries, agencies and civil society in a new all‐encompassing action plan on aspects of concern to youth such as Aids, drugs, prostitution, life skills, employment, further education, empowerment and the entrepreneurial spirit.

Housing

Mr Speaker, government is committed to maintain housing as one of its priorities despite the economic situation.
In 2009, the implementation schedule of the ongoing projects in the various districts was hampered by the effects of the economic reform that resulted in a major increase in the cost of construction. As a result, some projects that were planned to be completed in 2009 will now spill over into 2010.

For example, after a lull of two years the Ile Perseverance project will start up again early next year. In the reworked plan, we will aim to deliver 1,000 units by 2012. The first 200 units will be allocated towards the end of 2010.

Infrastructure for the new Ile Perseverance community is an important component of this project. We have already awarded contracts for the materials required to provide electricity, water and sewerage, and some of this material has already arrived in the country.

On Ile Perseverance, we have completed 128 units – the ones that accommodated the Indian Ocean youth games athletes last year. We expect to complete infrastructure for these houses – electricity, water, sewerage and roads – next year. As soon as this works is completed, we will start allocating these 128 units.

Before the end of 2010, a further 100 units and their infrastructure will be ready.
We plan to allocate 200 units in 2010, and a further 300 in 2011.

Government had planned to deliver 306 new houses in the beginning of 2009, but unfortunately some of these projects were delayed by rising costs.

By the end of December this year we expect to have delivered 163 units including those at Dan Kan (Plaisance), Ex‐Troian Phase 2 at Barbarons, and Lower Petit Paris, Cascade.

The remaining 143 units will be completed next year and these will include ex‐Albert (Pointe Larue), ex‐Onezime (Anse Aux Pins), Carana Housing Estate at North East Point and ex‐Teachers, at l’Amitie, Praslin.

Sports

The development and promotion of sports play a vital role in the process of nation‐building. It increases awareness of the importance and benefits of healthy living while fostering discipline, developing the competitive spirit and nurturing youthful talent and high-calibre athletes to become national sports heroes and role models.

Over the last few months, government has channelled resources into preparing high-quality athletes for the future. This strategy has begun to bear fruit as our young talent have won gold medals in the international arena in such fields as weightlifting and badminton.

Emphasis on youth sports will continue next year as we prepare for the regional youth games (CJSOI) in Reunion in August 2010, the first Youth Olympic Games in Singapore in August 2010 and the Commonwealth Games in New Delhi in October 2010.

Taking part in these games will also provide much-needed competition in preparation for the 8th Indian Ocean Island Games, which Seychelles will host in 2011.

Culture

Government has always embraced the importance of our country’s culture and its development, and over the years several companies and individuals have also made their own contributions.

Government has created and sustained the Creole Festival, and other countries have followed suit. Festivals of art and culture that are celebrated in Seychelles continue to feature on our annual events calendar.

Countries throughout the world have come to realise that culture, especially cultural industries, can play a greater role in the national economy. The Department of Culture has taken steps to ensure that this happens in Seychelles as well, since a growing number of tourists travel the world to discover and experience different cultures.

Culture is set to play a greater role in our tourism industry, and as such the private sector and other interested parties are encouraged to foster this new trend in our economic development.

For instance, a small home business that makes and packages pickles or jams for sale is promoting our culture, just like a restaurateur who ventures into setting up a Creole restaurant, and consequently both are helping to grow our culture and our economy.

It’s therefore timely for us to take a closer look at our culture and at our national heritage, to better understand and appreciate how we can make them play a social and educational role as well as an economic one.

Agriculture

The creation of the Seychelles Agricultural Agency (SAA) in January 2009 marked another major milestone in the development of the agricultural sector.

The SAA has been vested with the primary responsibility of providing a wide range of goods and services to the farming community so that collectively we can achieve a better level of national food security.
The year 2009 saw marked divestment by government from all traditional sectors, including agriculture. The Seychelles Farmers’ Marketing Cooperative has taken on the responsibility for the livestock feed factory, the abattoir and the hatcheries.

Members of the farming community have benefited through import tax concessions amounting to over R20 million for the year 2009 on the import of machinery, equipment and raw materials into the agricultural sector.
Despite the fact that we are still importing much of what we consume, our agricultural sector generates some R200 million in annual turnover.

Government will continue to sustain the agricultural sector through institutional support, with the aim of seeing the quality of produce go up and prices come down for consumers.

Fisheries

Mr Speaker, we are seeing some worrying trends in one of the most important sectors of the Seychelles economy.
The total catch in the western Indian Ocean by purse seiners holding licences to fish inside Seychelles’ EEZ for the first half of 2009 was estimated at 62,142 metric tonnes compared to 101,507 MT and 122,416 MT for the same period of 2007 and 2008 respectively.

The 2009 figure represents an approximate 50% reduction over 2008, and this is the lowest catch reported for the first half of any year since the late Eighties.

Total catch reported from inside Seychelles’ EEZ also dropped by about 50%, from 30,951 MT in 2008 to only 15,586 MT.
Port Victoria has been the principal port for tuna trans‐shipment by purse seiners in the western Indian Ocean region for many years. For the first half of 2009, we recorded a 67% reduction (from 99,084 MT to 32,644 MT) in trans‐shipment and landing of tuna, compared to the same period of 2008.

This reduction in trans‐shipment volumes translates into reduced earnings from related activities, as spending by fishing vessels in Port Victoria is by far the biggest component of foreign exchange earnings from industrial tuna fishing.

The reduction of catches in the western Indian Ocean can be attributed to a number of reasons. Firstly, it should be noted that the catch in the period 2003-2006 was considered as exceptional, due to large catches of yellow‐fin tuna reported over this period. Over the past three years, tuna catches in the western Indian Ocean appear to be returning to the pre-2003 level, hence lower catches.

Secondly, it must be said that fishing activity is facing serious threats. The activities of Somali pirates in our territorial waters have forced fishermen to abandon some of the more lucrative areas.

Through our negotiations we have succeeded in achieving a better level of security to encourage the purse seiners to carry on fishing in our waters.

Our challenge is to find further solutions with the help of our partners to protect both foreign fishing operators and our local fishermen, who today are wary of venturing too far out.

Defence forces

A planned restructuring of the defence forces is underway. This will mainly entail measures to increase the capacity and efficiency of our coast guard in carrying out surveillance of our territorial waters and being able to react suitably to threats, especially those from pirates.

Already a special forces unit has been created.
The 2010 Budget makes provision for our defence forces to carry out this restructuring.

Tourism

The new partnership between government and the private sector on the Seychelles Tourism Board is working well and the new dynamics have already contributed to a reversal of the downward trend in arrival figures.

Although we were experiencing a drop of 18% in arrivals in March 2009 compared to the same period in 2008, thanks to our collective efforts, this reduction is now at 2‐3% today.

It appears that our visitor arrival numbers will finish this year at about the same level as last year, despite the serious economic crises in our principal European markets. On an even more positive note, the STB is forecasting a 5‐6% increase in visitor arrivals in 2010.

We are also beginning to see the fruits of our joint overseas marketing initiatives between the STB and the Ministry of Foreign Affairs, as well as cost savings being achieved through the sharing of some overseas offices for both STB and MFA representations.

The state‐private sector partnership in the STB is therefore bearing fruit, and this should be further reinforced in the future.

Energy

Government’s main concern is for the energy demand by all sectors of the economy to be met through reliable and affordably‐priced energy.

An Energy Commission has been created under the Ministry of Environment, Natural Resources and Transport with responsibility for the oversight and planning of the country’s approach on energy issues.

The commission is responsible for the energy policy and the country’s energy master plan and for overseeing and co‐ordinating their implementation.

A new legislative framework governing the energy sector will be developed to attract investment into the sector and to ensure the observance of the principle of fair competition.

Government will promote the use of renewable energy by setting up an adequate institutional and legislative framework, developing human resources, public awareness and a suitable financing system.

Electricity, water and sewerage

This is a sector that touches the lives of every Seychellois as well as being a key component in the country’s development.
We all recognise that the recent development of the country has been very rapid. In these past five years the government has invested R1.6 billion in capital expenditure projects in education, health, housing and roads.

Given the growing demand for electricity, water and sewerage in the country, the time has come for the government to ensure that more investment is undertaken in these key areas by the Public Utilities Corporation (PUC).
Over the next three years this will entail a total of R2.2 billion in investment.

Under our new economic programme, government is not able to borrow more than R500 million per year to finance projects. New policies also dictate that the PUC can no longer receive government subventions and needs to operate on a commercial basis.

Therefore, in order for us to meet our country’s demand in these three key areas of life and development, and bearing in mind the government’s budget limitations, we have earmarked development grants worth R675 million for the PUC over the next three years.

The PUC will then need to find the balance of the money – about R500 million annually – through commercial loans and by reviewing its tariffs.

The PUC is currently finalising the new rates, which will be announced shortly.
International business

Our offshore industry faces unprecedented challenges but at the same time numerous opportunities. December 2009 will mark 15 years since the birth of the industry in Seychelles.

Over the years, our offshore industry has played an increasingly important role in the development of Seychelles’ economy, firmly establishing itself as one of our main economic pillars.

The numbers of new IBCs incorporated this year decreased by 10% compared to last year, believed to be due to the current world financial crisis. However, we have seen some positive growth signs over the past two months.

The economic benefit to Seychelles of the international business industry is now estimated at R400 million a year with Siba on its own having a turnover of R60 million.

During 2009, Siba managed to increase its total revenue by 12% and paid an interim dividend of R50 million to the government in the third quarter of this year.

The future of the industry will depend very much on promotion and innovation. The Ministry of Finance, CBS, Siba and SAOPRA, and all other stakeholders, are committed to the quest to market Seychelles as a preferred financial services jurisdiction for international investors.

Information Communications Technology

Unlike many other countries, as the economic slowdown intensified consumer spending power in Seychelles remained buoyant. Statistics indicate that the international incoming minutes, internet subscribers and the total number of SMS texts increased by 4.4%, 5.7% and 1.8% respectively during the first half of the year.

On the other hand, other ICT performance parameters such as the number of mobile subscribers, outgoing international minutes and fixed-line subscribers have all reduced. Outgoing international minutes were the hardest hit of all, experiencing a reduction of 6%.

It is our view that access to the internet, especially broadband, is vital for a country to take part in today’s information economy.

The recent launch of a detailed feasibility study for the building of a submarine fibre-optic cable system to serve Seychelles’ communications bears testimony to government’s recognition of the powerful effects that investing in ICT has upon our development and economic growth.

The study is being financed by a grant from the African Development Bank. Preliminary findings are very encouraging and it is expected that following the outcome of this study, interested parties will be in a position to make their investment decision in a project that should take the local ICT sector to greater heights and provide the public with a much-needed boost in internet speed and ease of access.

National Assembly

As an independent legislative arm of our country for the last 17 years, the National Assembly will finally get its own building.

The assembly is also carrying out its own programme of reforms. The 2010 Budget provides for more resources to support the assembly’s work.

Judiciary

Also as an independent arm, the judiciary is embarking on reforms that will change the way it functions.
The 2010 Budget provides support for these reforms, including the technology component of the project, and support for the development of court administrators.

6. Public administration and public sector reform policies

Carrying out the economic reform programme has obliged government to further redefine its role.
Government will focus on its core functions. That is, drawing up national policy, while executive agencies will operate and provide services on behalf of the state.

This second stage of our reform process is to determine what services and functions of government may be outsourced or contracted out to the private sector or independent agencies. In doing so, government must ensure that it is achieving the most efficient use of resources within an affordable expenditure framework and eliminate duplication of functions across its policy cells by consolidating and streamlining its administrative and regulatory structures.

These strategies are set out in the Memorandum of Action on Public Administration and Public sector reform policies which was approved by the cabinet in August 2009.

Services off payroll

As from January 2010, the government will begin the process of outsourcing its non‐core services.
For example, cleaning of government offices will be carried out by the Cleaners’ Cooperative Service.

Clerical staff not exercising strategic functions in government will all follow a training programme from January 2010 that will give them the necessary skills to fill other vacancies in the labour market. The Ministry of Employment and Human Resources Development, through the National Human Resources Development Council, will oversee the retraining of those people leaving under the reform. Government has allocated R10 million in the 2010 Budget for retraining.

Ministry of Finance

To further strengthen and improve on public financial management systems, a comptroller general has been appointed in the Financial Planning and Control Division.

To improve on budget execution, the role of accounting officers has been redefined and enhanced to improve the financial management function in line ministries.

As from January 2010 all financial controllers/ heads of finance and accounts in all ministries and departments will report directly to the comptroller general instead of reporting to their principal secretaries.

Also, as from January 2010, audit officers who work in other ministries will fall under the office of the chief internal auditor in the Ministry of Finance, with the aim of strengthening the government’s auditing capacity.

Postal services, which now falls under the Ministry of Finance, will become a statutory body.

Department of Information and Public Relations

Nation Publishing will become a statutory body. It is to be named the National Information Services Agency with the mandate to operate on a commercial basis and to provide government with a return on its investment as from 2011.

Environment Department

The Botanical Gardens and Biodiversity Centre will fall under the auspices of the National Botanical Gardens Foundation.

Community Development Department

As from January 2010, the management of homes for the elderly and cemetery services, which now come under the Community Development Department, will transfer to the Social Security Fund.

Youth, Sports and Culture

The Creole Festival secretariat will be transferred to the National Arts Council. The management of the International Conference Centre will be transferred to the Seychelles Tourism Board. All staff of the Youth Department will be transferred to the National Youth Council.

Social Development Department

The management of the Half Way Home and the President’s Village will be transferred to the Children’s Homes Foundation.

Department of Police

The Seychelles Fire Brigade, which now falls under the Department of Police, will become a statutory body.

Ministry of National Development

The Film Unit in the Department of Information Communications Technology will be transferred to the Department of Information and Public Relations.

Ministry of Education

The Creole Institute, which now falls under the Department of Culture, will fall under the Ministry of Education from January 2010.
The Adult Learning and Distance Education Centre will no longer fall under the Ministry of Education and instead become autonomous.

7. Privatisation

In the last Budget speech, I spoke of the need to continue with government’s privatisation process.
I am pleased to report that the following units have been successfully privatised during the year 2009:
Meat Corner retail outlet; Enterprise landing craft; tomato sauce production; water bottling operation; hatchery; animal feed; abattoir; agro‐industries.
Government has collected a total of R103 million through this programme.

8. Public procurement

Public procurement is a central pillar in government’s ongoing efforts for good governance.
The objective of the Public Procurement Act is to change the way public procurement is practised by all levels in government and by the business community, so as to improve the accountability and integrity of the procurement process.

Public procurement worldwide is an area that is seen as vulnerable to irregularities, scandals, corrupt practices, influence peddling and opaque transactions.

It is because of this that the government takes the functions of the Procurement Oversight Unit, the National Tender Board and other governance institutions very seriously.

The government will, therefore, endeavour to ensure that such institutions as the National Tender Board will continue to enjoy the autonomy they deserve to properly discharge their duties.

Let me assure you that with government’s stance of zero tolerance on corruption, the National Tender Board will be given the required environment to ensure its sustained autonomy.

9. Outsourcing

Government continued with its programme of outsourcing to seek efficiency by identifying activities that can be best undertaken by the private sector.

We started the outsourcing programme in 2005 and we have, over the last four years, approached outsourcing in a systematic way. We have already outsourced most of the cleaning and landscaping work in the districts and cleaning of schools, which this year alone has resulted in the creation of almost 900 jobs.

Outsourcing not only provides opportunities for government to cut costs and increase productivity but creates a more competitive environment and also creates productive capacity in the economy. Next year as more government agencies become autonomous, more services will be outsourced to the private sector.

10. Trade

A working group comprising representatives from government, civil society and the private sector has been established and mandated to prepare the negotiating position for Seychelles’ accession to the World Trade Organisation.

The WTO has helped Seychelles set up a WTO reference centre, which will be available to the public and will provide access to WTO documents, books and internet resources. The centre is to be located at the Trade Offices, Latanier Road, and is expected to be fully operational in 2010.

Interim Economic Partnership Agreement

The interim agreement extending preferential trade terms to Seychelles from the European Commission (EC) was signed in August this year. We have received notification from the European Union (EU) that the agreement has been ratified on their side. We have submitted the agreement to the National Assembly. Negotiations with the EC will continue during 2010 to reach a full agreement that deals not only with goods but other aspects of trade.

Regional integration

Seychelles is taking great strides in terms of aligning itself with international best practice. We are working intensively with our regional partners so as to strengthen regional integration. In 2009, Seychelles became a member of the Common Market for Eastern and Southern Africa free trade agreement (FTA), and 2010 will see us become a party to the Southern African Development Community trade protocol.

As part of our efforts to widen our trading avenues in both our imports and exports, we are exploring a number of free trade agreements. Only this month, Seychelles had a first round of negotiations towards a bilateral FTA with Turkey, which is a world leader in manufacturing. It is hoped this FTA will lead to cheaper imports such as intermediate goods and finished products.

Fair Trading Commission

The Fair Trading Commission has been established. As was announced recently, it will regulate domestic competition and ensure a level playing field for all economic operators.

Seychelles Trading Company

The STC has played a leading role in anchoring prices of essential commodities at affordable rates.
It is worth remembering that in the new economic environment, the STC does not enjoy any government subventions and does its business just like any other company.

The STC’s new role in this new economy will be primarily to ensure the supply of basic items at affordable prices and still balance its books.

11. Government – private sector – civil society partnership

Government will continue its efforts to develop a more solid partnership with the Liaison Unit for Non-governmental Organisations of Seychelles (Lungos) and the Seychelles Chamber of Commerce and Industry.
These two organisations represent civil society and the private sector, and government will continue to support them financially. In the 2010 Budget, we have provided for R700,000 for Lungos and R900,000 for the SCCI.
During the course of 2009 many worthwhile projects that have a positive impact on society have been launched by NGOs which fall under Lungos, and we need to encourage these through the Budget.

12. Multilateral institutions

Mr Speaker, 2009 has seen a resurgence of activities with our multilateral partners.
After years of absence, both the World Bank and the African Development Bank re‐engaged with Seychelles. Endorsement by their executive boards and the issue of interim strategy notes spell out their reengagement strategy with Seychelles.

Seychelles also hosted the first Seychelles Forum in May 2009, which brought together most of its bilateral and multilateral partners. The theme chosen for the forum was: Paving the way towards a sustainable economy.

The forum provided a platform for the exchange of views and sharing of experiences among the delegates on the recent economic reform programme in Seychelles.

During 2009, we also saw the visit of Seychelles’ executive directors at the AfDB and the IMF. They came to Seychelles to witness at first hand the effect of the economic reform programme and to show their continued support.

Budget continued...