INDEPENDENCE OF THE CENTRAL BANK IS ESSENTIAL FOR FINANCIAL STABILITY

The prosperity of our country depends on the stability of our financial system. The independence of the Central Bank of Seychelles is vital.

Money in the pockets of workers does not come by words. We must build a strong economy that earns for the country and for government while workers get their fair share. We must also make sure that this money has value. There is no point in getting more rupees if the rupee loses value.

The Central Bank is the guardian of the value of the rupee. To do this job well it cannot be used for short term political purposes.

These are principles that LDS has always stood by and which it maintained in government.

Today, our financial stability is at risk because of the policies and actions of the US government. With the departure of a trusted Central Bank Governor, the independence of this critical institution is uncertain.

ROLE OF THE CENTRAL BANK

The Central Bank plays an important role in managing our financial system to ensure stability.

It holds reserve funds, in particular foreign exchange, which can be used in emergencies. It controls the money supply to maintain the value of the rupee. It also regulates and controls banks and the international exchange system. Thus, it protects customers and investment, controls interest rates and facilitates transactions with the world.

WHAT US IS DOING WRONG

Over-spending is creating a budget deficit. Already Government is asking for an additional SR300 million for this year. It is proposing to take on new debt to create a Sovereign Wealth Fund and planning the sale of a government owned bank to foreigners.

These actions are threatening financial stability and will put pressure on the independence of the Central Bank. Reserves can be depleted to cover spending and to service debt. The biggest risk is interference with the money supply which can create inflation and devaluation of the rupee.

LDS CALLS ON GOVERNMENT TO RESPECT INDEPENDENCE OF THE CBS

The appointment of a new Governor of the Central Bank will be a critical decision. It must be made on the basis of qualifications and experience and not with political considerations. The appointee must be fully devoted to the role that the Bank needs to play. The independence of the institution must be guaranteed. The US Government must put aside politics and decide for what is best for the country.