Minister Hassan gives concluding remarks on budget address debates |25 February 2021
‘Put aside our political differences and let’s work together to save our country’
The Minister for Finance, Economic Planning and Trade, Naadir Hassan, yesterday delivered before the National Assembly his reply to the budget debates on the Appropriation Bill, 2021, which proposes a budget of R11 billion to cover the country’s services and expenditure for the year.
Minister Hassan started off by once again reiterating the state of the country’s economy at present, and how this demands a new vision and new way of doing things so as to gradually rebuild the economy.
“In 2008, Seychelles embarked on an economic reform programme with the assistance of the International Monetary Fund (IMF), where the emphasis was on the development of the private sector and reducing government interference in economic activities. Our economy grew almost every year, due to the wealth created by the private sector. The wealth has been shared haphazardly without regard for the future or whether there is merit in the sharing. Supervision on the way wealth was being shared under the previous administration was not important. Nobody was thinking of the consequences. There has been an attitude of spend, spend and spend. All of this spending without any control could not continue. Sooner or later, we would crash and our economy would be hit hard,” Minister Hassan said.
“And it is exactly that which happened in March 2020 when Covid-19 hit. We saw our economy sink suddenly, the private sector was hit hard and the revenue that government used to collect from this sector to sustain its expenses has reduced enormously. This is the state of the economy that our administration inherited,” Minister Hassan started off.
Moving on to address some of the pertinent queries and issues raised by MNAs, Minister Hassan said it is imperative that efforts are focused on diversifying and restarting the economy, and that the 2021 budget appropriation provides a good starting point towards rebuilding better.
“The budget is laying the foundations for the economy to be transformed, where we will not put all our eggs in the same basket. With the budget, we are laying a new foundation as to how the government manages the country’s resources. The emphasis is on eliminating wastage, eliminating corruption, eliminating duplication within the public service, and transforming our economy.
“Secondly, the budget permits us to return towards sustainability in the medium-term by reducing expenses and debt. Thirdly, the budget is one whose objective is to increase and maximise productivity of Seychellois employees, where we control the recruitment of foreign employees, and also by reducing dependency on social programmes where not necessary. This will therefore help to fuel growth,” he added, urging MNAs to support the budget, a budget which puts in place fundamental concepts to render government more efficient and which lays the foundations to ensure that government spends according to its means and eventually returns to a surplus budget and sustainable debt level.
Minister Hasssan went on to note that the present administration has a plan which is already in implementation, a plan which places emphasis on reopening the tourism market gradually to start relieving the economy, as compared to the previous administration who failed to adequately plan how to sustain programmes such as the Financial Assistance for Job Retention (FA4JR), the Unemployment Relief Scheme (URS) and in general, the economy.
“The tourism sector will remain the pillar of our economy, as its entire infrastructure is already established. But in addition to this, our plan extends beyond this; it looks at how to launch other sectors of our economy, the sectors which were always vital to our economy such as fisheries and agriculture,” he added.
The Ministry of Agriculture already has a detailed plan, said Minister Hassan who also rejected allegations that only large agricultural corporations will benefit from measures proposed for the sector.
Government is giving all opportunities to all farmers regardless of size with a vision to see farmers expanding and developing in their businesses, while also supplying the country with produce and rendering the local economy more self-sustaining.
He went on to add that loan facilities are already in place to assist farmers to start their farms and expand production. Furthermore, government is working to remove restrictions on poultry production where the terrain permits, to enable businesses or individuals to expand production, in addition to eventually establishing at least two parent-stock farms for egg production and the introduction of structures to help youths to join the sector.
Furthermore, government is planning to revitalise the fisheries industry through a series of projects, mainly infrastructure projects to add value to the sector and develop it, so the country can generate more revenue.
With regard to the comment made by the opposition that the budget is one based on ‘maybes’ based of the fact that government is relying on grants and donations to offset the substantial government deficit and finance certain heads under the budget, Minister Hassan boldly declared that “the grants are guaranteed”, because government was adequately prepared in approaching partners.
Of the projects expected to be financed through grants and donations is the construction of a Government House, in a bid to reduce spending on office rent, a substantial proportion of the budget in previous years.
As for capital projects over which there was some contention in the assembly, Minister Hassan said the general principle is to finance projects that have already started, and to finance other projects deemed important for the country at present. It is especially important that capital projects go ahead despite the economic crisis he said, so that active sectors can create growth, while activities and growth in other sectors is reducing and contracting, as well as to ensure the maintenance of existing infrastructure.
As for the private sector, who some members of the assembly proposed are being favoured through the Appropriation Bill, 2021, over vulnerable citizens, Minister Hassan asserted that the proposition to maintain the scheme is unrealistic and unsustainable.
“FA4JR, last year between April to December, cost government R1.2 billion that it did not have, and had to borrow. How long can the government keep indebting the country? The programme since the start was based on maybe, and did not have a comprehensive plan. Several members of the opposition proposed that FA4JR scheme be maintained, although they also acknowledged the lack of funds,” he stated.
Acknowledging that the private sector is still in need of support, Minister Hassan made reference to alternative relief measures aimed at the sector, namely, the private sector relief scheme which targets small and medium enterprises, the relief scheme for large enterprises, and the scheme under DBS with businesses with turnover of less than R2 million.
“In my address, I said that the vision of this government is to place Seychellois in employment over foreigners. This will remain the base of any new recruitment in the country, but at the same time, we need to come to a compromise on the subject, as there will be instances where there is no Seychellois who can fill a very specialised post, we need to find a middle ground. The procedure for a GOP now is really clear. An employer has to show that there really is no Seychellois that can fill the post. Once he has the GOP, the employer needs to have a succession plan to replace the foreigner. Government is serious about replacing expatriates with Seychellois. We will do it in a structured, organised and clear manner for all to understand,” he added.
To manage employment matters, the ministry responsible for employment has implemented a structure whereby all businesses with vacancies have to inform the ministry. Up until yesterday 40 organisations had already registered and up until February 22, the ministry had received 1093 advertisements for vacant posts, he said.
As for the issue of gainful occupation permits (GOP), the minister also addressed concerns raised as to hotels who are recruiting expatriates over Seychellois. Given the policies of the previous administration, the current administration needs to renegotiate with partners, he said, asserting that government will reverse the policy of the previous administration to put our people first.
In talking about the matter, Minister Hassan urged all citizens to refrain from substance abuse, noting that many citizens and job applicants have tested positive for illicit substances during the recruitment process.
With regard to whether there is a budget for re-skilling, Minister Hassan affirmed that R4.14 billion has been allocated to the department of employment for re-skilling.
Still on the topic of placing more Seychellois in employment reducing dependency on social welfare programmes, he alluded to the budget which allocates R77.7 million as social welfare assistance, R279 million for home carers, and R485 million for government programmes which comprise assistance for non-governmental organisations and schemes for small and medium enterprises, and subsidies for housing finance scheme among others.
“In fact, this budget remains the largest sum in the 2021 budget, so the government believes in the principle of assisting those who need to be assisted. But it doesn’t believe in the abuse on the social assistance system. The government believes social assistance is for those who really deserve it,” he added, pointing out that social assistance if funded by hardworking taxpayers and abuses within the system is unfair to them.
As such, persons who are made redundant or find themselves without employment need to register with the department of employment whereby they will be assisted to get a job. It is only after trying to secure a job that they can apply for social assistance, on condition that the individual needs to remain as an active job-seeker to get social assistance, a newly introduced measure aimed at instilling in citizens a sense of responsibility.
Minister Hassan also addressed the matter of corruption and abuses under the previous administration, after having been challenged by members of the opposition to provide evidence, and to take action against perpetrators.
The minister reaffirmed that there have been many abuses at the Agency for Social Protection (ASP) which administers social welfare programmes, as evidenced by the findings of internal audits and reports.
He also alluded to numerous cases of fraud at the organisation, noting that as of 2010, around 10 cases was put before the police and Anti-Corruption Commission of Seychelles (ACCS), who have up until this day failed to act upon the cases, leading him to call out to such organisations to act on the cases and against those responsible.
As to the allegation that the appropriation bill disfavours needy and vulnerable citizens but protects the interest of large corporations, he said in actual fact, the 5 percent tax reduction will give businesses space to manoeuvre and will help businesses to survive during these hard financial times. The private sector is the motor of the economy, he added, having a vital role in wealth creation and generating revenues for government through taxes and investments in the economy, which in turn is beneficial for other citizens in need of employment and for the local economy.
“It is the government’s vision to not have vulnerable persons depend on assistance, because we want to equip them to become dependent on themselves. In fact, this will also in the long-term help to reduce the cost of living. […]The report that the previous government commissioned with OECD proves that Seychelles has one of the highest tax regimes in the world. The report also found that only a small percentage of persons pay taxes in the country,” Minister Hassan explained, noting the government’s rationale behind reducing taxes, so as to encourage more businesses to make tax contributions, and to from the tax savings have the ability to expand their businesses and create employment.
After addressing the prominent issues which were touched upon during debates, Minister Hassan proceeded to address what he termed as ‘fake news’ by assembly members. He first off categorically denied that government will no longer fund scholarships and advanced education for Seychellois students, highlighting that R302 million has been allocated for such purposes, a sum exceeding that of the 2020 Appropriation Bill, for which R196 million was allocated.
Furthermore, the claim that part-rental assistance has been abolished is also false. According to Minister Hassan, the final part-rental assistance payments will be issued by ASP, and the programme will subsequently be transferred to the Ministry of Lands and Housing.
A reform in the policy is also expected, introducing capping on assistance. Prior to reform, some applicants were being assisted with sums up to R20,000, he noted. Minister Hassan also denied that Long Service allowances, the Covid-19 allowance to healthcare workers and benefits to elderly citizens are to be abolished.
One point of contention which Minister Hassan cleared up during yesterday’s reply is the allegation that government is victimising Seychellois with cleaning and security contracts at government organisations and agencies. He noted that the intention is simply to simplify the procurement process so as to ensure that government gets the most value for its money for such services.
In order to determine the best method to provide security at government departments, security risk assessments are to be carried out to analyse where cost savings are feasible, all the while not compromising on the security aspect.
In concluding, he affirmed that government is in discussion with the IMF for another reform programme while it also unravels its own restructuring reforms. Highlighting that the present economic crisis is worse than the 2008 recession, Minister Hassan asserted the necessity for reform and urged that the opposition join hands with government towards ensuring that the reforms are smooth and the threat of political instability eliminated.
“Let us therefore put aside our political differences and work together to save our country. If we try to sabotage the government, we are sabotaging our country,” he ended.
Minister Hassan was accompanied by principal secretary for Finance Damien Thésée.