The Head of State of Seychelles, President James Michel, announced last week that he would address the nation in due course on the country?s economic reform programme under discussion. When the programme is ready, he said, he would explain to the nation what has been and is being done, and what measures need to be taken to overcome their difficulties brought about by the world?s economic crisis. When the media asked him what guidance he could give to his people in relation to the current financial crisis and the country?s economic reform programme being discussed with the International Monetary Fund (IMF), President Michel replied that he had always been and would always be there by the people?s side both in good and bad times.

He recalled being with the Praslinois when strong winds wreaked havoc on the island a few years ago and when the tsunami struck in 2004. ?Today, at a time when the world?s financial crisis is exacerbating our economic difficulties, I am here with you trying to find solutions as to how we can mitigate these adverse effects on us.? The reform programme is aimed at putting the economy back on a firm footing to experience renewed economic growth.

The Government of Seychelles had announced on 30th September that it would seek its creditors?support to restructure its external debt stock of US$800 million. Its objective would be to clear accumulated arrears and place the country's high debt burden firmly on a sustainable path as Seychelles prepares to embark on its first-ever IMF-supported economic and financial reform programme. Equal to 175% of GDP, Seychelles's debt burden is amongst the highest in the world. The country's external debt is owed by the Government and its public sector to both official and private sector creditors. The Government also announced that the near-exhaustion of its international reserves would prevent it from paying the coupon due on 3 October on its 9.125% bonds due 2011.

Seychelles is currently facing a difficult economic environment, characterised by severe fiscal and balance-of-payments constraints, an unsustainable debt burden and a depleted international reserves position. These problems have been exacerbated by high oil and other commodity prices and by a generally adverse external environment. The authorities are presently finalising a comprehensive economic and financial reform programme seeking to restore financial stability and improve the country?s medium- and long-term outlook by addressing the acute macroeconomic imbalances that have been present for some time. They were assisted by an IMF team, which visited Victoria in September.

The advanced discussions with the IMF in October, should pave the way to a formal request by the authorities for a stand-by arrangement, to be considered by the IMF's Executive Board in November 2008. ?To address the present crisis, Seychelles has started to undertake the most comprehensive overhaul of the economy in its history,? commented Danny Faure, minister of Finance of Seychelles. ?In designing this ambitious reform programme we have had to acknowledge that our country is no longer able to service its debts on existing terms and we must therefore work with our creditors and with their support find the best way to place our debt on a sustainable footing once and for all.? The Government has appointed investment bank Houlihan Lokey as financial advisor in consultations with affected creditors. Clifford Chance will be legal advisor to the authorities. More information can be viewed on the Presidency of Seychelles web site at www.statehouse.gov.sc

<I> © 2008 PR Newswire</I>