Fitch affirms Seychelles’ ‘BB’ credit rating with stable outlook |26 December 2019

Minister Loustau-Lalanne (Photo: Joena Meme)

Earlier this month, credit rating agency Fitch Ratings affirmed Seychelles’ ‘BB’ credit rating with a stable outlook, after the country was given the status for the first time in June this year.

After having conducted the second annual assessment locally earlier this month, the agency has released a report of its findings, detailing the improvements over the years, and challenges the country needs to overcome if it is to maintain or improve its sovereign rating.

Speaking to the media on Tuesday, December 24, Minister for Finance, Trade, Investment and Economic Planning Maurice Loustau-Lalanne noted that the rating and accompanying report is promising, especially to foreign direct investors.

“It confirms that we are on the right road, a positive road for 2019, 2020, and 2021 if we remain on the same trajectory. We need to ensure that we make a fiscal surplus, our target is 2.5 percent, so we can reduce our debt to 50 percent in 2021. We need to maintain the debt to Gross Domestic Product (GDP) ratio”.

“A ‘BB’ rating means a country is safe to invest in and you can make a return on your investment and you can do business with ease,” Minister Loustau-Lalanne noted.

According to the report, there are risks of fiscal slippage on account that the 2020 Presidential elections could trigger pressure to increase spending, although Minister Loustau-Lalanne assured that the risk of overspending is minimal since the 2020 budget has already been approved by the National Assembly, inclusive of provisions for the elections.

A further concern which could impact negatively on Seychelles’ rating is the delayed restructuring of national airline Air Seychelles.

“Air Seychelles, for a very long period of time was not on the budget. We put aside a small sum of R16.7 million annually for 10 years and this comes to an end in 2022. But now, we have to give $6 million in subsidies, for which provisions have been made in the budget. Moreover, we have to guarantee Air Seychelles’ debt owed to Etihad. It is important that we give them the subsidies otherwise it might have to halt operations, so as the government, we will subsidise the airline for five years, but as I said before, no further subsidies will be given to Air Seychelles after that as it will affect our fiscal performance,” Minister Loustau-Lalanne noted.

Minister Loustau-Lalanne further noted that the indicators propose that the Seychelles economy is on the right track and more growth is expected next year, from the tourism sector, fisheries and manufacturing sectors.

He also noted that numerous projects will be implemented by stakeholders including the Central Bank of Seychelles (CBS) towards ensuring that the economy remains dynamic.