CORONA CRISIS, BUDGET 2020 AND BEYOND ….

CORONA CRISIS, BUDGET 2020 AND BEYOND …..
As the National Assembly gears up to debate on the new 2020 Budget this week, there are key aspects of financial sustainability to address.
Our usable forex reserves may have been at an all-time high in March 2020 at about US$440 million, but they are set to decline in view of the shutdown of our tourism industry and we do not know how long this industry which constitutes our primary source of forex will take for it to bounce back.
The key question is whether Government and Central Bank will be able to sustain the monthly financial burden of private sector salary bailout plus the huge cost of an under-employed public sector.

In order to better appreciate the impact of the additional Government deficit on the country’s limited forex reserves, we should first understand the link between Government deficit and the external trade deficit.
We must accept the notion that a Government Deficit means that Government is injecting more Rupees by way of Government expenditure than it is collecting by way of taxes.

Such extra Rupees which Government injects into our domestic economy, will be largely spent on foreign goods and services given that most of what we consume is imported or from abroad, hence the reason why a Budget Deficit gets largely mirrored into a Trade Deficit.
If we continually incur budget deficits, it will result in chronic trade deficits, and over time such ballooning trade deficits will in turn either erode the country's Forex Reserves or result in a depreciation of our local currency, or a combination of both. As we can already note, our local currency has started to slide and this will cause a rise in inflation.

On the domestic front, if we restrict the importation of certain imports (e.g. meat imports) and yet we are not able to locally produce more of what we wish to consume, the prices of such locally produced commodities will also rise, since we will have a situation of too much money chasing too few goods. This will be another source of potential increase in domestic inflation.
WHAT SHOULD WE CONSIDER DOING IN ORDER TO MITIGATE THE IMPACT OF CORONA ON OUR ECONOMY AND HOW DO WE MAKE IT MORE FINANCIALLY SUSTAINABLE IN 2020 AND BEYOND?
There is of course no magic wand or panacea to escape from the very difficult times ahead, but we can at least try to adopt policies and strategies which will minimise the damage and the suffering. The following are some of such prudent strategies.
We have to devise ways and means to either generate more productivity-related income and to cut down on expenditures, including making sacrifices during these hard times.

Government and the Parastatals should lead by example and cap salaries and hefty allowances for those employees earning more than Rs50,000 per month and introduce a 10% cut in salary for those earning less than Rs50,000 as per the following categories of public sector employees:
i) Medical Staff: No salary capping is being proposed for ALL medical staff who are after all putting their lives at risk for the rest of the nation. On the contrary, they are very much entitled to new allowances over and above their current remuneration package.
ii) Essential Services: A capping of Rs100,000 per month is being proposed for staff of essential services such as President’s Office, National Assembly, SEYPEC, PUC, STC, SPTC, Airport, SCAA / Air Seychelles, Port Authority, CBS, DBS, Nouvobanq, Seychelles Commercial Bank, Social Security, AG’s Office, SRC, Ministry of Finance, Ministry of Employment, Social Services, SFA, SAA, Ministry of Fisheries & Agriculture, SPDF, Police Force, DRDM etc.
iii) Non-Essential Services: A capping of Rs50,000 per month is being suggested.

iv) All other staff earning more than Rs15,000 but less than Rs50,000 per month to have a reduction of 10% in their monthly remuneration.
The suggested salary + allowance thresholds of Rs50,000 and Rs100,000 are indicative only, but the objective is that Government should lead by example. It is hoped that those in such high earning jobs should be able to cope with Rs50,000 per month during the period that the economic crisis remains severe. After all, many households will be left to cope with unemployment relief scheme of less than Rs6,000 per month.
Government should rethink the private sector bailout and its policy with regards to redundancy.
While we would all wish not to make anybody lose his / her job, the harsh reality is that both Government and the Private Sector will not be able to sustain 100% job retention as the crisis deepens. It would be better to bite the bullet early and to assist those made redundant with unemployment benefits until such time they can find alternative employment, including self-employment.

We should be reminded that after the 2008 crisis, Government made a large number of employees redundant and became leaner. So why cannot we do the same now that we are faced with even more difficult times ahead?
By allowing both private sector and Government to hoard under-employed staff, we are not tapping into our country's potential. It is in times of adversity that we become more creative and resourceful. We must remember that at the time of the Global Financial Crisis, there were for example many high-flyers from the City of London who left top finance jobs to go into farming, plumbing and other trades and did so successfully.
HOW DO WE FINANCE THE EXPECTED INCREASE IN OUR TRADE OR BALANCE OF PAYMENTS DEFICIT?
Even if we adopt some of the above and other mitigating measures, we will not be able to avoid a worsening of our deficit in trade of goods and services (including tourism) which is often referred to as the Current Account of the Balance of Payments (BOP).
There are not that many options when it comes to funding our Trade or BOP Current Account deficit.

We can either fund such deficit by external borrowing from funding agencies such as IMF, World Bank, African Development Bank, EIB or bilateral donors or by asking our creditors to reschedule our debt (via Paris Club) as we had successfully done in 2008.
Another means of financing the increase in our Trade or BOP Current Account Deficit is by Foreign Direct Investment (FDI) which is likely to dry up since most of such FDI in the past has been tourism-related e.g. hotels.

However, a case may be made, even in the wake of the Corona crisis, for high net worth individuals wishing to invest in a second Eden Island-type residential scheme, especially if Seychelles can come out of the Corona pandemic relatively unscathed. We could then use such a Corona Clean Record combined with Seychelles other attractions including the purest air in the world, to attract such investors.

IDC has already begun developing villas on a number of the islands it manages including Desroches, Alphonse and Silhouette. Such islands could serve as a platform for larger residential schemes aimed principally at foreign investors, provided that the new schemes would be consistent with good governance, transparency and accountability.

In the event that we cannot raise sufficient foreign loans and reschedule repayment of existing foreign debt, and that we also do not succeed in bridging the external finance gap by way of foreign direct investment (FDI), we will as a last resort have to use our country’s foreign exchange reserves to finance the overall external deficit.

HOW DO WE RECAST OUR VISION AND REINVENT OUR ECONOMIC MODEL MOVING FORWARD?
We should already be giving serious thought to a new economic model whereby we can diversify our economy and not remain over-reliant on tourism, even if we all wish that it starts picking up again soonest possible.

We can re-strategise our fisheries and agricultural sectors such that these key sectors not only provide us with both short-term and long-term food security, but that they also help earn or save foreign exchange.

There is no reason why Seychelles cannot benefit much more from tuna industrial fishing. Government should consider developing a Public Private Partnership (PPP) project whereby Seychellois private sector and individuals would be able to jointly develop our own purse seiner fleet. Lessons should be drawn from similar initial projects which were quickly aborted. We ended up throwing away the baby with the bath water!
We have to also concede that we have failed with our agricultural sector, bar a few success stories in the private sector.

We should firstly not under-estimate the potential of backyard farming.…. we should know more than most that our beaches are made up of grains of sand. The Corona home confinement offers an opportunity for all those with a back-garden to engage in producing their own home-grown fruits and vegetables. The Ministry of Agriculture and Seychelles Agricultural Agency (SAA) should support such households with home delivery of seeds, seedlings, potting soil and compost at cost price.

Micro farmers (e.g. ex-Blockers) should be similarly encouraged as they may suddenly appreciate the expanded local market for their produce.
Synergies could be exploited between development of agriculture and the Eden Island-type residential scheme for foreign investors being proposed above on IDC islands since this would generate enough critical mass and economies of scale for the logistical costs, as one would then expect spare capacity on both aircrafts and barges serving such islands. Denis Private Island is a good example of how tourism and agriculture can synergise and overcome what would have otherwise been prohibitive costs for shipment of both factors of production and final products for their agricultural activity.

We should be reminded that our outer islands, Silhouette and North Island used to be an important source of meat, fruit and vegetables until the late 1960s when our country was still quasi self-sufficient in food products. Moreover, those same islands used to be important producers of export cash crops such as coconuts and copra. Yet in those days, such islands had no airstrips, helipads, and proper vessel quays.
These are but a few examples of how we can re-strategise sectors such as agriculture and fisheries.

We should go back to the drawing board with regards to both our Vision 2033 and our National Development Strategy 2018-2023 in order to capture this new reality and to further diversify our economy and try to turn the economic plight of the Corona crisis into new economic opportunities.
https://www.facebook.com/profile.php?id=100011392091218

COVID-19 Sesel: Reaksyon Prezidan Ramkalawan Lo Lekonomi Sesel Ler Aktyel.
https://www.facebook.com/sbc.sc/videos/1102908170164188/

https://www.facebook.com/sbc.sc/videos/135762348270918/

Life is very wired - had we been President Trump would have deployed our own social media. They got my person to go crazy then discovered President Trump Facebook was still alive.  The way very grave thematic get treated at times by the Social media.  Our very many articles and comment on that SIROP program  and the Seychelles Indian Ocean component.  We have worked with two of Mauritius leading Interdisciplinary Management executives highly respected and know to the Mauritius Nation.  " In bracket as the Vaccine is deployed  yesterday the prayer - In French, British and half civilized European benchmark,  it is not just about vaccine as the politicians and media would liken to crap everybody. There are other symbiose and synergy associated. " We currently have three Priest in  Seychelles, no  nation can proclaim this currently of Mauritius origin - the high duty and responsibility of Priests. The issues of the seminary at Angers - Loire.  That SIROP program and other impute we have made contribution to Mauritius economy, other national thematic - the COI thematic and its secretariat in Mauritius 1982, the Indian Ocean Rim Association   1995 after the first crash its secretariat in Mauritius, the process of getting the OAU to become AU the major benefits to Mauritius, the EU setting is regional office in Mauritius and the politic of the Cold war and EU that SIROP program, Before the piquick get too piguick my sisters would say,  yesterday we posted the issues of the Regional CARICOM Stock exchange/Market,  in 1987 when we presented President FA Rene the Seychelles Stock exchange thematic  and that SIROP program the idea was for a regional Stock exchange/market working to overcome the socialist taboo, opposition - how this would work. The benefits the CARICOM  got from that SIROP program.  Beside the Parkar family residence at Majoi,  SIM.  Today most government data, statistic get publish - can President Wankalawan publish the data of the current government economy, income and expenditure and forecast for the next 6 months.  Any entity working high interdisciplinary science, discipline need to have the core information, data only then can they impute and intervene. Formulate models and possibilities.  This is the way President FA Rene and Michel worked with my person and other governments. Including the IMF and World Bank official,  the US.



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Gary Tall
Wavel Ramkalawan knew that this virus was around before he took power. Instead of working on a contingency plan, he was lying to the people, promising them the earth when he knew he will not be able to deliver. This bastard have a lot to answer. I am pretty sure he will not last his term as President. Either he will quit under pressure or the people will force him out. Just wait for it.

Proposal for a COUNCIL DECISION on the conclusion, on behalf of the Union, of the Sustainable Fisheries Partnership Agreement and its Implementing Protocol (2020-2026) between the European Union and the Republic of Seychelles
COM/2020/2 final
https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52020PC0002

https://www.facebook.com/kitgr1/videos/10220138034260832/

Only last night was thinking of the media situation in Seychelles the two side of information and knowledge. The small percentage who understand really what is going on in the greater world and those who just mumble along. 30years ago when those began rebuilding that Seychelles the few economics and Management qualified young Seychellois and the major investment to give the due education and qualification to the next generation. From1985/86 the economic issues we worked with those leading Austrian economist and high management experts - Britain was is a terrible Economic mess. There are hybrid rock bottom, core management issues Ms Sinon is overlooking. We would love her to take some time and study /research that SIROP program and publish her views, because a great deal of Seychelles current economic system and development was build, leverage and synergized by that SIROP program. She need to refer with Mrs Janique Brue the former Head of SIM under president FA Rene Administration, She can go further put in place a Forum and they ought to take that program to task.

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We just made a comment under Ms Sinon SBC economic position

The need to remind President Wankalawan government what the original project was all about, that SIROP program conception and marketing - President FA Rene

Seychelles wanted to diversify its hospitality Industry,  not so dependent on Tourism and Branch out in the care, residential Care for retiring expat and the relevancy to any small economy,  their spending power. All those in Europe and the UN who viewed the possibility with us and the IMF people. Instead this Hospital project was started and the proposed residential care home project shelved,  abandoned and the mess that ensued, the trudle, It would also have required the necessary education and training facilities  again what ensued.  

Part of that complex concept was in the eventuality of a major epidemic or disaster to have such a  facility.

There have been many blogs and arguments and the National Assembly of then MNA Wankalawan position,  refusal to look at the bigger picture the why.
Can will somebody point this threat to the current Finance Minister Mr Christopher Gill thank you for your time and love for Seychelles  and its people -Thank you.

http://starseychelles.blogspot.com/2010/05/getting-our-priorities-wrong.html

SBC | LIVE Press conference - Ministry of Finance - 13.01.2021
https://www.youtube.com/watch?v=1l5i1mSUrik

Seychelles government have been praised, available reports for their ability to perform better than many small Nation government economy during the past crises - our comment and the mechanisms that was in place and this current government relation to this mechanism our warning on the reporting benchmark, .

WHERE DOES THE GOVERNMENT GETS ITS MONEY TO FUND ITS EXPENDITURE.
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