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UPDATE 1-Seychelles sees 3 pct economic growth in 2013 -finmin
December 4, 2012 / 11:42 AM / 5 years ago

UPDATE 1-Seychelles sees 3 pct economic growth in 2013 -finmin

* GDP seen at 3 pct in 2013 from 2.7 pct in 2012

* Inflation seen slowing to around 5 pct in 2013

* Revenue, spending both seen up 3 pct next year (Adds details)

By George Thande

VICTORIA, Dec 4 (Reuters) - Seychelles economic growth will reach 3 percent in 2013 while inflation will slow, but the tiny Indian Ocean state remains vulnerable to external shocks, Finance Minister Pierre Laporte said on Tuesday.

He told parliament that inflation, which he said was forecast next year at about 5 percent versus 7.6 percent in October, remained the import-dependent country’s biggest economic challenge.

“We remain cautious of the downside risks to the forecasts since, as we have said repeatedly, our economy remains vulnerable to external developments,” Laporte said during a 2013 budget debate.

He said higher tax income would increase total government revenue in 2013 by 3 percent to 6.3 billion rupees ($479.59 million) compared with a revised forecast for this year. Spending would also be up 3 percent to 5.4 billion rupees - or 36 percent of GDP.

The nation of some 87,000 people was on track to achieve its debt sustainability position of 50 percent of gross domestic product by 2018, Laporte said, following a restructuring of its external debts.

A 2008 balance of payments crisis led Seychelles to default on a Eurobond interest payment and teeter near bankruptcy before the government brought in a raft of reforms to liberalise the once heavily state-controlled economy.

Tourism, the archipelago’s economic mainstay, will grow by 3 percent in 2013, Laporte said. The sector has battled for growth in its main market, the debt crisis-hit euro zone, while the Seychelles is vulnerable to volatility in global food and fuel prices.

On taxes, the finance minister said a business tax levied on companies with turnover in excess of 1 million rupees would be reduced to 30 percent from 33 percent. Commercial banks, telecommunications and insurance companies and alcohol and cigarette manufacturers would be excluded from the tax cut. ($1 = 13.1363 Seychelles rupees) (Writing by Richard Lough; Editing by Drazen Jorgic and Stephen Nisbet)

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