Seychelles' fiscal policy is to reduce debt to almost 50% by 2029

The Liberty House which houses the Ministry of Finance. (Gerard Larose)

(Seychelles News Agency) - Seychelles' Fitching Ratings at BB- with a positive outlook is a good indication that the country is doing well in regards to the macro-economic indicators set, said a top government official on Thursday.

The statement was made by Secretary of State for Finance, Patrick Payet, when giving the the government's reactions to the Fitch Ratings, supported by relatively high-income levels, strong World Bank governance indicators, and support from multilateral creditors.  

Fitch said, "Seychelles continues to have strong performance against benchmarks of the International Monetary Fund's Extended Fund Facility (EFF) and Resilience and Sustainability Facility (RSF) programmes, which collectively total $102 million, 4.7 percent of 2023 GDP, worth of funding over three years to 2026, of which 32 percent has already been disbursed."

In his reaction, Payet said, "We have a clear plan as a government and as a country, and also the fiscal policy that we have put in place to reduce our debt to almost 50 percent by 2029."

He said that the government has a primary balance target for 2024 of 1.1 percent of GDP.

Payet gave detailed actions that Seychelles is taking to ensure it keeps its outlook good, and this includes a new national strategy plan that sets out what needs to be done in the next five years to diversify the economy and transform the economy.

He added that the latest rating will be a useful tool, should the government or private company need to borrow funds from overseas.

"Any lending institution will use the rating agencies as an indicator of what is happening in the country to assess the indicative borrowing cost or lending rate for the government or that company. For us, we have good indicators that we can use when negotiating a lending rate and interest rate with the financial institutions overseas or if we want to maybe have a bond in the overseas market in the future," he added.

Payet said, "A very good interest rate will minimise the interest borrowing cost in the budget, so it will allow the revenue that you are collecting to invest in public infrastructure or social services and social infrastructure as well to be used for the country."

He said that Fitch Ratings has examined the monetary policies and "seen that it is in good shape and our financial system is stable, we have political stability and that one of the vulnerabilities we have is in regards to climate change."

Seychelles is heavily exposed to risks from climate change, with impacts already being felt primarily through the rising intensity and frequency of storms and flooding that are rendering some coastal infrastructure unusable.

Payet said the rating "allows for more foreign direct investment (FDI), so investors when they are coming into our country, they will use those indicators and this will attract more FDI and this will create more growth for the country and as a result, more employment will be created."