World Bank

During the course of 2009, the World Bank has helped Seychelles in various sectors.
The bank conducted and published the findings of the first Public Expenditure Review (PER) exercise, concentrating on three main sectors: health, education and public administration. Through the PER exercise, areas of weaknesses were identified which the government has taken steps to address as it moves forward to the second generation of reforms.

Since the introduction of the reforms, more than ever, statistics have had a crucial role to play. To help address this situation, the World Bank has agreed to support the National Statistics Bureau with a grant of US $376,200 for statistical capacity building.

The bank also gave its approval for a €6.4 million development policy loan, which will help the country carry out its economic reform programme.

African Development Bank

On August 25, the government signed a €15 million loan agreement which will finance the country’s economic governance reforms programme.

We have also had high-level talks with the AfDB on a partial guarantee of the bank to be attached to the new bonds that will result from Seychelles’ forthcoming external debt exchange offer.

As part of the forthcoming exchange offer, holders of our Eurobonds due in 2011 will be invited to tender their instruments for new bonds. This partial guarantee will provide extra value to creditors affected by the exchange offer and thus make it more attractive.

It is now expected that the AfDB will review the partial guarantee proposal in the next few weeks. The government of Seychelles wishes to launch the exchange offer shortly.

European Union

The European Commission is helping Seychelles through a general budget support programme including €9 million from the Vulnerability Flex Fund and €7.5 million from the 10th EDF.
Mr Speaker, it should be noted that the above-mentioned loans are meant to support our eonomic reform programme as well as help us to sustain our reserves.

International Monetary Fund

In addition to monitoring the Stand-by Arrangement, the IMF continued to support Seychelles by providing technical assistance in numerous areas such as taxation and public finance management, as well as technical help to the Central Bank.
This year we have received US $13.2 million from the IMF. We hope that by the end of this year, Seychelles will be in a position to sign off on a new extended fund facility with the fund.

13. Objectives of the medium-term strategy

The major objectives of our medium term strategy are to:
● Preserve macroeconomic stability;
● Achieve external sustainability;
● Improve economic efficiency and raise growth by carrying out a second phase of structural reforms.
The main goals of our fiscal policy are to put public finances on a sustainable path, while creating the fiscal space to raise public investment and support our targeted social safety net.

We hope to achieve primary fiscal surplus levels that are consistent with our medium‐term sustainability objective, assuming full external debt restructuring. This profile will allow us to reduce domestic public debt significantly, releasing resources to support private sector development.

One key objective is to have a tax reform that delivers a fair and simple tax system, which will promote growth, improve self‐compliance and level the playing field for investors.

Our new macro-economic framework will guide fiscal and financial policies over the next three years. After the shocks of 2008‐09, we expect the economy to start a sustained recovery from 2010.

There are positive signs that tourism and related services – the main drivers of growth in our economy – commenced a gradual recovery in the second half of 2009, and foreign direct investment (FDI) is expected to rebound in 2010.
FDI will be further supported by a successful public external debt restructuring in late‐2009/early‐2010 that will improve our country’s sovereign rating. Real GDP growth is projected to recover to 4%  in 2010 and to 5% in 2011‐12, while inflation is expected to remain in the low single digits.

The GDP projection in 2009 is estimated at R10.3 billion, will grow to R11 billion in 2010, R11.8 billion in 2011 and R12.9 billion in 2012.

We have assumed an exchange rate equivalent to current levels over the medium term.
The external current account deficit is expected to widen again in 2010, due to higher growth and FDI, but will narrow over the medium‐term as tourism earnings recover. Foreign exchange reserves are projected to rise gradually to nearly three months of import coverage by end‐2012.

Primary fiscal surpluses will be targeted at 7% in 2010, 6% in 2011 and 5% of GDP in 2012. These levels are consistent with our medium‐term sustainability objective, assuming full external debt restructuring.

This profile will allow us to reduce domestic public debt significantly, releasing resources to support private sector development.

14. New policy

Current macro‐economic environment

Mr Speaker, our strategy under the programme is focused. The initial phase of our programme has been to restore convertibility in the currency, stabilise inflation and bring about real interest rates within the monetary system.

With the clearing of the exchange system, the wiping out of the black market, month-on-month inflation being currently slightly negative and treasury bill rates down to less than 2%, we believe we have achieved our initial set of objectives.

The economy has slowed down, nevertheless, mainly driven by external factors especially those affecting the tourism sector.

Our future strategies will be underpinned by strong fiscal performance guided by reforms in the taxation system, further streamlining of government, improved governance and adherence to a debt strategy that is consistent with our long-term objective of debt reduction and sustainability.

We must focus on the creation of more jobs for our people. Our workforce must become more competitive and together we must continue to diversify our economic base.

Government’s role must remain that of a facilitator, regulator and enabler, and we must provide the private sector with a conducive environment which allows all businesses to flourish with minimum bureaucracy and administrative barriers.
In the coming year, Mr Speaker, we must do everything we can to improve our ranking on the World Bank’s Ease of Doing Business index.

Wage grid

Government has often stated in the past that work is being undertaken with the help of the Commonwealth Secretariat to do a comprehensive salary review of the public sector.

A large part of this work is now completed and we are ready to implement the new wage grid from 2010.
From January 2010, a more flexible and transparent wage grid will be adopted. It will provide for an average salary increase of 4.3% within the public sector.

Some 77% of workers will get a pay rise, depending on their base salary, and policies to be established on how the increases are to be administered. These increases will also vary based on a grading system on the grid today.

Positions at the level of director general and above will not receive any increases under the new wage grid.
It is important that we appreciate that this project was complex and was done in two phases:

The first phase comprised: research on the evolution of salary structures in the past 30
Years; analysis of private sector salary schemes with a comparison of those in the civil service; developing a comprehensive system to evaluate jobs; developing a wage grid that takes into account other human resource issues; developing a detailed report with recommendations on the first phase of the project.

The second phase comprised: the training of 110 directors and human resource officers on ways to use this new system in evaluating jobs and educating them on ways to manage the changes to accompany the new salary system; collecting job analysis questionnaires (more than 700 have been analysed to get a reasonable base); evaluating jobs in different grading levels or professions; reclassification and regrading of jobs; drafting new policies to adapt to the new grid; drafting new schemes of service to take into account the framework set by the Seychelles Qualifications Authority (there are over 170 schemes of service today).

The adoption of the new wage grid will change the way salary increases are administered in the public sector. Instead of giving fixed increases across the board, as before, government will instead rely on a percentage change of actual salaries based on salaries as at December 2009. All workers will, as from January 2010, be paid according to the new wage grid based on their qualifications and experience.

This wage grid will apply to all government ministries and departments as well as other government agencies. Commercial public enterprises are not obliged to adopt this new system.

It is also my pleasure to announce that the new “scheme of service” in the health sector will be implemented from January of next year. In this sector there are now 23 schemes that will be restructured into four categories: medical, dental, technical operations of health, graduates and nursing staff.

As regards education, a new scheme of service for teachers will be introduced from January 2010.
As announced earlier in September, government will pursue a strategy to retain its professionals who work in ministries and departments.

Social security benefits

It is thanks to the courage and determination of the Seychellois people that we have succeeded in creating a social security system.

The Social Security Fund will be financed by revenue collected by government and the payment of benefits is in line with Social Security legislation.

The 2010 Budget provides for R252 million to pay such benefits, such as benefits for:
pensioners, invalids, accidents at work, people incapacitated through illness, orphans and abandoned children, maternity leave.

In line with our policy of social protection, we will maintain our programme of home care. The 2010 budget has earmarked R35 million for this. We will also continue our programme of family support.

Our programme to help children, students and pensioners who use SPTC buses will cost a sum of R28 million, and this will be financed by the Social Security Fund.

Post-secondary students’ allowances and allowances for students from Praslin and La Digue living in the Youth Hostel will increase as from January 2010.

Social safety net

Government introduced the Social Welfare Agency in October 2008 to mitigate the impact of the economic reform by establishing a safety net for the most vulnerable in society.
By October 30, 2009, the agency had help those in need with financial support for up to R30 million.

The reasons for financial help vary from case to case and will include situations where there is a need to help due to: low household income; inability to work because of sickness, for example; emergency temporary unemployment; one-off cases, for example emergency financial help; other social cases.

The agency will reinforce its mechanisms, increase efficiency and curtail abuse.

15. New measures
Tax review

Since the overall economic reform process started in 2008, work has progressed towards a major reform of the taxation system that now operates in Seychelles.
With the help of a number of international taxation experts, a comprehensive review of our taxation regime has been undertaken, and recommendations flowing from this review have been taken on board.

Several principles were considered in our decision to undertake this taxation reform and these included:
● Ensuring a level playing field is achieved in the next three years for all businesses in Seychelles;
● Ensuring all businesses in Seychelles enjoy the same benefits and are bound by the same obligations under the law;
● Broadening the taxation base to ensure that the imposition of taxes is more fairly distributed;
● Setting up systems and structuring the rates of taxation in Seychelles to be more in line with regional and international norms.

I am pleased to announce that in January 2010 the reform of our taxation system in Seychelles will begin.
We have weighed this carefully and we are convinced that in the next three years we will achieve our objective to establish a new tax system that is fair and modern.

Business tax
In January 2010 we will see the introduction of a new taxation Act for all businesses operating in Seychelles.
New tax thresholds will be set and rates of business tax will be reduced, with the top marginal rate of 40% being lowered to a rate of 33%.

For companies and trusts there will be no tax-free threshold (as compared to the situation today where the first R250,000 of taxable income is at a taxation rate of nil). However, for companies and trusts, the first R1 million of taxable income will be taxed at a rate of 25% and taxable income over R1 million will be taxed at a rate of 33%.

For sole traders and partnerships, the tax-free threshold will be reduced from the current level of R250,000 to R100,000, and taxable incomes over this amount, up to R1 million, will be taxed at a rate of 18.75%. Taxable incomes for sole traders and partnerships above R1 million will be taxed at a rate of 33%, as is the case for companies and trusts.

It is clear that many of our businesses will benefit directly from this move to lower rates of business tax and government hopes to see this result in positives for the economy through improved employment opportunities for Seychellois, increases in wages in the private sector and a lowering of costs and charges to consumers.

From January 2010, a 15% rate of withholding tax will be applied on interest and dividend income. The 10% GST on interest will, at the same time, be abolished.

Good and services tax
As has been announced previously, Seychelles plans to move towards a full value-added tax (VAT) system by 2012 and we are currently reviewing various scenarios so that we are able to implement a system that is suited to the Seychelles economy.
To alleviate the problem of the cascading of taxes where GST is concerned, from January 2010 those businesses that are now liable to pay GST on the goods and services they produce will be exempted from GST on all goods they import that are used in their business.

Removing the cascading effect of GST on businesses that are liable to pay GST on their services or goods will result in cost savings for these businesses and should provide scope for them to reduce the prices of their services or goods to the consumer.

Businesses that will directly benefit from this change will include telecoms, insurance companies, professional services, restaurants, hotels and other operators in the tourism sector,
and I call on all of these business owners to analyse their GST savings under this change and to pass on the benefit to the consumer.

The GST calculation for imported goods will be simplified, with a flat rate of 15% being applied to the value of the imported goods (inclusive of the trades tax) without any recourse to the current practice of having to nominally increase the value of the imported goods by 15% to 30%, for GST calculation purposes, to take into account a deemed profit margin.
This change in the way the GST is calculated will result in a lower amount of GST being imposed on most imported goods than under the current system, again with the aim of this reduction being passed on by the importer to benefit consumers.

Tourism GST

After consultations with the tourism sector in 2008, government announced that there would be an increase in GST payable by tourism operators, from 10% to 12%, as from
November 2009.

Given our economic situation this year, it was decided to delay this increase until November 2010. So I would just like to remind the industry that this change in the rate of GST on their services will kick in from November 2010.

Trades tax and excise tax

In January 2010, as part of this major taxation reform process, Seychelles will move to align itself with international taxation norms and to prepare itself to meet its international customs tax commitments through a revision of its rates of taxation on imports and the introduction of an excise tax regime.
In its initial form the excise tax will cover the four main revenue items, namely petroleum, motor vehicles, alcohol and cigarettes.

The introduction of an excise tax regime will see a common rate of tax applied to these four items and the tax will equally apply to imported and locally produced items.

One significant outcome of this change will be a reduction in the rates of taxation for motor vehicles to a level that is broadly consistent with those business sectors that now have access to concessional rates of tax for the import of a motor vehicle, substantially levelling the playing field and removing the need to consider future concessions for such imports.
The total combined excise and trades tax on vehicles will be as follows:

● On passenger vehicles with an engine capacity of up to 1600cc, the combined trades tax and excise tax will total just 50% of cost, insurance and freight (CIF);
● On passenger vehicles with an engine capacity of more than 1600cc litres but not more than 2000cc the combined trades tax and excise tax will total just 75% of CIF;
● On passenger vehicles with an engine capacity of more than 2000cc the combined trades tax and excise tax will total just 100% of CIF.

Mr Speaker, in line with our tax reforms the levy that was introduced on motor vehicles in July 2008 will remain.
Gainful occupation permits
In an effort to bring parity to the cost of a work permit for non-Seychellois, all GOP fees will be set at R700 per person per month.

The government will tighten up on the application, approval and monitoring process of GOPs.

Personal income tax and Social Security Fund
One of the major changes in our taxation reform process will take place on July 1, 2010, with the introduction of a personal income tax system that will replace the Social Security Fund contributions that are now paid by employers and employees.

Employers now contribute 20% and employees contribute 2.5% of an employee’s salary. From July 2010 this employer and employee contribution will be replaced by one tax with a flat rate tax of 18.75% that will be levied under a personal income tax system.

Under this personal income tax system, employers will be required by law to raise the salaries of all employees to offset the employer’s contribution that will no longer be required to be paid by them, and the employer will then deduct from this new “higher” salary, a flat 18.75% which will be paid over as a personal income tax by the employer on behalf of the employee, to the Seychelles Revenue Commission.

As a result of this move to a personal income tax system, no employee will take home less than under the current system.
On January 1, 2011, the personal income tax rate will be reduced from 18.75% to 15%.

In the case of foreign workers, the fact that they do not qualify for benefits from the social security system and they pay for education and health, their PIT contribution rate will initially be 10% as from 1st July 2010.
This rate will be harmonised with that applied to Seychellois from January 2012.

Mr Speaker, the current concessions in the rate of SSF that is applied to domestic workers and to employees of day care centres will continue under the PIT system so that employers and employees in these sectors are not adversely affected by this change.

Similarly, the concession on SSF that is available to an employer when paying annual bonuses will also continue to be enjoyed by the employee and therefore bone fide annual bonuses of one month’s salary (up to a R10,000 maximum per employee) will be exempted from liability to the 18.75% PIT.

From January 2010, the liability for social security contributions on employee benefits on staff accommodation, meals and transport will be exempted for the construction and tourism accommodation sectors.

Personal income tax rebate
Under the new personal income tax regime there will be a rebate system for those workers who earn the least in the country. A threshold will be set, below which those workers will be reimbursed all or a percentage of the PIT that has been deducted during the year

Social security statutory benefits

From January 2010 there will be an increase in social security benefits, excluding benefits for funerals.
From January 2010, some of the monthly benefits that are paid under the Social Security Fund will be increased as follows:
Retirement pension from R2,200 to R 2,300; invalidity benefit R2,100 to R2,200; orphan benefit R1,050 to R1,100; injury benefit R1,800 to R1,900; survivor (widow’s) benefit R1,800 to R1,900; sickness benefit R1,800 to R1,900; maternity benefit R1,800 to R1,900. Minimum wage
Minimum hourly wages for full-time workers, except casual workers, will go up from R15.50 to R16.50 an hour. For casual workers, the minimum hourly rate will increase from R18 to R19 an hour.

Exemptions under employment law
As from July 2010, we are doing away with exemptions in minimum wages for overseas workers (non‐Seychellois).
Pension Fund contributions
To help businesses plan well ahead, I would like to announce today that as from January 2011 the system of contributions to the Seychelles Pension Fund will change.
From January 2011 every employee and every employer will contribute the equivalent of 1.5% of the employee’s salary to the employee’s pension account.

This new system will bring us more in line with international practice as well as ensure higher pension benefits for retirees.

Other government pensions

Government pension and the public sector special pension will increase as from January 2010.

Contributions for transport

From January 2010, all secondary and post‐secondary students who use SPTC bus passes that are covered by the Social Security Fund will have to contribute R125 per year.

This charge represents a mere 1% of the cost for the service. Parents who cannot afford to meet this cost will be means‐tested before being helped.

Home Savings Scheme

From January 2010, government will be introducing a Home Savings Scheme to allow people waiting for state housing assistance to save money with the Housing Finance Company before they can receive a loan or be allocated a house.
New housing clients will be expected to contribute 10% of the cost of their housing before they become eligible to receive help. Those who cannot meet this requirement will be means‐tested before being helped.

Licence fees

Licence fees for telecommunication companies will drop from 12.5% to 10% as from January 2010. We trust the consumers will see the benefits of this reduction.
In consideration of the role that taxis play in the transport sector, government has decided to reduce taxi licence fees from R3,000 a year to R500.

There will be an increase in licence fees for banks: as from January 2010, small banks will pay R0.25 million, medium‐sized banks will pay R0.5 million and large banks will pay R1 million per year.

Public enterprise monitoring
The government has adopted a public enterprise reform strategy aimed at making our public enterprises more efficient, transparent and accountable. This strategy includes a detailed work plan for the new Public Enterprise Monitoring Division (PEMD) directed at reinforcing the monitoring and control of public enterprises, strengthening governance, reducing dependence on public funding and minimising financial risks to the state.

Performance targets will also be established, where possible, against which all public enterprises will be assessed.

Government is also undertaking a strategic assessment on all public enterprises to determine their role and performance in the context of the economic programme.

Improving the business climate
Government is committed to undertake far-reaching and coherent reforms to modernise Seychelles’ business regulatory framework.

We recognise that without focusing on these much-needed reforms, our efforts to build a modern and prosperous economy may not be realised.

The primary objective of the reforms to is to ensure the provision of effective services and achieve greater efficiencies. We have to minimise procedural steps and transactions that require the direct involvement of businesses. Rather than requiring business to travel from office to office to fill in different forms to obtain related services, we intend to provide citizens and businesses with the ability to conduct single transactions from a single entry point, accessed over the internet, the telephone or the counter.
We will achieve this effective “one stop shop” by strengthening the Seychelles Investment Bureau to provide advisory services to businesses.
The Seychelles Investment Bureau should serve as single access point which will allow businesses to meet public obligations more easily and quickly rather than deal separately with many diverse agencies.

Small businesses in particular will benefit from the easing of red tape to complete such basic activities such as obtaining permits, approvals for projects, providing statistical reports, accessing information on laws and regulations.
To achieve this, government will fast‐track the necessary regulatory laws. The following legislation will be submitted to the National Assembly during the first half of 2010:

● A modern Licensing Act which will redefine the role of the Seychelles Licensing Authority and introduce modern principles governing the coverage and issue of licences;
● Amendment to the Investment Code to streamline the investment approvals procedure, clearly set out decision criteria and specific recourse/appeals mechanisms;
● A law to establish the Seychelles Investment Bureau as a statutory body, with the authority to provide direct investment approvals;
● A new Employment Act and amendments to the Companies Act;
● Support for small businesses.

Government recognises that the entrepreneurial creativity and ambition among our youth could be frustrated by the lack of dedicated financing vehicles to enable such enterprises to establish and flourish. As a result, government established the Concessionary Credit Agency to support the growth and development of young entrepreneurs in Seychelles.

Over the last three years, the Concessionary Credit Agency has been the primary source of start‐up capital for our young entrepreneurs. The agency has helped over 1,000 small businesses, which has empowered our youth through self‐employment.

The entrepreneurial spirit is no doubt alive but needs to be further nourished. While maintaining the access to credit for our young entrepreneurs, we will streamline government bureaucracy affecting small businesses; we will provide training and support to these small businesses in such areas as the preparation of tender documents, bookkeeping and accounting and marketing of products and services.

The successful introduction of proactive and creative programmes will result in a thriving small business community, which in turn creates more prosperity and opportunities for Seychellois to become owners and create more job opportunities in the country.

Employment

Earlier this month, government launched the Leve Debrouye campaign – a new wake-up call to our people to take on their responsibilities and to be more productive.

We should intensify the national effort for our population to become more resourceful, more industrious and more productive. This will be achieved through education, training, reskilling and localising posts held by non–Seychellois.

We have managed to bring down the unemployment level to low levels. But we believe that there are still able bodied people who can be involved in productive work. Government will thus intensify the efforts to move those who are on welfare due to lack of employment into the workforce.

As was announced earlier, government carried out a reform in the public sector with the aim of encouraging Seychellois to move to the private sector. By the end of April 2009, 2,500 government employees had made this move. Statistics show that most of them are now integrated in the private sector, leaving only 109 still registered as job seekers.

As you will see in this budget, there is a lot of effort being made for  both government and the private sector to retrain these people and increase their employment opportunities.

This is symbolic of the collaboration between government and private sector and it bodes well for the country.

16. Budget 2010
Main objectives

The aim of the 2010 Budget is to achieve a primary surplus balance of 7% of GDP in order to improve the fiscal position of government and to further sustain the debt reduction programme.

Highlights Revenue
In year 2010, total revenue is forecasted at R 3.72 billion, which represents almost 34% of GDP. This is a decrease of almost R 299 million on the 2009 revised figures.

The decrease is mainly due to the fishing licence fees (which in 2009 comprised abnormal receipts on account of excess catch payments and compensation by the EU as well as higher transfers from Central Bank due to larger revenues being generated from exchange rate movements following the floating of the Seychelles rupee.

Expenditure
The total expenditure and net lending but excluding debt interest, is forecasted at R2.95 billion, which represents 27% of GDP. The total wages and salaries for 2010 represent 6% of GDP in comparison to 7% of GDP in the 2009 revised budget.

This is mainly due to government decisions to outsource its noncore services. As a result the goods and services expenditure has increased from 6.7% of GDP in the revised 2009 figure to 7% of GDP in 2010.

Another significant change in the 2010 Budget is the total envelope for capital expenditure, which has increased from 5.7% of GDP in the 2009 revised budget to 6.8% of GDP in the 2010 Budget. Government has seen the need to invest in infrastructure to further boost growth in the economy.

In the 2010 Budget there will be several reforms taking place at ministry and department levels. Therefore, funds have been provided to enable those ministries and departments to properly administer their reform process.

The 2010 Budget will once again see the Ministry of Education and the Ministry of Health and Social Development receive the biggest shares of the total ministries’ and departments’ budget. This represents 5% of GDP in total. This once again demonstrates the government’s commitment to provide education and health for its population, which is a key requirement for the development of our country.

Social programmes of government, funded via centralised payments and
subventions to regulatory bodies

A great part of the Budget address focuses on our overall revenue generation avenues and our expenditures that are allocated to government ministries and departments so they are able to function effectively.

Mr Speaker, it is to be highlighted that the funding budgeted by the government of any developing society does not limit itself to simply the funding of its ministries and departments but extends also to countless other areas of social and economic importance. In this regard, Mr Speaker, Seychelles is no different and in fact due to our small size and isolation, the cost borne by Seychelles per head of population is far greater than most other countries.

It is to be noted that our Budget in 2010 to cover the centralised payments for our social programme of central government is R339 million.

Of this amount, it is noted that nearly half will be required in government’s commitment to just two important cost items, namely overseas training for 2010, which is budgeted at just over R99 million and the cost of the social safety net for our people, which has been budgeted at R65 million.

With the creation of the University of Seychelles, government will provide funding for 100 Seychellois. The source of funding will be from the overseas training fund budget.

Mr Speaker, it is also noted that in other major expenditure being budgeted under centralised payments, we have provided:
● Local training programmes with a budget of over R30m will cover the following areas: R3m for the Revenue Commission, R2m for the Fire Brigade Services, Postal Services and SBC who are preparing to go digital;
● The Concessionary Credit Unit which will assist with micro financing to our small  entrepreneurs, with a budget of R20m;
● The Tourism Marketing Fund with an allocation of just over R28m in the budget to enhance our tourism marketing efforts.
From our centralised payments budget, government also maintains its very important commitment to such programmes as:
● The National Aids Trust Fund of R1m;
● The Children’s Homes Foundation – R4.4m;
● The Children’s Special Fund – R5m;
● National Council for the Disabled – R1.1m;
● CARE – R2m;
● Contribution of R2m to the renovation of St Michel’s Church at Anse Aux Pins.
The budget also makes provision to assist in various development areas such as:
● The Praslin and La Digue Development Funds, which will receive a combined total of R10.6m between them;
● The fuel rebate scheme to assist registered fishermen with a budget of R14m.
We have also established a number of statutory regulatory bodies in Seychelles that fulfil necessary and important roles and that help to complement the overall efforts of government’s administration processes.
In 2010 the budget to operate at all of our regulatory bodies has been set at R150m.
I am referring to the major funding areas such as:
● National Sports Council which has been allocated just over R29m, recognising the extra expenditure needed in preparation for international sporting events;
● Seychelles Tourism Board and the Seychelles Tourism Academy, which have between them been allocated a budget of just over R32m to further progress our efforts at maximising the potential in the tourism sector;
● Fire Brigade Services, which has been allocated R13m;
● Botanical Gardens Foundation, which will receive just over R9m.
In our continued fight against drug and substance abuse and financial offences such as money laundering and other proceeds of crime, the National Drug Enforcement Agency will receive R23m and the Financial Intelligence Unit will be allocated R10m.
Capital projects
The capital project-related expenditure proposed for the fiscal year ending December 31, 2010 is R591.0 million, which is 5.34% of our GDP.
The total capital outlay for the fiscal year 2010 is R747.5 million including
development grants to parastatal organisations representing 6.76% of GDP, or 20.36% of gross expenditure.
I will highlight here some of the major projects:

EDUCATION
Reconstruction of Mont Fleuri Primary School and Creche
Project work started in the 1st quarter of 2008. This project is entirely funded by the Seychelles Government with a budget of R21 million.

Maritime Training Centre

Project work started in the 3rd quarter of 2008. This project is being co‐financed by BADEA and the government whereby BADEA finances 75% and the government 25% of the cost of civil works.

The project will cost R15.7 million and will be completed next year.
Ile Perseverance Primary School

Work will start next year on this primary school which will serve the new housing estate, and it is being financed by OFID, BADEA and the Seychelles government.

HEALTH
Beau Vallon Health Centre
There have been delays in the completion date due to various reasons and the project is now expected to be completed next year.

Les Canelles – Mental Health Centre
Project work is expected to start early next year. The tendered price for this project is R24.2 million.

Anse Royale Hospital
This is one of projects under the Chinese government’s grant programme fully funded and implemented by them. It was estimated to cost around R43 million.
Project work is progressing well and is expected to be completed by the 2nd quarter of 2010.

Ile Perseverance Health Centre
There will be a health centre on Ile Perseverance that will be financed by OFID, BADEA and the government of Seychelles. Work is expected to commence in mid 2010.

Equipment for health
Government has also contracted a loan from OFID in the sum of R66 million for the procurement of equipment for the Victoria hospital and the National Institute of Health
Studies. All the equipment should be in the country next year.

ENVIRONMENT, NATURAL RESOURCES & TRANSPORT
Providence landfill project

Tenders have been floated for the construction. The cost of R36 million will be borne by the European Union and the Seychelles government.

Construction of artisanal fishing port
This project involves the construction at Providence Industrial Estate of facilities for artisanal fishing on Mahe. It will include facilities for all stages of unloading and processing of fish, as well as ice storage and administration. An ice plant is also being built at Bel Ombre under this project.
The project is expected to be completed in the 2nd quarter of 2010 at a cost of R110 million.

District street lighting
Priority is being given to lighting up the district roads, at a cost of R1.5 million.
Improvement of Belle Vue Road, La Digue
We are providing R1million to complete this project.
Jean Larue Road, Takamaka – 2nd phase
This project will continue during 2010 at a cost of R1.1 million.
Kap Bonm Zan, Anse Royale
Likewise, this project will continue in 2010 at a cost of R1.5 million.

NATIONAL ASSEMBLY BUILDING, ILE DU PORT
This project was started in 2008 under the Chinese government’s grant programme, at a cost of R46m. It is expected to be ready shortly.
The Seychelles government will be responsible for the road, electricity, water and landscaping, at a cost of R6 million.

JUDICIARY BUILDING
This project also falls under the Chinese government’s grant programme at a cost of about R45m and work is expected to start early next year.

COMMUNITY DEVELOPMENT, YOUTH, SPORTS AND CULTURE
We have put in an allocation of R20 million for projects in the districts.

DEVELOPMENT GRANTS
The Budget provides for R129.5 million as development grant. The sum of R3 million has been budgeted for the SPTC and R126.6m for the PUC.

CONTINGENCY
The 2010 Budget provides for R100 million as contingency. We have decided to use all of this contingency to finance capital investments that the PUC needs in line with its investment plan.

EXTERNAL DEBT
Government continues in good faith with its efforts to achieve a comprehensive public external debt restructuring, consistent with our medium‐term payments capacity.

As was recognised by Paris Club creditors, an immediate and sizable cashflow relief in the short to medium term and a sustained reduction of our debt service burden is necessary. This needs to be supplemented by significant balance of payments support from our international partners.

The principal objective of our medium‐term debt management strategy is to place public debt on a sustainable path. The strategy approved by cabinet in November commits us to achieving this through the pursuit of prudent fiscal and monetary policies and securing a restructuring of public external debt that is consistent with Seychelles’ limited payment capacity.

Mr Speaker, I am pleased to present to the National Assembly our medium-term debt strategy as well as our annual borrowing plan.

17. Concluding Remarks
Mr Speaker, the last 12 months have seen Seychelles through one of its most significant economic and financial transformations. This process is one which has been undertaken with much planning with consideration given foremost to the long-term stability and sustainability of our small country.

All of our Seychellois citizens have felt its impact and many of us have been affected by the profound changes that have swept across our lives, businesses and normal way of doing things.

This has helped us reflect on a new way forward, being more efficient, more conscious of how we affect others and realising that finally we belong to a global village where competitiveness is key and success is a common objective and hard work is essential, and we need to develop the passion and love for work.

This transformation is a long and irreversible process. Together we are determined to make the march towards further economic prosperity and wellbeing of our citizens.

We must continue to hold our moral values high as well as those principles of ensuring that we always protect all our citizens and resources. We must continue to pursue the fight against piracy and acts of banditry with vigour and determination.

We thank all of the hardworking people of Seychelles for your patience and indulgence in adapting to the new Seychelles as well as your resilience in these challenging times. We thank our friends and partners who have shown their faith in our reforms, those who have agreed to write off part of our debts and to assist us in our effort to achieve economic sustainability and progress.

We have also undertaken a number of other commitments to our multilateral partners who have stood by Seychelles during this difficult period of our reform. Here I wish to pay tribute to the IMF, the World Bank, the AfDB and the European Union in particular for both their financial and technical support and otherwise, which has helped us improve our budgetary position, build up our reserves and regain international credibility.

I must give a special word of thanks to members of the Paris Club who accorded Seychelles a 45% reduction in our stock of debt to member countries. This gesture was a symbolic show of support for the ongoing reforms and proof of the good will and trust by these countries in our commitment going forward.

I also wish to thank all our bilateral partners who have shown support to Seychelles during these testing times. In particular I would like to mention the government of the United Arab Emirates and mainly the Abu Dhabi government acting through the Abu Dhabi Fund for Development whose financial help to Seychelles is deeply appreciated and acknowledged.

We also thank the governments of China and India for continuing to stand by us in our socio‐economic development.
The government of Malaysia also signed up a debt relief agreement with Seychelles and we thank them too for their support and understanding. We continue to negotiate with other creditors, both bilateral and commercial to place Seychelles’ debts on a sustainable footing.

I would like to thank the President and Vice‐President of the Republic for their guidance and support, as well as my colleague ministers and their respective teams.

I thank my staff in the Ministry of Finance for their professionalism, motivation and devotion in their work and the numerous tasks we have undertaken together.

Last but not least, I would like to congratulate members of the private sector and civil society who gave us their collaboration and embraced this new spirit in our economy and the wave of change with a positive attitude. I would also like to thank the National Assembly for the support they have given in establishing the necessary legal framework to ease our reform programme.
People of Seychelles, after the shocks we have experienced in 2008 and 2009, we are gradually stabilising our economy.
I salute President Michel for his courageous decisions. Our vision for Seychelles hasn’t changed. We will not compromise our principle for equality in opportunity and social justice. And we would like all our citizens to put these opportunities to good advantage.

We have created an economic and financial policy that is able to sustain our development plans for the benefit of Seychelles.
In the new economy that we’re creating, it is absolutely necessary that we find the right balance in our social programme, and the new tax regulations are based on this principle – and that means that we are creating a system that is more just.
In the new direction we have chosen, it’s important that we don’t depend on what the economy will bring us, but rather we need to find ways to contribute to help it grow.
We need to ensure our economy’s sustainability while at the same time securing our social gains for which we have worked so hard.

The key to this is that we all need to work and contribute. For those who cannot contribute, we have a system in place to help you.

If you work but your means do not allow you to contribute to some of the paying services, a system of means testing will determine how you can be helped.

But what is clear is that if you work, you just cannot automatically depend on social security or welfare assistance.
The 2010 Budget is based on our medium-term programme over three years. We also have a plan to restructure our debt during this same three‐year period.

The measures that I have announced are the solid bases for the Seychelles economy to start showing real growth from next year.

The world economy is still in recession. We’re still living in uncertain times. We don’t have control over external factors.

In order for us to see results faster, government has to stay steadfast on its fiscal policy. We need to ensure that our reform programme is in line with our priorities. We need to manage our expectations and bring about a change in our mindset.
That calls for a collective effort, so that if we can do it together we will see faster results.

My dear Seychellois brothers and sisters, let us “leve debrouye” for Seychelles.
Mr Speaker, I would like to thank you and everyone in this assembly, as well as the people of Seychelles, for your kind attention.
I now commend the Bill for the approval of the National Assembly.