Seychelles’ BB- rating with ‘stable outlook’ spells good news for the country |20 April 2023
SS Payet
Aims to improve to BB or BB+ at next assessment
The Fitch report has reaffirmed the BB- report for Seychelles, along with the ‘Stable Outlook’, which brings better investment opportunities for the country along with better loaning conditions for the government.
The secretary of state (SS) for Finance, National Planning and Trade, Patrick Payet, made the statement during a press conference yesterday while outlining Seychelles’ first annual assessment for 2023, released earlier this month.
Speaking to the local media at the ministry’s headquarters at Liberty House, SS Payet stated that the current rating is a reaffirmation of the rating in October 2022 with the ‘Stable Outlook’ added on.
With the reaffirmation, this allows investors and future ones to know that their investments are being well protected, especially those from the tourism sector who either take a loan with international banks or have their shareholders invest in the equity.
“This shows that there is confidence in the economic aspect of Seychelles and that the economy is on the right path,” explained SS Payet.
According to him, this also means there are more jobs being created for locals and the country can perform more economic activities for existing sectors.
The government can also use the rating to negotiate loans on a better condition on the international stage. A sovereign credit rating is an assessment of a country’s creditworthiness. It shows the level of risk associated with lending to a particular country since it is applied to all bonds issued by the government. Since Seychelles is in a programme with the support of the International Monetary Fund (IMF), Fitch has also had discussions with them before they gave the rating. Fitch also took into account the fiscal policy aspect.
Fitch completed the rating with discussions and information from key relevant partners such as the Ministry of Finance, Central Bank and private sectors like the tourism sector and other banks that may be involved.
The Fitch analysis gets done every six months and the ministry expects that the next Fitch rating will be done in October and this will be based on the budget performance of 2023. It will be on the debt to GDP ratio and they will see if the government will be able to repay their debt. It will also take into consideration the budget of 2024 and the future years. SS Payet stated that the next step is to achieve either a BB or a BB+ rating.
There are private sectors who also loan money internationally and they can do so on much better conditions because they will be able to see that the country is doing well and at they can repay the loan internationally.
“At the end of the day, it is based on the cost of doing business in Seychelles, so when you are getting better conditions, you can pass on the benefits to the consumers,” explained SS Payet.
It should be noted that in its first annual assessment of Seychelles for 2023, Fitch had affirmed that Seychelles' 'BB-' rating is supported by relatively high income levels, strong World Bank Governance Indicators, support from multilateral creditors and stable policymaking.
Text & photo by Sunny Esparon