President James Michel’s State-of-the-Nation address 2015 |27 February 2015

‘Seychelles, a nation on the move’

President James Michel delivered his 11th State-of-the-Nation Address to the Seychelles National Assembly yesterday afternoon, placing emphasis on the principles of patriotism, empowerment, national unity, social harmony, solidarity, entrepreneurial spirit, and family values for the development of Seychelles’ economic and social wellbeing.

Mr Michel said the world economy in 2014 remained fragile, with a particularly poor performance in the Euro zone which impacted negatively on the Seychelles economy, which relies mainly on tourism, where the gross domestic product (GDP) was 2.8% – smaller than was predicted – mainly because of a reduction in activities related to tourism and industrial production.

He said that 2014 was a year of challenges for the tourism sector.  Although there was a 1% increase in the number of tourists, there was a reduction of 3% in the number of visitors from Europe, estimating that tourism revenues were 5% lower in 2014 than in the preceding year.

In terms of expansion in the tourism sector, Mr Michel said that there was an increase in the number of hotel establishments from 426 in 2013 to 467 in 2014.  Over 60% of those establishments are owned or managed entirely by Seychellois.

Concerning the balance of payments, the Seychelles deficit in 23% of the Gross National Product, with foreign exchange reserves rising from US $425 million in 2013 to US $464 million in 2014.  This represents the equivalent of four months importation, compared to 2008, when the foreign exchange reserves represented the equivalent of only three weeks' importation.

With regard to external debt payments, foreign exchange reserves represent about 94% of the external debt.

“This is a strong indication that Seychelles does not anticipate any difficulties in meeting its external debt repayments over the years to come. Fiscal discipline remains a key element in our strategy to strengthen our economy.  The positive fiscal performance of 2014, and the successes we have had in our debt restructuring, have helped to considerably bolster the sustainability of Seychelles' external debt.  We must maintain this strategy for us to achieve our aim of reducing public debt to 50% of our Gross National Product by 2018,” said President Michel.

He noted that the financial agency Fitch Ratings has maintained Seychelles’ position at B+, with a favourable economic environment.

“This rating shows that in spite of the major challenges in 2014, our fiscal and monetary policies have helped to bring stability and build resilience, and to lay the foundations for a more solid economy in the future.”

The President said that the purchasing power of Seychellois continues to increase.  For example, according to immigration statistics, over 20,000 Seychellois travelled overseas in 2014.  Over 95% of households have access to modern means of communication, making Seychelles the top country in Africa in terms of development, penetration and access to information communication technology.  The number of vehicles on our roads today, according to the Seychelles Licensing Authority, is 20,291 which includes 12,878 private vehicles.

“In 2014, we have seen a 25% increase in credit or loans which the private sector have borrowed from commercial banks.  This is one of the principal factors which has contributed to a considerable increase in consumption.  This has resulted in an increase in demands for imports, and has created pressure on our balance of payments.  At the same time, our balance of payments has been impacted by a reduction in revenues.”

He said that in view of this pressure, and since the value of the Rupee depends on the demand in the economy, the value of the Rupee was adjusted.  During 2014, the Rupee depreciated by about 70 cents, or 5.8% in comparison with 2013, before it stabilised at a higher level.  The Central Bank tightened its monetary policy, and Government also maintained its fiscal policies.  These factors helped to stabilise the value of the Rupee, he added.

“The lowering of the price of energy, and better economic performance are expected to reinforce this position.  This adjustment in the exchange rate, combined with tighter monetary policy, has resulted in a lowering of demand for foreign exchange since the start of 2015.  The reduction in demand is also contributing to the strengthening of the value of the rupee.  It will help to lower the cost of living,” he said.

Mr. Michel announced that lower electricity charges and lower costs of cooking gas would be communicated by the PUC and Seypec in the coming days.
The President concluded by saying that the Seychellois people are together building a modern, dynamic, visionary small nation that is a model of peace, unity and tolerance for the world.

In his speech the President presented several government work results and priorities for the next year. The following is a summary of the major announcements made by President Michel:

• Seychelles last night signed an historic debt buyback agreement with the Paris Club of creditors. This means that about US $30 million of our debt will be transferred in terms of a fund for the protection and development of our marine space – our Blue Economy.  In addition, our partners are giving us a further 5% reduction in that debt. Through this debt exchange, we shall be better able to protect our oceans, create opportunities for artisanal fishing, reduce our foreign exchange payments, and keep more money within our economy.

• The Government is working on new legislation to encourage Seychellois business development, with the planned introduction a Small and Medium Enterprises Incentive Act.

• The proposed major hotel development at Cap Ternay on Mahé Island will not be going ahead, for environmental protection reasons.

• The 2014 inauguration of a new 120-metre fishing port at Ile du Port has already begun to show its benefits in terms of port transactions and a reduction in the amount of container traffic on the roads.  In 2014 the Government also signed an agreement for the construction of another larger 425-metre industrial fishing port on Ile du Port as part of a public-private sector partnership venture.

• Aspects of the state health system which have weaknesses will be eliminated.

• A Police Child Protection Team will be set up to work with Social Services in order to bring cases to court when cases of child abuse takes place persistently.

• Men in Seychelles will for the first time be able to apply for paternity leave, for 5 days, on the condition that the father acknowledges the newborn.
• The National Consultative Forum’s meetings last year dedicated much attention to Education, particularly the Medium-Term Strategy of the Ministry of Education.

• In 2014, 304 Seychellois families were given the keys to their own homes. 82 were offered plots of land. In 2015 the government shall again make available some 200 houses to Seychellois families.  In addition, construction work is starting this year on 267 residential units in different regions of Mahe and Praslin.

There are also plans to start work on several units on Ile Perseverance.
The construction of a bridge connecting Ile Aurore and Ile Perseverance later this year will open up many more opportunities in the residential and commercial sectors on both islands.

• The Government will actively encourage the private sector to enter into partnership with Government to build and sell affordable houses.
Further details of these announcements can be found in the full address of the President which is published in our centre pages.
The full speech can also be accessed at the following link http://www.statehouse.gov.sc/speeches.php