(U) IMPACT OF GLOBAL ECONOMIC SLOWDOWN ON

S E C R E T STATE 029727 NOFORN E.O. 12958: DECL: 03/27/2034 TAGS: PINR ECON EFIN EINV EMIN SE SUBJECT: (U) IMPACT OF GLOBAL ECONOMIC SLOWDOWN ON SEYCHELLES (C-AL9-00286) Classified By: SUZANNE MCCORMICK, DIR., INR/OPS. REASON: 1.4(C). ¶1. (S/NF) WASHINGTON ECONOMIC ANALYSTS ARE CLOSELY MONITORING THE IMPACT OF THE GLOBAL ECONOMIC SLOWDOWN ON SUB-SAHARAN AFRICAN ECONOMIES AND THE REACTION OF REGIONAL GOVERNMENTS, PRIVATE SECTORS, AND GENERAL POPULATIONS TO NEGATIVE IMPACTS DOMESTICALLY. SENIOR US POLICY MAKERS HAVE EXPRESSED INTEREST IN THE RESILIENCY OF AFRICA'S RECENTLY STRONG ECONOMIC GROWTH IN THE FACE OF A GLOBAL FINANCIAL AND ECONOMIC CRISIS. AFRICA ANALYSTS HAVE WARNED THAT, WHILE THE REGION IS LARGELY INSULATED FROM DEVELOPED COUNTRY FINANCIAL SECTOR MELTDOWNS, THE REGION IS VULNERABLE TO AN INCREASINGLY APPARENT GLOBAL ECONOMIC SLOWDOWN THROUGH FALLING COMMODITY PRICES AND DEPENDENCE ON DEVELOPED COUNTRY ECONOMIES FOR EXPORT MARKETS, AID, AND SOURCES OF REMITTANCES. A STAGNATING GLOBAL ECONOMY WILL TRIGGER A SLOWDOWN IN REGIONAL ECONOMIC GROWTH RATES THAT ANALYSTS FEAR WILL PUSH INCREASED NUMBERS INTO POVERTY, STRAIN GOVERNMENT COFFERS AND ABILITY TO RESPOND TO AN ECONOMIC CRISIS, AND POSSIBLY LEAD TO GREATER SOCIETAL AND POLITICAL INSTABILITY. AS TIME AND RESOURCES ALLOW, ANALYSTS WOULD GREATLY APPRECIATE RESPONSES TO THE FOLLOWING QUESTIONS REGARDING SEYCHELLES: ¶A. (U) SEYCHELLES RECEIVED A 2-YEAR IMF PACKAGE WITH THE FIRST TRANCHE BEING $9.1 MILLION. 1) (U) HOW WILL SEYCHELLES SPEND THESE FUNDS? 2) (U) TO WHAT EXTENT WILL THIS HELP SEYCHELLES? 3) (U) CAN REAL ECONOMIC GAINS BE MADE WITHOUT POLITICAL CHANGES (OR IS THE IMF EXPECTING ANY POLITICAL CHANGES)? ¶2. (U) PLEASE CITE C-AL9-00286 IN THE SUBJECT LINE OF REPORTING IN RESPONSE TO THE ABOVE QUESTIONS. CLINTON