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Fitch Ratings upgrades Seychelles to ‘BB’ score, a first for the country |24 June 2019

Fitch Ratings upgrades Seychelles to ‘BB’ score, a first for the country

Minister Loustau-Lalanne speaking during the press conference on Saturday

Fitch Ratings – one of the three main credit ratings agencies – has upgraded Seychelles sovereign credit rating from ‘BB-’ to ‘BB’ with a stable outlook.

Seychelles had been scoring a grade ‘BB-’ every year since 2015 until this recent rating boost.

A sovereign credit rating indicates the risk level of the investing environment of a country and is used by investors when looking to invest in particular jurisdictions.

In a press conference on Saturday, the Minister for Finance, Trade, Investment and Economic Planning, Maurice Loustau-Lalanne, said that this is an important improvement for Seychelles and marks a strong economic trajectory.

“It is the first time that we receive such a score and this improvement bodes well for investment in Seychelles. Current investors are assured that their investments are secured and potential ones can make reference to the rating to decide where to invest in the country,” Minister Loustau-Lalanne remarked.

He further noted that the new and encouraging rating is the result of good governance over the last ten years which the country should aim to maintain and improve on.

“The country has been making a primary surplus on its fiscal budget for the 11th consecutive year and this has allowed us pay our debts and better manage the economy.”

“We hope to continue on this strong trajectory that we have been on since 2008 when we embarked on the macro-economic programme, after defaulting on our government debt,” he noted.

Fitch Ratings cited the country’s strong track record of implementing International Monetary Fund’s (IMF) Policy Coordination Instrument (PCI), signed in 2017, and the Extended Fund Facilities as the main driver of the rating upgrade.

The main factors which have contributed to the upgrade are the country’s sustained forecasted primary surpluses and robust nominal GDP growth which have been consistent with the government's medium-term target of bringing general government-debt-to-GDP below 50% by 2021, from 55% in 2018, including monetary debt of 9% of GDP.

The credit rating agency noted that, in 2018, inflation remained contained at an annual average of 3.7% and that the country’s GDP per capita was 2.7 times higher than the ‘BB’ median which stands at US $16,294.

Minister Loustau-Lalanne also noted that the Central Bank of Seychelles played an important role in managing the inflation rate by adjusting its monetary policies.

The minister however said that the country should remain mindful to protect the tourism and fisheries industries, the two main drivers of the economy and which bring in the most revenue into the country.

Seychelles nonetheless remains vulnerable to external elements such as oil prices and other imported commodities.

Meanwhile, with the government as its main shareholder, Air Seychelles has been cited as a potential fiscal risk for the country.

The local airline which recorded a US $44 million loss in 2018, recently started its restructuring programme focusing its flights to countries of the region.

The government has pledged an annual budget allocation of US $6 million for five years to the airline’s programme.

 

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