Things Are Getting Worse Not Better

Things Are Getting Worse Not Better

The shortages of essential commodities that used to be the monopoly of SMB, which surfaced again so soon after the New Year is a foretaste of things to come in 2007. This week cooking oil, sugar, onions, cheese, ham, bottle water and construction materials were not readily available on the local market, at least in the market where most of us shop using the currency which is the legal tender – the rupee.

Since the new year almost everyday we hear of new trading enterprises being set up to supply the hotels and catering industry which have been given special concessions to purchase in hard currency, the preferred one being the Euro. Even car hire operators, who consume only fuel, want to buy from the hard currency shops. The hard currency shops have even applied and got permission to sell 25% of their stocks in the legal tender currency – the rupee, to selected retailers. The last country where this type of shops exists is Cuba. Not even Zimbabwe would adopt the practice.

In the past, since the SMB monopoly was lifted, after Mr. Michel took over the presidency from Mr. Rene, merchants have been blamed for not importing these goods regularly now that they had been given the freedom to do so. The SPPF mouthpiece The People has been specially scathing and revelling in demagoguery. Meanwhile, the hapless merchants who are prevented by law from pricing their goods in foreign currency and the hotels and catering establishments who are equally prevented by law from paying in foreign currency anyone who is not authorized to receive it or does not have a special license to operate on the SITZ, must only grin and bear it. They have their hands full in scouring the black market for foreign currency to keep a minimum of stock – money which they have to literally smuggle out of the country to pay suppliers overseas, while keeping the bulk of their funds in the official pipeline hoping against hope that things will get better.

Foreign exchange “shortages” have existed in Seychelles as a major economic impediment for the past 15 years and all attempts to resolve the problem by introducing draconian and cumbersome measures such as the pipeline and MERP have ended in total failure. At the same time the Government has refused to fully liberalise the economy and remove price controls and other restrictions on trade as recommended by most experts including the IMF and the World Bank. Instead Mr Michel as Minister of Finance and now the President has opted for half hearted measures which barely scratch the surface of the problem.

Although 2006 was a record year in terms of tourist figures, the bulk of the money generated by the increase in tourist arrivals did not see the light of day in Seychelles, especially after the 5-star hotels have been given 100% retention and the privilege of trading in foreign currency. Meanwhile the statistics published by the Central Bank on its website make dismal reading as table shows. We have totalled the tourism earnings for ten months of 2005 and 2006 and found the results shocking. While in 2005 the volume of tourism earnings reached SR 946 million, for 2006 the amount is a dismal SR 176.3 million. Clearly, things are getting worse, not better

As usual the government has remained silent on the issue of availability of foreign exchange, preferring to publicise the “good” news from the IMF economists. The usual propaganda organs of the state, SBC and Seychelles Nation have conveniently ignored the foreign exchange reality.

Unlike our sister Island, Mauritius where the Minister of Finance, the Honourable Rama Sithanen, was given a free hand to create a major economic revolution and was voted “Man of the Year” in 2006, our own Minister of Finance, Mr. Danny Faure, is clearly ill-equipped to drag us out of the economic quagmire. His silence has been deafening.