With a population of over 96,000, Seychelles is an island nation located off the eastern coast of Africa in the Indian Ocean. Seychelles gained its independence from the United Kingdom in 1976, at which time the population lived at near subsistence level. Today, Seychelles’ main economic activities are tourism and fishing, and the country aspires to be a financial center. Although the World Bank has designated Seychelles as a “high income” country, its wealth is not evenly distributed. The United Nations Development Program’s Human Development Report for 2016 found that Seychelles still experiences income inequality, with a Gini coefficient of 46.8. However, this is a significant improvement from 2015.
Seychelles experienced a socialist coup in 1977 which resulted in a centrally planned economy and, in the short term, rapid economic development. However, serious imbalances such as large deficits and mounting debts contributed to persistent foreign exchange shortages and slow growth that plagued Seychelles through the first decade of the 21st century. After defaulting on interest payments due on a USD $230 million bond in 2008, the Government of Seychelles (GOS) turned to the IMF for support. To meet the IMF’s conditions for a stand-by loan, the GOS implemented a program of reforms, including a liberalization of the exchange rate regime, devaluing and floating the Seychellois Rupee (SCR) and eliminating all foreign exchange controls. As a result, the country has experienced economic growth, lower inflation, a stabilized exchange rate, declining public debt and increased international reserves. Economic growth in 2016 was 4.5 percent, although IMF estimates it will decline slightly to 4 percent in 2017.
Despite GOS attempts to diversify the economy, it remains focused on fishing and tourism. Seychelles’ vast Exclusive Economic Zone (EEZ), which encompasses 1.3 million square kilometers of the western Indian Ocean, is a potential source of untapped oil reserves and represents potential business opportunities for U.S. companies. Seychelles also has a small, but growing, offshore financial sector. There is also potential for U.S. investment in renewable energy as Seychelles seeks to reduce its heavy dependence on imported fossil fuels while preserving its naturally beautiful environment.
Seychelles welcomes foreign investment. The country’s investment policies encourage the development of Seychelles’ natural resources, improvements in infrastructure, and an increase in productivity levels, but stress that this must be done in an environmentally sound and sustainable manner. Indeed, Seychelles puts a premium on maintaining its unique ecosystems and screens all potential investment projects to ensure that any economic, social or industrial benefits will not compromise the country’s international reputation for environmental stewardship.
Since multi-party elections began in Seychelles in 1993, the ruling Parti Lepep has traditionally won elections by large margins. However, as a result of recent elections, the government and the National Assembly are controlled by different parties. On the one hand, President Michel of Parti Lepep was re-elected in the closely contested presidential election in December 2015. However, in the parliamentary elections of September 2016 the opposition alliance won a majority in the National Assembly for the first time in 40 years. While the President’s party continues in government, it is weakened by its loss of control of the legislature. In October 2016 President Michel resigned and was succeeded by then Vice-President Danny Faure.
|TI Corruption Perceptions Index||2015||40 of 168||http://www.transparency.org/
(No ranking available for 2016)
|World Bank’s Doing Business Report “Ease of Doing Business”||2016||93 of 190||doingbusiness.org/rankings|
|Global Innovation Index||2015||65 of 141||https://www.globalinnovationindex.org/
(No ranking available for 2016)
|U.S. FDI in partner country ($M USD, stock positions)||2015||$39||http://data.imf.org/CDIS|
|World Bank GNI per capita||2015||14,760||http://data.worldbank.org/