Seychelles receives Fitch Rating upgrade reflecting economic growth
Seychelles' Principal Secretary for Finance, Astride Tamatave, praised the country's recent Fitch Rating upgrade to BB with a positive outlook, reflecting the continuing growth of the East African nation's economy.
According to the report, Seychelles has a 'BB-' rating. The rating is supported by relatively high income levels (2.4x the peer median), strong World Bank Governance Indicators, and support from multilateral creditors.
However, the economy's small size, limited effectiveness of monetary policy, a lack of firm fiscal anchors, and exceptionally high concentration in the tourism sector, which makes it vulnerable to external shocks, balance these strengths. There are also medium- to long-term risks associated with climate change that need to be considered.
On the back of this, Tamatave emphasized that the revised rating demonstrates Fitch Rating's growing optimism regarding Seychelles' creditworthiness.
"This rating shows that Fitch Rating, as a credit rating agency, has become more optimistic about the future of Seychelles' creditworthiness. This also shows that Seychelles' various fiscal and monetary policies adopted by the Central Bank and the government after the COVID-19 pandemic to re-launch the economy are working," Tamatave is quoted by Seychelles News Agency.
The principal secretary noted that Seychelles achieved a primary fiscal surplus of 1.8 percent of GDP in 2023, accompanied by a reduction in debt to 60.1 percent of GDP.
According to the Ratings, Seychelles witnessed a 5.7 percent increase in tourist arrivals and a 5.8 percent rise in tourism earnings in 2023, indicating stabilization following significant growth rates of 82 percent and 59 percent in 2022, respectively.
Tamatave also highlighted the significant contributions of the information and communication technology sector, along with a 2.5 percent growth in the fisheries sector, to Seychelles' economy in 2023.
Brian Commettant, the first deputy governor of the Central Bank of Seychelles, attributed the improved Fitch Rating to the country's augmented foreign exchange reserves. He noted a 5.8 percent increase in foreign exchange inflows in 2023, supporting the rise in reserves from $639 million in 2022 to $682 million in 2023, estimated to cover at least three months of imports.
Despite the positive assessment, the Fitch Ratings report highlighted Seychelles' vulnerability to climate change impacts, particularly its susceptibility to rising sea levels. The nation has experienced heightened storm frequency and intensity, leading to the degradation of coastal infrastructure.
