Budget Speech Outline for Fiscal Year 2020 |31 October 2019

Ambassador Maurice Loustau-Lalanne

1. INTRODUCTION
   

Mr. Speaker,

Honorable Leader of the Opposition,

Honorable Leader of Government Business,

Honorable Members of the National Assembly,

The People of Seychelles.

Good Morning

Mr. Speaker, on the 5^th of August 2019, Government launched the Vision 2033-aspiring to transform Seychelles to “A resilient, responsible and prosperous nation of healthy, educated and empowered Seychellois living together in harmony with nature and engaged with the wider world.” The launching of the long term Vision highlighted the need to look beyond the medium term and ascertain what we want to achieve as a nation over the next 15 years.

The Vision 2033 was done in partnership with the Government, civil society, private sector, the international community and the different groups within our society. Thus, it is of collective responsibility to ensure that Vision 2033 is translated into reality.

Our country remains vulnerable to external shocks especially at this crucial point in time where the steady pace of expansion in the global economy masks an increase in downside risks that could potentially exacerbate development challenges in many parts of the world. Thus, we need to continue to work together to ensure we are resilient and find a common solution for our challenges.

Mr. Speaker, the 2020 budget is designed around the six thematic pillars of the NDS. In light of this, the theme chosen for the 2020 budget is “Equitable Outcome-Shared Prosperity”. For the 2020 budget, following consultation with the National Assembly, we will only provide electronic copies of the budget.

2. OVERVIEW OF THE ECONOMY IN 2019 AND MEDIUM TERM

2.1.      Overview

As per the October 2019 World Economic Outlook, the global economy is in synchronized slowdown and growth has been downgraded once again to 3 percent in 2019, and is expected to pick up to 3.4 percent in 2020.

2.2.      2019 in Context

Mr. Speaker, in the context of Seychelles, Real GDP growth for 2019 has been revised upwards to 3.9 per cent compared to the initial estimate of 3.5 per cent at the time of budget preparation. This upward revision follows stronger performance during the first half of 2019 than initially anticipated. The main driver behind this more favorable outlook is the ‘Manufacturing of beverages and tobacco’ sector. By the end of the second quarter of 2019, the production of ‘stout and beer’, stood at 21 and 12 per cent respectively. Increase in tourism activities, the main economic pillar for Seychelles, is also contributing towards the upward revision with visitor arrivals growth at 5 per cent year on year by the 20^th of October 2019. The ‘tourism’ sector anticipates to grow by 5 per cent in 2019, compared to the initial 4 per cent forecasted. Continuous increase in data usage and demand for internet services is driving growth in the ‘Information and telecommunication’ sector with the overall forecast at 7 per cent. This sector has been resilient over the past 5 years and outlook is anticipated to remain strong in the medium term with the installation of a second submarine cable. Finally, the ‘construction’ sector is resurgent in 2019 given several Government housing projects, the expansion of La Gogue Dam, the renovation of Ste. Anne Resort, as well as other ongoing projects spilling over from 2018. This has led to an increase in manufacturing of ‘concrete and rock products’, and thus, a positive outlook for this sector also. Such increases in economic activities naturally necessitate increased demand for ‘electricity and water supply’ as evidenced by year to date growth of 8 per cent on average.

2.3.      2020 Projection and the Medium Term

For 2020, growth remains positive at 3.5 per cent, driven by continuous activities in the ‘information and telecommunication’ sector with a growth of 5 per cent. Tourism, the main contributor to overall GDP, will help sustain growth with an estimated growth of 5 per cent as a whole. Tourist arrivals is anticipated to be strong following the announcement by Air France, to recommence its flights to Seychelles, and the increased flight frequency by Qatar Airways to 14 flights per week as of end March 2020. Furthermore, Air Seychelles will start flying to Tel Aviv, and this may help to further boost arrivals. Activities in the ‘construction’ sector will continue into 2020 thus supporting growth.

With a lower than initially forecasted inflation estimate on a twelve month average, from 2.2 to 2.0 per cent, and with more favourable exchange rate against the Euro and the US Dollar than initially anticipated, the Nominal GDP growth assumption has been revised downwards by 0.3 percentage point compared to the March 2019 revision. This has slightly lowered Nominal GDP forecast to reach SR 24.4 billion.

In the medium term, growth is forecasted at an average of 4 per cent. The main drivers of growth remains tourism, information and telecommunication as well as the financial and insurance sector.      

3. 2019 BUDGET PERFORMANCE

Mr. Speaker, Government is forecasting to end 2019 with a primary balance of SR 583.9 million or 2.5% of GDP. Tax revenue is expected to be in line with the initial budget with only SR 5.9 million higher, with a shortfall in business tax offset by higher personal income tax receipts. However, the non-tax revenue is SR 50.3 million below the original budget. The total grants expected to be collected in 2019 will be SR 64.2 million below the initial budget.

In regards to the expenditure, Government proposed a supplementary budget during October 2019 with a net savings of SR 125.6 million or 0.5% of GDP. Thus, expenditure has been forecasted downward. The main savings has been under wages and salaries amounting to SR 52.0 million and goods and services at SR 26.8 million.

Mr. Speaker, there were a number of discussions in regards to budget freeze that was done during the mid-year review exercise. Section 26 of the Public Finance Management Act, 2012 give the Minister responsible for Finance the power to;

1. Set restrictions for the use of an appropriation by an accounting officer;
2. Limit the use of an appropriation if it is justified by economic or fiscal conditions or the purpose for which the appropriation was authorized is no longer applicable.

4. PROJECTIONS FOR FISCAL YEAR 2020

4.1 Primary Objectives

Mr. Speaker, Government remains committed towards achieving its fiscal balance of 2.5% of GDP for the year 2020. This target will allow us to meet our debt reduction target of 50% of GDP by 2021. However, the latest projection indicates that the debt to GDP will be at 51.7% in 2021 because of the additional Air Seychelles guarantee amounting to US$ 30 million. Nevertheless, we will work further during 2020 to ensure that the debt target remain on target of 50%.

4.2 Revenue

Mr. Speaker, for the year 2020, we are projecting total revenue including grants to increase from SR 8.8 billion in the revised 2019 budget to SR 9.9 billion in 2020. Of this, SR 7.73 billion will be tax revenue, which represents 78.4% of the total revenue collection. A total of SR 1.48 billion is forecasted for non-tax revenue and SR 647 million as grant receipts. 

4.3 Government Expenditure

For the year 2020, the Government is proposing an appropriation bill of SR 9.29 billion which is being financed 88.9% from domestic resources, 4.1% loan financing and 7.0% as grant financing.

Mr. Speaker the education and health sector remains the priority sectors with the largest share of the budget allocation at a total of SR 1.18 billion and SR 1.12 billion respectively which the total of the two sectors represent 24.7% of the total appropriation bill. Mr. Speaker, these two sectors, have contributed immensely towards an excellent human capital index for Seychelles.

Mr. Speaker, the tender process for the integrated Health Information System has completed and is currently entering the contract negotiation phase. We expect the contract to be signed by the end of this year. By establishing an integrated Health Information System, the Government is making the necessary commitment that is expected to ensure improvements in health care quality, efficiency of delivery and access, while also moving the health care system closer to harmonization with relevant international standards. Central to this is the implementation of an integrated Electronic Medical Record solution that will cover 100% of the citizen population of Seychelles. The secondary purpose of the project is to link the Health Information System to the various national E-Government systems (e.g. birth and death registry) to improve health related regulatory enforcement and overall Government strategic decision-making nationally for planning purposes

Major setbacks are being encountered in the implementation of capital projects for various line ministries and implementing agencies. Government has quite an ambitious infrastructure development plan as well as a vast number of aging infrastructure that requires significant attention. As a temporary measure, Government has recruited foreign project staff to assist with the implementation. The ability to recruit local expertise remains very challenging, as Government cannot compete with the private sector which remains a more attractive option. In addition, it would be necessary to ensure that project officers dedicate their full effort on Government projects which is quite demanding, and as a result they would not be allowed to carry out private works. We have seen that this affect the service delivery and as such, this measure is required to ensure that Government attains its targets accordingly.

4.4 Wages and Salaries

Mr. Speaker, a sum of SR 3.0 billion equivalent to 12.3% of GDP has been allocated to Wages and Salaries. This represents an increase of SR 382.6 million or 15% compare to the revised 2019 budget.

Mr. Speaker, a total budget of SR 81.4 million has been allocated under wages and salaries for the revision of schemes of service in 2020 and the full impact of the 2019 scheme of service implementation during the year.

The following scheme of service will be revised effective January 2020;

• Seychelles Land Transport Agency; Asphalt Workers
• All project officers in Ministries/Departments/Agencies
• Attorney General – Public Prosecutors
• Ministry of Education and Human Resources Development – Head teacher and Deputy Head teachers, Library Cadre
• Department of Immigration and Civil Status
• Department of Foreign Affairs; Diplomatic Cadre for Seychelles Diplomatic Missions Abroad and Protocol Chauffeur
• The Legislature; Parliamentary Unit and Secretariat
• Department of Risk and Disaster Management: Disaster & Risk Management Cadre

Scheme of service for the Ministry of Environment, Energy and Climate Change will be revised effective March 2020 and scheme of service for Judiciary will be revised effective April 2020. In addition, the Seychelles Bureau of Standards scheme will be implemented from July 2020.

The scheme of service for nurses was revised in 2018 when Government introduced a retention allowance of SR 3,000 per month and a revision in the way we calculate the nurses gratuity. Therefore, during 2020, we will work to review the basic salary of nurses with the aim of 2021 implementation.

In addition, Government aims to review the common support cadre in 2021. These are the Human Resource, Administration and secretarial cadres. Although these schemes were revised in 2018, there is a need to re-consider these scheme of service to attract and retain quality support structures in the various organisations, which is crucial to ensure that all Government organisations operates effectively and efficiently.

Mr. Speaker, for the year 2019, there is a provision in the budget to implement the five percent salary increase from April 2019. In 2020, the full year implication for the implementation of the five percent salary increase will be SR 74.4 million. In addition, we started the implementation of the long service allowance from July 2019. This will have a full year implication amounting to SR 103.8 million in the 2020 budget. Furthermore, as per the announcement made by the President in October 2019, the Long Service Allowance Scheme for Government employees which was introduced in July 2019, will now be applicable for employees on Public Service Commission and Agency contracts from 1st January 2020. This will costs SR 18.9 million in the 2020 budget. In addition, the long service allowance for housekeepers working with the Cleaner’s Corporative and the security officers working for the VVIP unit will be entitled to their long service allowance from the day they joined the Government. It is to be noted Mr. Speaker, that the long service allowance is exempted from income tax.

Mr Speaker, the ability of Government to retain its workforce and attract other suitably qualified person to join the public service has been one of our main priority since the 2008 reform. A diagnostic report that focused on a review of the public service and performance management in Seychelles was carried out early this year, by the World Bank.  In general it was observed that the Seychelles public service operates relatively well, continuing as a whole along familiar, but mostly traditional paradigm lines. It was also highlighted however, that our public service requires substantial strengthening to make it more performing.

The public service was perceived to be not appropriately sized for its mandates, as in many areas, existing staff and their skills are not employed effectively. The wage bill as a share to GDP is continuously increasing. This will lead to less space for pay and grading reform. In addition, the 2013 data shows a  20% overall wage premium over the private sector, although  senior management, professionals and technician position in the private sector are relatively higher. Human Resource function of Government and the mandate, roles and responsibilities of DPA are perceived to be in need of reform, including the existing system of pay and benefits.  In regards to pay policy, the paper acknowledge the 2013 restructuring of the salary scales as an improvement on what existed before. However, it stressed on the multiple number of allowances that are determined by scheme of service, which although convenient in the short run, will risk rendering pay non-transparent, reduce the share that should be performance related, and encourage a culture of entitlement that will not be in favour of result base management if we continue with this method. It is to be noted that there are currently 216 schemes of service in Government. It also stressed on the need to move away from a traditional human resources management administration to a result based oriented, public service and public sector reform. Existing delegation of authority to MDAs was seen to be sufficient for the moment, but could be increased further as the Result Based Management is developed.

In regards to pay policy, a revision in our model of adopting schemes of service needs to be carried out, that stresses on competencies and performance. In addition, a new model of career progression could be developed that is less reliant on promotion, but place greater emphasis on work life skills and training, varied experience and mobility. Government will therefore be analyzing these recommendations and will present policy options for the way forward.

5. Expenditure in the six thematic pillars of the NDS 2019-2023

Mr. Speaker, the National Development Strategy 2019-2023, which is the first step towards the implementation of Vision 2033 is designed around six thematic pillars. I will therefore give an indication of the budget allocation around the six thematic pillars.

5.1. Good Governance

Mr. Speaker, good governance is essential for ensuring a sound foundation for peace and prosperity, which in turn paves the way for sustainable development. In the 2020 budget a total of SR 221.8 million has been allocated with the different independent institutions as follows;

-          The Judiciary SR 102.0 million

-          The Legislature SR 43.0 million

-          Office of the Auditor General SR 21.3 million

-          Office of the Ombudsman SR 3.8 million

-          Constitutional Appointments Authority SR 2.1 million

-          Electoral Commission SR 8.9 million

-          Anti-Corruption Commission SR 19.0 million

-          Truth, Reconciliation and National Unity Commission SR 12.1 million

-          Public Officers’ Ethics Commission SR 3.0 million

-          Seychelles Human Rights Commission SR 6.7 million

This is the cost to ensuring democracy. I know the request was much more from the institutions however we have managed to allocate the funding I have just mentioned. This represents an increase of SR 26.6 million or 13.6 % compared to the 2019 revised budget.

Mr. Speaker, in addition we have allocated SR 15 million for the expenses related to the executions of the Presidential election in 2020.

5.2. People at the Centre of Development

Mr. Speaker, as Seychelles engages with the wider world, the country requires a pool of highly-skilled, creative workers who can increase labour productivity and stimulate economic growth. The Agency of National Human Resources Development which has been allocated with a budget of SR 205.2 million will play a key role in achieving this strategy. The agency will be working closely with the Ministry of Education and Human Resources Development and the Department of Employment to ensure that the education sector provide the required skills that are needed in the labour market.

During 2019, we have had 95 students graduated from overseas universities and 104 from the University of Seychelles. This number will increase in 2020, as we expect 238 graduates. In addition, based on the 2020 budget, the Agency of National Human Resources Development is expected to offer 358 scholarships in the different fields of study.

As mentioned by the President in his 2018 State of the Nation address “there is a necessity to better prepare our youth from a young age for them to gain the knowledge and competence to better integrate into the economic sector”. To overcome these challenges and better equip Seychellois youth to benefit from the country’s economic growth, and to lay the foundation for future economic and social development, it is crucial for the Government to adopt a system-wide approach and at the same time be strategic and innovative in the education and training reform endeavors. The Government has embarked on an establishment of a new Technical and Vocational School.

The proposed National Technical School, under the present conceptual plan, is intended to take in students from the existing ‘General and Skills’ pathway that runs concurrently with the ‘Academic and Technical’ pathway in all secondary schools at S4 and S5 levels. This mixing of two pathways in the same school has proven to be difficult to manage for schools, creating diversion of critical resources and mixed missions. Hence the new National Technical School is intended to address this by bringing half of these students into a specialized school. The aim is for the new school at Ile Soleil to be operational by 2022.

Mr. Speaker, the new Seychelles Business Studies Academy and Seychelles Institute of Art and Design will be constructed at Ile Aurore. The project will go on tender in 2020. A provision of SR 27.9 million has been allocated in the 2020 budget.

Mr. Speaker we have allocated another SR 10 million for the Unemployment Relief Scheme and SR 3.1 million for the employment reskilling programme.

Mr. Speaker, the opportunities are there for our youth to study, the sky is the limit for them and they need to take these opportunities and use them in their development to take the highly skilled jobs that are being created in the country and be prepared for the jobs of tomorrow.

5.3 Social Cohesion

Mr. Speaker, forty-two percent of the total appropriation bill is for the education, health and family affairs portfolio which represents 16.0% of GDP. A lot has been said about the Benefits and Approved Programmes of the Agency of Social Protection in the past few weeks. In the 2020 budget this will amount to SR 1.49 billion which represents an increase of SR 100.5 million or 7% compared to the 2019 revised budget. Mr. Speaker, SR 1.28 billion or 88 percent of the total allocation of SR 1.49 billion is for retirement benefits, invalidity benefits, disability benefits and home carers scheme. Thus there is little room for savings taking into account our ageing population. However, we are working towards rationalizing the functions and programs in the area of social services, with the aim of increasing efficiency in service delivery and achieve savings.

5.3.1.      Land and Housing Sector

Mr. Speaker, land and housing remains a priority for the Government. Based on the availability of resources, we have been able to give 188 families the keys to their new homes from January to end of October 2019. We expect that another 152 families will receive their keys before the end of December 2019. Furthermore during 2020, we expect another 209 families to receive their keys. With regards to land allocation we have allocated 175 plots during 2019 and we expect to complete infrastructure to serve around 286 plots during 2020.

Mr. Speaker, in 2020 a total budget of SR 97.1 million has been allocated under the Ministry of Habitat, Infrastructure and Land Transport for the development of the housing and land projects. However, this will not be enough, Government through Property Management Corporation will have to finance another SR 200 million worth of projects. This will be through a bond that we expect Property Management Corporation will issue in January 2020 for 5 years at 5% interest rate. The repayment will be through the budget. Government will use SR 40 million from that SR 200 million to purchase the Ile Perseverance housing project from Seychelles Pension Fund. The project consists of 24 two bedrooms apartments and 18 one bedroom apartments at a purchasing price at SR 68.5 million. This project is expected to be completed by end of November 2019. The balance of the funds will be financed through loans by the individual graduate at a price of SR 1.2 million per unit. The 18 one bedroom apartments will be used by Property Management Corporation to rent out to graduates at a reasonable rate at SR 6,000 per month in the interim while they wait for either a Condominium or plot of land from Government.

The new bond of SR 200 million will also be used to finance the replacement of roofing tiles project by Property Management Corporation.

5.3.2.      Community

Mr. Speaker, during the year 2019, the Department of Local Government is expected to complete 210 small community projects worth of SR 27.4 million. Another SR 30 million has been allocated in 2020 for the small community projects. In addition, SR 9.2 million has been allocated in 2020 for minor emergency works.

By end 2019 budget, the following day care centers would have been completed;

• Anse Aux Pins Day Care
• Glacis Day Care
• Takamaka Day Care
• Grand Anse Praslin Day Care

In addition, we will use the financing through the Small Development Project Grants under Indian Government financing to construct, the following day care centers in the following districts;

• Cascade
• English River
• Grand Anse Mahe
• Ile Perseverance
• Les Mamelles
• Roche Caiman

These will be new business opportunities for Seychellois operators.

5.3.3. Arts, Culture and Heritage

Mr. Speaker, the different departments and entities under arts, culture and heritage sector have received a total allocation of SR 153.7 million. In addition, Government has provided SR 0.5 million and SR 1 million under the Seychelles Heritage scheme and Culture and Arts Trust Fund respectively.
Effective January 2020, a National Arts Council grants policy will be introduced. The new Seychelles National Cultural Policy emphases on the importance to encourage artistic creativity to further enrich the Seychellois Culture and promote Seychellois cultural goods and services abroad. The Grants Policy seeks to support and nurture creativity and encourage cultural activity to encourage greater social cohesion and economic development.

A sumofSR 1 million has been allocated to the National Arts Council, to nurture the capacity of the arts sector in Seychelles. The National Arts Council Grant will provide support to artists and Arts Associations in bringing the arts to communities, to engage, inspire and create shared experiences for people to connect with one another.

Funding will be provided to projects that will promote, develop and preserve arts in Seychelles especially projects that:

• Development of all Art forms;
• Build capacity within arts;
• Promote the visibility of the arts;
• Create opportunities through the arts;
• Promote meaningful changes and interventions within the communities.

In 2020, we will commemorate the 250^th anniversary since the first settlers arrived in Seychelles. The National Preparatory Committee for the 250^th anniversary of Seychelles will organise a number of activities at national level and in all districts with a provision of SR 5 million allocated in the budget 2020.

5.3.4.      Youth and Sports

The Department of Youth and Sports and National Sports Council have received SR 9.2 million and SR 77.7 million respectively. Mr. Speaker, we have seen the success of our athletes during the 2019 Indian Ocean Island Game. We need to continue to allocate resources to upgrade the current sports facilities and train our athletes to enable them to compete at the international level. In the 2020 budget, we have made provision for our athlete to prepare and participate in the 2020 Tokyo Olympic Games and to host the “Zwe Lespwar” in 2020.

The Seychelles National Youth Council has received an allocation of SR 28.2 million for the Council to continue to discharge and play its role in the country.

5.4.      Economic Transformation

Mr. Speaker, as we look at the economy over the medium term, we need to ensure that we transform our economy for sustainable growth and shared prosperity. Some of the key sectors which will enable that transformation Includes;

5.4.1 Transport Sector

For the 2020 budget we have allocated SR 85.2 million under Seychelles Land Transport Agency for the different road infrastructure projects. The Seychelles Land Transport Agency will continue to implement the Victoria Traffic Management master plan in phases to improve the circulation of traffic within and around greater Victoria. As present, the third lane along Fifth June Avenue is being implemented and with its completion by end of 2019, we expect to see a reduction in traffic congestion especially around the Independence House roundabout and adjoining roads. The recently completed roundabout and connecting roads at Bois De Rose is functioning well and the project will continue up to Roche Caiman. The road from Eden Island towards Providence Industrial Estate will be widened to allow more traffic to flow. Other important projects that form part of the Victoria Master Plan that the Seychelles Land Transport Agency will implement are, overhead pedestrian bridges to segregate pedestrians and vehicular traffic to allow smoother flow of traffic and improve safety of pedestrians. In addition, the project for the dual carriageway from Perseverance to Ile Du Port and Inter Island Quay is part of the medium term plan.

Mr. Speaker, the rehabilitation and extension of the Victoria Commercial Port is currently at the design stage and we expect that the project will be on tender by January 2020 with an indicative start date for construction of June 2020. The Seychelles Port Authority considers the investment in seaports infrastructure facilities and equipment as one of the most important element of its long term strategy to become competitive and to remain self-sustainable. During the year 2020, Seychelles Port Authority will maintain its strategy to invest in port infrastructure and equipment, and it is for this reason that an allocation of SR 109.2 million, mainly for the following projects;

• Relocation of Container opening Yard at Ex Coast Guard
• Eve Island Passenger Terminal Building and Infrastructure
• Realignment of seawall La Digue Jetty by 150 metres
• Purchase of 40 Ton BP Tug
• Purchase of a pilot boat
• Improvement in the Port Management System

Seychelles Civil Aviation Authority (SCAA) will be in the fifth and final year of implementation of its five-year investment plan. SCAA has thus far been able to use its retained profit to achieve its capital projects to an actual sum of SR 237.7 million, of which SR 59.8 million was incurred in 2019. During 2020 SCAA is forecasting to invest an amount of SR 103 million in capital investment.

Focus will be mainly on infrastructure projects such as SCAA’s new office block, Terminal concourse refurbishment and road restructuring for improved traffic flow. In addition SCAA will continue with the airside infrastructure projects amounting to SR 17.7 million, that is maneuvering areas repairs and extension, improvement in northern-end drains and reclamation of land for RESA and piling works for pontoon for securing rescue boats.

SCAA will also invest in the replacement of the Air Traffic Management software amounting to SR 26 million to cater for surveillance and other key services in our airspace, which is critical. Furthermore, SCAA will invest SR 16.3 million in its Information, Communication and Technology network infrastructure.

5.4.2 Energy Sector

Mr. Speaker, PUC will be undertaking SR 348.9 million worth of projects to be financed either by PUC or Government development grant.

The power outages that the residents of La Digue experienced during August and September was finally resolved late September. As a Government we need to provide the infrastructure to ensure that these interruptions do not re-occur. PUC has provided standby generator system for La Digue costing SR 21.7 million. In addition, Government is finalizing the agreement with Abu Dhabi Fund for the loan amounting to US$ 10 million equivalent to SR 143 million to install a third cable so as to ensure continuity of services in the event of a breakdown/failure.

PUC has also started the noise reduction and ventilation improvement at the Baie Ste Anne Power station costing SR 47.2 million. This project will be completed in 2020.

PUC has begun installing pre-paid electricity metres at selected homes at Ile Perseverance. There are 190 vulnerable families across Mahé, Praslin and La Digue, benefiting from social welfare assistance towards payment of their electricity bills from the Agency for Social Protection. They are the first ones benefiting from such service.

5.4.3 Agriculture, Fisheries and the Blue Economy Sector

Mr. Speaker, after one year, the Agriculture Comprehensive Plan can be seen as progressing well. 380 hectares of agricultural land has been surveyed which has been divided into 564 plot of land of which 436 plot of land has already been allocated to the farmers. The Government has also put in place the mechanism to allow registered farmers and fishermen to be eligible for VAT refund on locally purchased goods/equipment solely for use in their business.

In the 2020 budget, the Government has allocated SR 30.8 million and SR 41.1 million to the National Biosecurity Agency and Seychelles Agricultural Agency respectively. During the 2020 budget, the Seychelles Agricultural Agency will continue to invest in new farm roads and irrigation projects in the different districts.

In regards to the Fisheries sector, on the 22 October 2019, Government and the European Union concluded negotiations for a new Sustainable Fishing Partnership Agreement and a new Protocol that will strengthen their cooperation in the fisheries field for the next six years. The agreement marks a new important milestone of the long-standing bilateral cooperation between the Government and the European Union in fisheries and of their commitment in promoting the sustainable use of marine resources. Based on a reference tonnage of 50 000 tonnes, the EU will provide the Seychelles with an annual financial contribution of Euro 5.3 million equivalent to SR 89.5 million. A significant part of this contribution, Euro 2.8 million equivalent to SR 47.3 million per year, is specifically earmarked to promote the sustainable management of fisheries in Seychelles, as well as to support the development of small-scale fisheries. For the whole duration of the protocol, the total estimated value, including the EU ship-owners contribution, amounts to Euro 58.2 million or SR 982.4 million, equivalent to Euro 9.7 million or SR 163.7 million per year. For the first time, EU ship-owners payments will also include a specific contribution to a dedicated Fund that Seychelles will put in place to improve environmental management and the observations of marine ecosystems in our waters.

Mr. Speaker, we anticipate to complete the phase one of Ile Du Port Infrastructure during first quarter of 2020 and this will cost SR 29.6 million . We are working on the second phase of the Ile Du Port Infrastructure which will costs SR 87.5 million in total, mainly for road works, drainage and electrical works. The tender process will start during 2020.

Mr. Speaker, the Blue Bond proceeds will continue to finance several projects under the Blue Grant Fund under SEYCATT and Blue Investment Fund under DBS. During the year 2019, SEYCATT has financed several grant under the Blue Grant Fund as follows;

• 7 Small and Medium projects amounting to SR 0.7 million
• 4 Large projects amounting to SR 2.4 million

And 12 large projects amounting to SR 10.6 million are being evaluated.

The same process will be followed during 2020 since US$ 0.5 million and US$ 2 million will be available through SEYCATT and DBS respectively.

5.5.      Innovative Economy

Mr. Speaker, science, technology and innovation are important drivers of economic development. We need to find new ways of doing business to ensure we remain resilient and sustain our development.

Mr. Speaker, in 2019 the World Bank undertook two diagnostic surveys; one on Digital Government and the other on the Digital Economy in Seychelles. Recommendations emanating from these will help inform improvements required so that the Department can better deliver its mandate. The focus for 2020 will be on the rolling out of fully interactional digital services (or e-services) similar to what has been achieved for the Planning Authority and also on the implementation of the National Cybersecurity Strategy. The implementation of the recommendations in these reports and some decisions already taken by Government, also imply that there will need to be changes in the structure and work practices of the Department. This includes the setting up of an independent regulator for the broadcasting and electronic communications sector. Work is on-going on the new legislation, which will replace the Broadcasting and Telecommunications Act, 2000. The new legislation will separate the functions of state from that of regulatory activities.

The Department of ICT (DICT) has also undertaken new spectrum planning to accommodate 5G and has assigned radio frequency spectrum to two mobile operators for the deployment of 5G network, and it is expected that provision of 5G services will commence sometime in 2020. Note that 5G is the fifth generation cellular network technology and it allows for the transportation of huge amount of data much faster, reliably connecting extremely large number of devices and processing very high volumes of data with minimal delay. 5G is expected to connect people, things, data, applications, transport systems and used in the Internet of Things in smart networked communication environments. Therefore, 5G should deliver significantly increased operational performance, as well as superior user experience. On top of mobile broadband, 5G is also expected   to be used to provide fixed broadband access and this will assist in improving the fixed broadband penetration in Seychelles; since 5G, being a wireless system, will be able to reach areas that are currently inaccessible by copper and fibre networks.

The second submarine cable project is in its full implementation process with the marine survey expected in the first half of 2020 and the coming into operation of the PEACE system in mid-2021. The Cable Landing Station of this system will be located on Perseverance. The Government has also recently approved the project for the installation and operation of a third submarine cable system by a local operator to provide international connectivity. It is therefore expected that in the near future, Seychelles will be connected, not by 2 but by 3 submarine cables.

Mr. Speaker, with the new developments, particularly in the mobile sector and submarine cable systems, which will increase connectivity and bandwidth availability, there should be better and more competitive prices for services, particularly for mobile voice and data, which is still considered as expensive, compared to prices for similar services on fixed networks.

5.6.      Environmental Sustainability and Resilience

Seychelles has been a champion in conservation, preservation and protection of our natural environment, while we also continue to develop as a nation. Diversifying our energy sources is also paramount to maintaining our resilience as we are currently almost entirely reliant on imported fossils fuel for electricity.

Mr. Speaker, as a Government we need to set the example. From now on, Government will only procure hybrid or electric vehicles. This will also be part of the Government replacement plan of the current conventional vehicle.

Mr. Speaker, we still remain on track to be amongst the first floating utility scale Photovoltaic plant on marine in the World. Government is currently evaluating the technical proposals of the six bidders. This will be followed by opening of financial bids and subsequent evaluation of the same. Government expect to announce the successful bidder before the end of the year and we expect construction to start in the first quarter of 2020 and the commissioning is scheduled towards the end of 2020.

In addition, the two Photovoltaic projects being undertaken by PUC on Ile De Romainville are in advanced stages and are expected to be commissioned in the first half of 2020.  One is for a five Megga-Watt capacity being co-financed by Abu Dhabi Fund for Development and PUC costing US$ 3.43 million equivalent to SR 49.0 million and the other one is a one Megga-Watt capacity financed by a component of the Grant from the Republic of India which include 944 KW of distributed roof tops PV (about 150 units) which have been installed on premises of families in the low income group, and on Government buildings.

The renewable energy development plan, climate change mitigation and adaptation remains high on the Government agenda. Mr. Speaker, the Government with the assistance of one of its development partners has developed a Coastal Management Plan 2019 to 2023 which aims to help maintain and protect the coastal zone to reduce coastal risk, support healthy ecosystems, and enable sustainable coastal economic development. The plan has been costed at US$ 15.8 million or SR 225.9 million. The Government is currently in discussion with its development partners to work on a financing strategy for the Coastal Management Plan.

The new National Waste Policy was approved in December 2018. The purpose of this policy is to provide a framework to facilitate the involvement of the Government, private sector and the general public in the waste management sector and encourage the efficient use of resources by helping the public to make better informed decisions on how to manage and dispose of their waste. The objective of the policy is to minimize the amount of waste from being landfilled by promoting waste minimization through the 3Rs (reduce, re-use, recycle) and build capacity among state and non-state institution to manage waste.

There are a number of other related initiatives currently underway, with our international partners, including

• A World Bank project in the Seychelles is documenting the solid waste management infrastructure to understand the impact of disaster on coastal solid waste management and infrastructure. It aims to provide a diagnostic designed to define potential interventions for policy reform, alternative options for mitigating the forecasted climate and weather related risks and strengthened institutional capacity for managing the risk. The study is employing a multi-sectoral integrated and holistic approach to stimulate informed decision making and targeted stakeholder engagement.
• In parallel, the European Union is supporting the Government in preparing a Solid Waste Master Plan that will ensure that the management of solid waste in an integrated manner through the right policy, infrastructure, and capacity (financing and human resources) to implement advanced, solid waste management programs that will respond to the needs of the country for the forthcoming 25 years.

6. 2020 Budget for Social Programs

In the 2020 budget, Government will maintain its commitment to finance Social Programs targeting the most vulnerable people in our society. The budget for the various programs are as follows:

• SR 47.8 million for Social Safety Net by the Agency for Social Protection (ASP),
• SR 5 million for Home Improvement/Re-roofing Scheme for Pensioners through HFC,
• SR 10 million for Vulnerable Home Repair Scheme through ASP,
• SR 28 million for the SPTC travel concessions for the Elderly, students and disable through ASP
• SR 18 million for Housing finance Subsidy Scheme,
• SR 4.2 million for dedicated funds for Schools
• SR 6.7 million for Daycare Scheme, and
• SR 3.2 million for Foster Care Scheme
• Inner Islands Transport scheme for students, medical referrals, and pensioner totaling to SR 5.7 million
• SR 1.5 million for Emergency Housing Assistance scheme
• SR 292 million for Home Carers which include their 13th Month pay.