The Seychelles Column - By Christopher Gill

Central Bank Governor Introduces “Wobble-Nomics” To Seychelles

Our mild mannered Governor of the Central Bank of Seychelles (CBS) Mr. Pierre Laporte has been grappling with his new legislation to require that local establishments publish rates in Seychelles Rupees and when converting currency, they must use a median rate that the CBS issues from time to time. What about our commissions? What about our risks of taking fake notes? What about our profits? What if we have to buy and sell to complete multiple transactions? Are you really serious and have you not heard of letting the market find its own balance?

Here Comes “Wobble –Nomics”

In the meantime, the President of Seychelles, also the new Chancellor of the University of Seychelles, has taken to the districts throughout Seychelles to meet with hard core supporters in “tet a tet” meetings that are meant to discuss the future of Seychelles. But instead, complaints about coconut grass growing to light post tops, lack of street lights, drugs in schools, gutters over flowing with rubbish, prostitution and lack of public buses occupy the President’s time with the people. The future of Seychelles is indeed bright with so many great ideas emanating from these smart, propped-up Lepep supporters!

One of the key points the President relies on to show his programmes, (the IMF Plan) is working is the ever powerful Seychelles Rupee that has gained over 20% in value against major world currencies like the United States Dollar and the European Market Euro of course.

Poor US Dollar is now USD 1.00 = SCR 11.62, lower than the last figures to come from the Black Market. One mighty Euro trades only at SCR 16.62. President Michel says that is a success and it will curb inflation and reduce the cost of living for us poor Seychellois.

CBS Governor Pierre Laporte and George Thande (an embedded Nation newspaper journalist) tell us that inflation in Seychelles has gone from 78% to 31%. President Michel back in the Districts argues to the old ladies and pension-aged men that the cost of living is coming down and that everything is fine, to stay the course, to have courage, to back his Lepep party reforms and to continue supporting his Jj spirit. According to the Emperor, all is well in the land of the Emperor without clothes!

Meanwhile, and in my opinion, Governor Pierre Laporte’s stance is a little like acting like he is a muscle man economist when he looks in the glass of the Central Bank building before entering the office for a days work. Nothing could be further from the truth or this perception.

In fact, they are all relying on the “wobble-nomics” Pierre Laporte has brought to the Central Bank to fake a little more success. Why wobble? Because Mr. Laporte’s move to increase Treasury Bill’s interest to 32% soaked up most of the Seychelles Rupees in the system. While the Seychelles Rupee is strong against the USD and Euro, our receivables as a country are down – 20% and our GDP is – 10 % according to IMF. How can your currency gain when your economy is in free fall and no jobs are being created? Big question but here is the answer. What he has done is a little like a body builder taking steroids to build muscle. Steroids is cheating and the cheating comes back to destroy a bodybuilder’s health, even reducing the size of you know what!

Black Market Wobbles Back from No Supply High Demand to High Supply No Demand

The Governor of Central Bank has created a dangerous situation. Now that traders have over stocked goods in warehouses on a convertible Seychelles Rupee at the banks, these goods are too expensive to unload to the consumer who has a contracted supply of Seychelles Rupees. There is no new money and FDI coming into the system. Tourism is -20% according to Mr. Loustau-Lalanne of the Seychelles Tourism Board (STB), and tourism spending is lower than previous years.

In the past, traders purchased hard currency on the black market and passed the cost on to consumers. Now, they purchase currency from banks at high rates including excessive bank commissions and do exactly the same; that is to pass the cost on to consumers. This time around, the goods stay with the Traders. Why? Because there are Reserves in hard currency, but there are no Seychelles Rupees out and about town. No one trusts the Seychelles Rupee enough to convert hard currency held in accounts beyond what they must. The only winner is the commercial banks who are making those large commissions that were previously being made by the “Black Marketers”!

With Mr. Laporte’s policies in place, we have wobbled along from a Black Market where there was no hard currency at the banks, to where now there is hard currency, but demand is stifled, activity brought to a grinding halt, while banks also charge exorbitant rates and commissions. Why?

Because Mr. Laporte let the banks do what they want including charge high commissions, while at the same time, he spends all his time and energy trying to legislate confidence in the Seychelles Rupee instead of legislating a favourable business environment to allow the Seychelles Rupee a fair chance in due course, to acquire its credentials.

He Dare Scare The Goose

Mr. Laporte’s legislation to impose confidence in the Seychelles Rupee has done nothing more than frighten the Tourism Industry players into freezing many future developments in Seychelles for fear of instability at the ships helm. Many are now putting properties up for sale to cut losses. Enough is enough. Where is Emirates, Qatari Diar, Beachcomber and many others with their promises of billions of dollars of investments? Where are the new jobs and new businesses? Are businesses expanding or contracting? No jobs, no new businesses mean less taxes collected by the Government. That is called a contracting economy!

With that said, Seychelles has had enough of freak show central bankers. Central Bank policy must be set by a Board made up of Trade, Government, capable, sensible, economics –finance expertise. A Central Bank Governor must not remain independent and in isolation any more, but must become answerable to a bona fide Board. And please Mr. Michel, not one of those boards like Air Seychelles with the same old faces or puppets of the master!

Bonuses from the Minister of Finance for doing a good job at royally screwing up our economy each year must come to an end. Golden Parachutes must be packed and stacked once and for all. Finally, Central Bankers and their staff must become accountable and face criminal charges when found guilty of manipulating the system for their personal gain or the gain of their masters. This must be retroactive to include former Governors not because it is right, but because we need the money that has gone missing. Sadly, ex-CBS Governor Mr. Aboo Aumeeruddy has recently suffered a stroke in his home country of Mauritius, and of course the last controversial CBS Governor Francis ChangLeng is now enjoying his large exit cheque and a fat monthly pension paid for by Seychellois taxpapers! How ironic that we reward those who fail us!

Now that the goose has been scared to a fright, the industry freezes the conversion of hard currency as much as possible and holds. As the rates Mr. Laporte dishes out become unfavourable and compound the cost of doing business in Seychelles by 20% -30% overnight, be warned, wobble-nomics will always blow up in your face, Mr. Governor. And the Black Market very soon will pay you a visit… in fact, it has already returned as consumers are getting tired of being ripped off by exorbitant bank rates and commissions! A free market indeed!

Today, the Black Market lurks behind the closed doors of the commercial banks. Supply of goods rots and expires in warehouses because the people cannot afford what Mr. Laporte has done. Our old people beg Mr. President to bring down the cost of living and he has nothing much to say. Prices in the shops are up, fuel prices are up, PUC rates are up. And yet, prices according to Mr. Michel is down. But then, maybe the containers of goods and freebies that come in for the elite, the army, the connected and the upper echelon of Seychelles are not taxed and are delivered straight to the homes like always.

So while our moderate communist leaders continue to speak with forked tongues and continue to deceive the masses with their promises, the people weep tears of pain and continue their daily struggle to feed their children, to find a job and to pay their bills.

So here is to our strong Seychelles Rupee SPUP....SPPF....now “MODERATE” Lepep....all failures as usual, despite the name changes.

May God Bless All Freedom Loving Seychellois!