ECONOMIC CRISIS DEEPENS-BANKS REFUSE TO OPEN FRESH LETTERS OF CREDIT

ECONOMIC CRISIS DEEPENS

BANKS REFUSE TO OPEN FRESH LETTERS OF CREDIT

Signs that things are taking a turn for the worse caught everyone by surprise this week as the least expected product to suffer from shortages this time around was no other than the good old fashioned Seybrew lemonades. The impact on the community by the lack of this particular product from the shelves of shops was not less than that of the shortages of the more traditional foodstuffs, as school children seemly are suffering the most, being the biggest consumer of this product.

It is now common knowledge that the cause for the scarcity of basic foodstuff in the shops is due to the fact that there is a foreign exchange shortage in the country which has persisted unabated despite the introduction of several measures over the past few years by the government to curtail the problem. The government started its assault on the problem by introducing the much celebrated foreign exchange pipeline. It promised the people that this measure would alleviate the problem in no time. When the measures failed to live up to expectations the government just ignored them and proceeded to introduce new ones which also failed dismally. This clearly showed that the government had run out of options and in a desperate and frantic move which made no sense to anyone, resurrected some of tried and tested measures which had failed to deliver any sort of result as was initially promised.

The government then introduced legislation making it a criminal offence for Seychellois to be in possession of foreign exchange without a bank receipt. This was designed to criminalise foreign currency exchange in the hope that it would act as deterrence as well as an incentive to deal only with official financial institutions. A small number of Seychellois were summarily arrested for illegal possession of foreign exchange which was confiscated. Widespread media publicity was given to some of these arrests while the courts were urged to slap exorbitant fines on them with a stern warning from the Judges that if they do not pay they will be sent to prison.

A special police squad, similar to the much feared Gestapo of Nazi Germany and led by Agnes Mondon, was permanently stationed at the Seychelles International Airport lying in wait for the next unsuspecting victim. They promptly pounced on the usual suspect as soon as the person walked through the airport. Their victims were made to suffer untold humiliation and indignity as all their human orifices were closely examined and inspected for the much sought after foreign exchange. The women especially took strong exceptions to request from these police officers to have a closer look inside their underwear, when all else had failed. Several airline flights were delayed and some people even abandoned their journey altogether when their foreign exchange were summarily confiscated. It was not uncommon to see a conspicuous Seychellois in Singapore making a quick dash inside his underwear in front of the hotel reception to retrieve his hidden foreign exchange to pay his hotel bills.

In an attempt to curry favour with the electorate and to save face the government introduced the $400 foreign currency allocation that anyone with an airline ticket can obtain. A new foreign exchange pipeline was created by the Central Bank as an afterthought to give the impression that the government was seriously tackling the foreign exchange problem. After a multitude of the most basic foodstuff after another, suffered from periodical glut and shortages (creating long queues and scuffles between eager consumers and shop assistants), while consumers resorted to hoarding all manner of goods including onions and garlic, lemonades were the least expected commodity to run out not least because it is produced locally and has a very low foreign exchange content. However, apparently a persistent shortage of sugar – a commodity which has to be imported, has made life difficult for Seybrew to cope to satisfy the demand. Fights and scuffles are reported to have broken out at the compounds of both GS Pillay and Chez Deenu (official Seybrew distributors) as shopkeepers struggled to get their weekly supplies of lemonades. Accusations were also levelled at GS Pillay that shopkeepers of Indian origin were being favoured over everyone else.

Worse is now expected. The Annual General Meeting of the Seychelles Chamber of Commerce last Friday was informed that at least one commercial bank has told customers that it is finding it hard to honour the letters of credits it had opened and now it has no choice but to refuse to entertain any new request for letters of credits unless the customer comes up with foreign exchange. After the celebrated government bonds episode last year, the Central Bank announced it would be able to clear the foreign exchange pipeline provided that customers prove that the goods have arrived. But the commercial banks are now saying that, even that promise cannot be met.

As the economic crisis deepens many are now realising that the situation under President Michel has become worste than under President Rene and all indications are that the economic outlook for Seychelles looks bleak for the foreseeable future. Many believe it is the reason why President Michel is so anxious to call for early National Assembly (whose mandate is due to expire in a few months time) that the Electoral Commissioner has been ordered to decline any request to have it delayed even for a week. So anxious is Mr Michel wanted he resorted to denying even the Leader of the Opposition of the constitutional right reply to the President’s State of the of Nation address to the national Assembly. One merchant even observed that at least President Rene was consistent in that although he preached autocracy he also practiced autocracy.