By George Thande
VICTORIA, Oct 29 (Reuters) - The Seychelles government is urging more than a tenth of civil servants, or 2,000 people, to resign in a bid to cut costs as the national economy teeters on the edge of bankruptcy, a government official said on Wednesday.
The global financial crisis has left the Indian Ocean archipelago unable to service debts of $800 million, forcing it into rescue talks with the International Monetary Fund (IMF).
Earlier this month, the Seychelles missed an interest payment on $230 million of bonds maturing in 2011.
'We are asking 12 percent of our civil service to voluntarily resign in order to streamline the workforce and improve efficiency,' Ahmed Afif, principal secretary to the minister of finance, told Reuters.
The IMF is expected to announce a series of recommendations next month designed to move the economy towards a more open, liberalised model.
Foreign exchange reserves are 'extremely depleted' and the reforms will be key to restructuring the debt, a source close to the process told Reuters.
'The situation is severe,' he said.
The debt burden is equal to about 175 percent of gross domestic product, according to government statistics.
The IMF recommendations are expected to include tax and fiscal reform and slimming down a bloated civil service. Plans also are under way to float the Seychelles rupee, which analysts say has been artificially high for years.
Record high oil prices and turmoil in U.S. and European markets have weighed heavily on the archipelago's tourism sector, a top foreign exchange earner.
Standard & Poor's Ratings Services downgraded its debt rating on the $230 million senior unsecured Eurobond due 2011 to 'D' from 'CCC-' earlier this month.
It also assigned a recovery rating of '4' to the Eurobond of Seychelles, indicating its expectation of an average recovery of 30-50 percent on defaulted rated foreign currency commercial debt.
'For 12 years we have been telling the government to make changes. They have had to borrow and borrow through deals with foreign governments and commercial banks,' said Albert Payet, head of the Chamber of Commerce and Industry.
'There is no other avenue but to follow the IMF recommendations to get out of this quagmire.'
Central bank governor Francis Chang-Leng quit last week, citing ill health, as the extent of economic woes became clear.
(Writing by Richard Lough; editing by Michael Roddy) (For full Reuters Africa coverage and to have your say on the top issues, visit: http://africa.reuters.com/) Keywords: SEYCHELLES ECONOMY/ (Email: nairobi.newsroom@reuters.com; tel: +254 20 222 4717) COPYRIGHT Copyright Thomson Reuters 2008. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
VICTORIA, Oct 29 (Reuters) - The Seychelles government is urging more than a tenth of civil servants, or 2,000 people, to resign in a bid to cut costs as the national economy teeters on the edge of bankruptcy, a government official said on Wednesday.
The global financial crisis has left the Indian Ocean archipelago unable to service debts of $800 million, forcing it into rescue talks with the International Monetary Fund (IMF).
Earlier this month, the Seychelles missed an interest payment on $230 million of bonds maturing in 2011.
'We are asking 12 percent of our civil service to voluntarily resign in order to streamline the workforce and improve efficiency,' Ahmed Afif, principal secretary to the minister of finance, told Reuters.
The IMF is expected to announce a series of recommendations next month designed to move the economy towards a more open, liberalised model.
Foreign exchange reserves are 'extremely depleted' and the reforms will be key to restructuring the debt, a source close to the process told Reuters.
'The situation is severe,' he said.
The debt burden is equal to about 175 percent of gross domestic product, according to government statistics.
The IMF recommendations are expected to include tax and fiscal reform and slimming down a bloated civil service. Plans also are under way to float the Seychelles rupee, which analysts say has been artificially high for years.
Record high oil prices and turmoil in U.S. and European markets have weighed heavily on the archipelago's tourism sector, a top foreign exchange earner.
Standard & Poor's Ratings Services downgraded its debt rating on the $230 million senior unsecured Eurobond due 2011 to 'D' from 'CCC-' earlier this month.
It also assigned a recovery rating of '4' to the Eurobond of Seychelles, indicating its expectation of an average recovery of 30-50 percent on defaulted rated foreign currency commercial debt.
'For 12 years we have been telling the government to make changes. They have had to borrow and borrow through deals with foreign governments and commercial banks,' said Albert Payet, head of the Chamber of Commerce and Industry.
'There is no other avenue but to follow the IMF recommendations to get out of this quagmire.'
Central bank governor Francis Chang-Leng quit last week, citing ill health, as the extent of economic woes became clear.
(Writing by Richard Lough; editing by Michael Roddy) (For full Reuters Africa coverage and to have your say on the top issues, visit: http://africa.reuters.com/) Keywords: SEYCHELLES ECONOMY/ (Email: nairobi.newsroom@reuters.com; tel: +254 20 222 4717) COPYRIGHT Copyright Thomson Reuters 2008. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.