Supplementary Budget Sought by Seychelles Government Amid Fiscal Adjustments
In response to the mid-year economic and fiscal outlook, the Government of Seychelles seeks the approval of the National Assembly for a supplementary budget of R275,506,848.63. This announcement was made by Vice-President Ahmed Afif during a recent sitting, revealing the need for certain adjustments to the annual budget.
The first half of the year saw the country achieving a primary fiscal surplus of R365.8 million, a figure considerably higher than the initially projected surplus of R15.4 million. This surplus was primarily due to disciplined spending and higher-than-expected revenues. Nevertheless, tax revenues underwent a downward revision by R789 million, mainly due to a reduced tax base resulting from a 2022 deficit of R394 million. Despite this reduction, the overall outlook for tax collection remains positive, exceeding the 2021 figures by R671 million.
Non-Tax Revenues and Grants
The country’s non-tax revenues saw an improvement of R76.6 million, thanks to the strong performance from various sectors. However, Seychelles experienced a decrease in grants by R35.5 million, primarily due to delays in certain projects. This shift from a projected fiscal surplus to a deficit led the government to propose a supplementary budget, which is planned to be funded through reductions in expenses.
The supplementary budget includes additional allocations for the Truth, Reconciliation and National Unity Commission (TRNUC) and the new Communications Authority. To fund this, there will be reductions across different budget categories, including salaries, goods and services, capital projects, and net lending, in various government entities.
Salary projections for the second half of the year have been revised lower by R173.5 million. This is due to savings in the thirteenth-month salary, recruitments that did not materialise, and reallocation of budget appropriations.
Seychelles’ Debt and its Trajectory
As of June 2023, the country’s debt stood at R17.7 billion or 63.9 percent of GDP, showing a slight decrease compared to the end of the previous year. The government anticipates the debt to reach R18.6 billion or 62 percent of GDP by the end of 2023, indicating a sustainable trajectory.
Based on the performance of the first half and discussions with the International Monetary Fund (IMF), the government projects a primary fiscal deficit of R70.98 million, or 0.24 percent of GDP, for the full year. This move towards a supplementary budget signifies the government’s proactive response to the evolving economic landscape and its commitment to maintaining fiscal discipline.
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