Seychelles structural reforms are ahead of target - Bloomberg

Seychelles Public Debt to Fall on Economic Reform, Central Bank Head Says

By Kamlesh Bhuckory - Apr 4, 2011 1:23 PM GMT+0400

Seychelles, an Indian Ocean archipelago, expects public debt to shrink to 50 percent of gross domestic product by 2017 on further economic reforms, Central Bank of Seychelles Governor Pierre Laporte said.

“We are back on track after implementing reforms and tightening monetary policy,” Laporte said in an interview on April 2, in Port Louis, Mauritius’s capital. Public debt has declined to about 80 percent of GDP from 160 percent three years ago, he said. External debt almost halved over the past two years to 48 percent of GDP, according to the International Monetary Fund.

The country of 89,000 people, with a $900 million economy, sought help from the IMF in 2008 after missing interest payments on bonds and defaulting on privately placed securities, when higher oil prices and falling tourism crimped government revenue. Consumer prices declined on an annual basis in February after reaching a peak of 63 percent in December 2008.

Seychelles’s structural reforms are ahead of target, with the fiscal surplus at 9 percent of GDP last year, Laporte said. This will decline to about 4.5 percent this year, an election year, because of investment in “key infrastructure projects,” he said. Gross international reserves have surged to $244 million from $11 million in the fourth quarter of 2008, according the central bank’s website.

Foreign direct investment will probably fall by 54 percent to $149 million in 2011 compared with a year earlier when investment was boosted by property developments, including two new hotels, Laporte said. Economic growth may slow to 4 percent, he said.

The archipelago’s economy expanded by more than 6 percent in 2010, the IMF said on March 17. It estimated inflation of 5.5 percent this year from zero in 2010.

Tourism is the top foreign exchange earner and employer in the African nation, making up about 25 percent of the economy, Laporte said.

To contact the reporter on this story: Kamlesh Bhuckory in Port Louis at kbhuckory@bloomberg.net

From: Bloomberg