The Economy - Government Role
Under the socialist policies of President René, the government has taken a leading role in developing the national economy. Beginning in 1978, the Ministry of Planning and Development has drawn up very detailed "rolling" five-year development plans, which are updated and extended every year. The Ministry of Finance is responsible for economic decisions and budgetary policy. A separate Monetary Authority supervises the banking system and manages the money supply. Although foreign banks operate branches in Seychelles, the government owns the two local banks--the Development Bank of Seychelles, which mobilizes resources to fund development programs, and the Seychelles Savings Bank, a bank for savings and current accounts.
The expansion of parastatal companies since 1979, when the first such institution was created, has had primary economic significance. By 1988 the number of parastatals had reached thirty-five, but in 1994 there were indications that the government's more liberal economic policy would probably reduce the role and number of parastatals. Among the most important organizations of the public sector is the Seychelles National Investment Corporation, whose role is to promote economic development in areas neglected by private enterprise or to become a major stockholder in private companies that encounter economic difficulties. The most powerful of the state enterprises is the Seychelles Marketing Board (SMB), which is the sole importer of key commodities, exercises controls over other imports, and regulates prices, production, and distribution of most goods and services.
The state-owned Seychelles Timber Company has responsibility for reforestation and for operating the government sawmill at Grande Anse. The fishing Development Company controls industrial tuna fishing and the tuna cannery operated as a joint venture with France. Air Seychelles, a parastatal, flies both international and interisland routes, making a critical contribution to the tourist routes, making a critical contribution to the tourist industry. The Islands Development Company (IDC) was established in 1980 to develop agriculture, tourism, and guano production on ten of the outlying islands-- guano deposits have since been depleted. A hotel complex on le Desroches is among the projects conducted by the IDC. Opened in 1988, the Desroches resort is managed by another parastatal, Islands Resorts. A US$12 million shrimp farming project on Coetivy Island remained in the final development stage in 1992. The high initial investment and heavy transport costs raised doubts about its viability, although a study has indicated that about 8 tons of shrimp could be caught annually in the area.
Despite the government's strong involvement in the economy, it has never imposed a policy of forced nationalization. Rather, the government encourages foreign investment, preferably as joint ventures. Concurrently with the political liberalization in 1992, the government has attempted to strengthen the private sector, announcing measures to attract investment and planning to divest some state-owned companies. Among companies scheduled for privatization are the agro-industrial division of the SMB and Stationery, Printing, and Computer Equipment, to be sold as three separate enterprises. A parastatal holding 65 percent of Seychelles hotel assets reportedly is ready to sell some hotels or to privatize their management. Private investors nevertheless remain cautious because of the continued high level of state economic control.
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