SEYCHELLES

RISK RATING
High
Default High Risk Score 6.00
Normal Average 2.02
Weighted Average 1.52
RISK RATING HISTORY
RISK RATING SCALE

Risk Rating Scale

Severe: 8.0 to 10
High: 6.0 to 7.9
Elevated: 4.0 to 5.9
Moderate: 2.0 to 3.9
Low: 0.0 to 1.9
EXCHANGE RATE
Country Outlook

Long-time opposition leader Wavel Ramkalawan won the 2020 elections in the first opposition victory in 44 years. As a result, the United Seychelles party has been knocked from power for the first time since independence in 1977. The pandemic has been a burning campaign issue because restrictions on global travel have hit the tourism industry, a major sector for the country’s economy and employer of many of its 98,000 people. Industrial action will gradually be stepped up in the public service and tourism sector, as the crisis lingers. As the government has been forced to cut some social spending, the probability of protests has increased, though these are unlikely to turn violent. The government intends to honour external debt obligations in 2020, although debt sustainability will become a greater problem in case of a protracted economic crisis or resurgence of the virus.

  • New President Ramkalawan, who is the leader of the Linyon Demokratik Seselwa (LDS), or Seychelles Democratic Alliance, received 54 percent of the 2020 vote in the Indian Ocean island nation. Meanwhile, Ramkalawan‚Äôs LDS party also won more than a two-third‚Äôs majority of National Assembly seats. The LDS was widely expected to win the 2020 elections as it built on mounting socio-economic grievances and perceptions of corruption and cronyism in the ruling party. Close ties between business and the political elite have increased cronyism and rent-seeking. The small scale of Seychelles society makes it very difficult for incomers and entrepreneurs to operate without key contacts at government and party level. The new government will shake up the entrenched elite.
  • Piracy no longer poses a threat to tourism or shipping lanes, while violent unrest is rare. The political system has experienced growing democratisation and the institutionalisation of competitive politics continues. Social unrest is very uncommon in Seychelles. While industrial action is becoming more likely in the public sector and on Mahe, strikes are very unlikely to turn violent. Somali pirates pushing out across the Indian Ocean to avoid increased security measures being employed in the Gulf of Aden presented a risk to Seychellois fishing lanes and the tourism industry until 2013. The Seychelles government has combined a military strategy, supplemented by co-operation with the EU and the US, with bolstering the legal framework dealing with offenders.
  • The economy has slowed since the start of the pandemic and will contract by almost 14 percent in 2020, while unemployment has doubled to 6.3 percent. The contraction would reverse some fragile progress made since the government defaulted on its debt in 2008 and sought an International Monetary Fund (IMF) bailout. However, the banking sector enters the crisis well capitalised and profitable, providing a buffer to absorb the expected deterioration in asset quality. There continues to be a risk of loss of correspondent banking relationships due to anti-money laundering concerns with associated reputational costs for Seychelles, which France included in its tax haven blacklist in 2019.
CUMULATIVE AND DAILY COVID-19 INFECTIONS AND DEATH RATE
INTERNATIONAL MONETARY FUND | DATAMAPPER
Risk Perils
Political Instability
1.2
Expropriation, Nationalisation, Confiscation & Deprivation
0.5
Contract Frustration & Breach
1.5
Taxation
1.5
Bribery & Corruption
1.0
Regulatory Burden
2.0
Strikes, Riots & Civil Commotion
1.5
Security
1.0
Sovereign Default
4.0
Economic Volatiliy
6.0

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