Seychelles's Exchange Offer Receives Boost from Creditors

LONDON, December 23 - An informal group of creditors holding 9.125% Notes due 2011 eligible
under the country's recently launched exchange offer announced today that its
members intend to support Seychelles's debt restructuring effort by
participating in the exchange offer.

Members of the informal group include Banco Finantia, Cable & Wireless,
and Diageo.

On December 14 2009, Seychelles issued a press release announcing the
full launch of an offer to exchange certain debt instruments, constituting
the bulk of Seychelles's external commercial debt, for new bonds. One of the
new bonds being offered will benefit from a partial guarantee on interest
from the African Development Bank (AFDB). The terms of this exchange offer
are set out in detail in a Prospectus dated 7 December 2009.

The Creditors' intention to participate in Seychelles's exchange offer
follows multiple rounds of discussions with the Seychelles authorities and
their advisors since September 2009, and was prompted by an analysis of the
terms of the offer, the country's financial position, and its progress with
the reform process.

Mr. Peter Donnelly, Managing Director of Banco Finantia and chairman of
the informal creditor group commented that, "Our focus from the outset of the
discussions has been on helping Seychelles to regain debt sustainability
whilst ensuring equitable burden- sharing amongst creditors and the
Government. In this regard we believe that Seychelles considered creditor
views in finalising the terms of the exchange offer, and we are satisfied
that the final terms of the offer are as good as possible under the
circumstances."

He added, "We have been reassured by the Seychelles Government's clear
commitment to reform as reflected in the IMF's recent approval of a new three
year arrangement under the IMF's Extended Fund Facility (EFF), and have been
appreciative of the constructive dialogue that it has maintained with
creditors throughout the process."

The expiration date of the offer is 14 January 2010.

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To Members of the International Community:

At the request of the Government of Seychelles, I would like to inform
you of recent economic developments in Seychelles, and the country's
relations with the International Monetary Fund.

Seychelles has made rapid progress in restoring macroeconomic stability,
thanks to the liberalization of the exchange regime, a strong fiscal
adjustment, and prudent monetary policies. Inflation has been near zero since
March and the exchange rate has appreciated from lows early in the year.
Official external reserves have recovered from near depleted levels in
mid-2008 to 1.3 months of imports at end-September. Government expenditure
has been tightly controlled and revenue has remained buoyant despite the
difficult domestic and external environment. The primary budget surplus
reached 13.4 percent of GDP in the first nine months of 2009, a large
adjustment compared to 3.8 percent for the full year in 2008. GDP will fall
by 7-1/2 percent in real terms in 2009 on the impact of global recession, but
the economy is responding favorable to the reforms. Real economic growth is
expected to recover to 4 percent in 2010, on a rebound in tourism and FDI.

Program implementation has been exemplary and reforms continue to be
pursued with a high degree of ownership and broad public support, and in
spite of strong head winds from the global recession. All end-September 2009
quantitative performance criteria were met with margins and all structural
benchmarks under the Stand-By Arrangement (SBA) were implemented as
scheduled. The third program review was completed on December 18, 2009, and a
total of SDR 11 million (about US$17.3 million) has been disbursed under the
SBA.

The reform progress in 2009 sets the stage for a coherent medium-term
effort to extend the gains for growth and stability. These objectives form
the core of the new three-year SDR 19.8 million (about US$31.2 million)
arrangement under the Extended Fund Facility, also approved on December 18,
2009, in replacement of the SBA. The focus now shifts to a second generation
of reforms to consolidate macroeconomic stability, remove constraints to
growth, improve the performance of the public sector, and support the public
debt restructuring process aimed at reestablishing debt sustainability. The
reforms ahead include strengthening public financial management,
institutionalizing higher governance standards in the public enterprises,
reforming taxation, bolstering the financial system, and improving the
business environment.

Notwithstanding the government's strong fiscal adjustment and reform
successes to date, and the support of the international community in the form
of grants and loans, public external debt remains unsustainable without
additional relief to that granted by Paris Club creditors. Seychelles thus
needs further financial support from the international community, including
from private creditors. A high degree of participation in the recently launch
debt exchange offer to commercial bond holders is a critical element in
achieving public debt sustainability and in supporting economic recovery.

Yours sincerely,

Dominique Strauss-Kahn

DF King & Co., +44-20-7920-9700