Seychelles commodity import programs

PES covers the period 3/82-1/87 (i.e., CIP's for FY82-FY86) and is based on document review, site visits, and interviews with USAID/S and GOS personnel. CIP performance has been good and points to the capacity of the GOS to use local currency resources for a number of impressive development activities. A total of 44,362 MT of medium fuel and 11,235 MT of diesel oil have been financed, delivered, and resold, generating SR 67,544,047 in local currency, which was deposited in a special account in the Seychelles Central Bank; 96% of local currency funds have been allocated (and 75% disbursed) to 50 development activities. These activities have been, almost without exception, well selected and effectively implemented in areas directly linked to the U.S. assistance program. Most have centered around infrastructural upgrading, e.g., port and land reclamation, road rehabilitation, and the development of the indigenous fishing industry. A variety of persons, ranging from boat owners and fishermen to local contractors and tour operators have benefited. CIP impacts on the balance of payments and on helping the Seychelles to maintain a satisfactory foreign reserve level during difficult economic times have been limited, but not insignificant: the foreign exchange provided annually through CIP's has equaled about 2% of the Seychelles' commodity imports bill. CIP provision of fuel to the power sector has benefited the overall economy of the Seychelles, but it would be incorrect to assume that alternative funding for this sector could not have been found. As for political impacts, these have been positive for both the GOS and the U.S. Finally, although some management problems need attention, it is notable that the Seychelles CIP's have achieved success without the presence of resident U.S. direct hire staff. The following issues need to be addressed. (1) The restriction of fuel purchases to Code 941 countries, and Kenya in particular, greatly reduces the CIP's value. (2) Contracting procedures warrant close examination to ensure that the most advantageous prices are being obtained. (3) While the CIP mechanism is possibly the most effective program available, there are several critical economic reforms being examined by the GOS which may warrant that the CIP program be reconsidered. (4) Given the Seychelles' foreign exchange and the introduction of the new budget, there is a need to be more discerning about the priorities for use of local currency. Related recommendations are addressed in action decisions.