The Seychelles Column - By Christopher Gill

Passing The Buck On Economic Woes

When an economy runs into trouble, no one wants to take credit for the trouble or the failures, especially the political leadership of SPPF/PP.
The SPPF/PP tends to claim the occasional success, and lay blame of economic woes on external forces, that the SBC pounce on without posing questions.
Blame The Banks
Recently, President James Michel has been blaming the commercial banks of Seychelles, for all his problems. He came only a slight step to declaring political war on them in his National Day speech and the Independence Day speech.
The problem is not the banks and the problem goes back to where the buck stops: on James Michel’s desk. The commercial banks only react to market forces that are in play in a very difficult pseudo communist market wherein costs of doing business is high for everyone, banks included, particularly when we have a defaulting client on loans like the Government of Seychelles.
Face Facts Man
At the start of the year 2010, there was a total of SCR 5.5 Billion in circulation in Seychelles. SCR 3.7 Billion was already tied up in commercial loans, loans to government of Seychelles, or Treasury Bills. The surplus of money in the economy, that is dormant is SCR. 1 .8Billion. A significant portion of that needs to be lent out to get the domestic economy running fluid again.
Unfortunately for the commercial banks, it is not easy to find viable customers for SCR. 1 8 Billion, when SCR 3.7 is already out there somewhere, spread over the entire economic market spectrum. Without adequate infrastructure in place to absorb another SCR 1. 8 Billion, we will remain in a stagnant state economically, in spite of the fluffy numbers being put out by SPPF/PP.
IMF / SPPF Said Three (3) Year Plan
In October 2008, the IMF and the SPPF/PP said the IMF program would last Three (3) years. The commercial banks of Seychelles relied on this declared program term. At the time, Treasury Bills went up to 30%. Most commercial banks reasonably expected that Treasury Bills would become the mop up tool for excess liquidity and bought into the program. They offered clients 12% interest on their deposits and bought Treasury Bills with the money, making handsome profits and clients made a “solid investment”.
Commercial banks took a calculated business decision to pay 12% interest on deposits. Those deposits that were fixed term at fixed rates for 2 or 3 years, must be honoured, in spite of unfavourable circumstance for the commercial banks now being paid Treasury Bill interest of 1.8%.
Dupe The Banks
The commercial banks have been duped by the SPPF/PP and IMF into believing the IMF program was to last Three (3) years. We now have 5 years of IMF programs, and many years of debt repayment for the $500 Million in debt that has not been written off or forgiven by bilateral and multilateral institutions. This is a reduction from the November 2008 official bankruptcy figures of $860 Million outstanding bill SPPF created over the years.
The commercial banks have been duped into holding all the liquidity in the market created by SPPF/PP when they printed money like tomorrow would never come.
Ministry of Finance Calls The shots on Treasury Bills. They have advised the commercial banks that they will not need their money over the next Three (3) years. Banks cannot drop interest rates lower they say, because of the cost of carrying bad debts and cost of doing business in Seychelles.
Catch 22 it seems.
Enter The Khalifa Pillar of Economy of Seychelles
The problem with the SPPF/PP economic recovery program is that it is hedged on good relations of SPPF with Sheik Khalifa, and the selling out of our sovereignty to Sheik Khalifa of UAE.
In 2010, it has been estimated that Sheik Khalifa will bring in the 4% GDP projected growth. Sheik Khalifa is building a residence that will exceed $500 Million when done, though everything is imported duty free.
Sheik Khalifa has funded $10 Million for a hospital renovation at Victoria Hospital (Ministry of Health prop), $16 Million for Two (2) generators (Ministry of Industry PUC prop),Ile Preservans Housing for $30 Million is forth coming (Ministry of Land Use and Housng prop), Michel has asked for military intervention against piracy and permanent military involvement with Seychelles on part of UAE (Ministry of Defence prop and internal security prop), Sheik Khalifa has just paid over $2 Million for some buses to keep fledging SPTC going,(SPTC prop). Additionally, Sheik Khalifa offers President Michel use of a jet occasionally, for free, (State House travel Budget prop).
All in all Sheik Khalifa pillar of the economy has gotten off to a quick start with exception of the La Misere damages settlement cases.
IMF See No Evil, Hear No Evil
IMF has turned a blind eye to this new pillar of the economy that does not pay taxes , choosing instead to focus on the bottom line. If Seychelles is being sold to Sheik Khalifa, does not concern the IMF technocrats that come and go and change every year.
Sheik Khalifa we all know, does not pay his way, he pays as he wishes. We all know over $200 Million could have been injected into our economy this year alone if Sheik Khalifa paid his taxes as due, when due.
Instead, he offers a gift here and there, to keep SPPF/PP floating. The confidence SPPF/PP displays and arrogance towards commercial banks have only one source.
After all, who can stand up against the commercial banks of Seychelles, who have SCR. 3.7 Billion in loans unpaid? Surely not bankrupted SPPF/PP.
Personally, I would prefer to deal with the commercial banks of Seychelles, knowing what I have to pay for what I get from them. The commercial banks would be good to extend loan terms to make the market buoyant and fluid.
With Sheik Khalifa, do you know what you will have to pay- for what you get, SPPF/PP?
In spite of your Bozo economics and bozo finance scheme proposals SPPF/PP, that involve the material sale of our country, we will over ride this policy of “Sell Baby Sell” and defeat you collaborators who are selling Seychelles and her People as you read this article.

Sesel Pou Seselwa!
May God Bless All Freedom Loving Seychellois!