Overview

Country Overview

Located northeast of Madagascar, the Republic of Seychelles is an archipelago of 115 islands that are home to 92,900 inhabitants, three fourths of which live on the main island of Mahé. While Seychelles records the highest gross domestic product (GDP) per capita in Africa ($15,476 in 2015), its economy (which relies heavily on tourism and tuna exports) is particularly at risk to increasing changes in climate.

Economic Overview

Seychelles’ economy expanded strongly in 2015, by 4.3%. The tourism sector remains the major engine of growth, and is benefiting from efforts to diversify source markets to the Middle East and Asia. Despite the recent, robust pace of growth, inflation has remained contained, due partly to favorable imported energy and food prices. However, following years of rapid debt consolidation, fiscal policy has turned more expansionary, raising some risks of the economy overheating. This puts into focus the need for continued reforms and implementation to make the public sector more efficient, and to lay the foundation for sustainable, private sector led growth. 

Challenges

Low unemployment and high labor force participation (70% in 2015) mask several structural weaknesses in Seychelles’ labor market. Skill mismatches hinder high-quality job creation. Youth unemployment is about three times higher than national unemployment, with female youth unemployment ranking nine percentage points higher than male youth unemployment.

Poverty rates in Seychelles are expected to remain among the lowest in the world outside the Organization for Economic Cooperation and Development (OECD). Recent estimates show that extreme poverty, using the international poverty line of $1.90 per day in 2011 purchasing power parity (PPP), stood at 1.1% of the population in 2013. Moderate poverty based on the $3.1 per day (in 2011 PPP) poverty line was 2.5% of the population in 2013. However, inequality is substantial, with a gross income-based Gini index of 0.46 in 2013.

Political Context

Independent since 1976, Seychelles is a relatively young democracy; the first multiparty presidential election was held in 1993, after the adoption of a new constitution.

A presidential election in December 2015 was closely-fought, and incumbent President James Michel was narrowly elected for a third and last term, by just 193 votes out of 62,831 valid votes cast. In September 2016, the opposition coalition Linyon Demokratik Seselwa (LDS) won the country’s parliamentary elections for the first time. This was also the first time that the ruling Parti Lepep lost its majority in the parliament.

LDS is a coalition of four main parties including the Seychelles National Party (SNP) which boycotted the previous parliamentary polls, in 2011. The LDS will hold 19 seats in the Sixth National Assembly, while Parti Lepep will hold 14 seats. Before the elections Parti Lepep held all 25 directly elected seats in the assembly and an additional seven proportionate seats, leaving just 1 seat held by the opposition.

On September 27, 2016, President Michel announced that he would resign on October 16, to be replaced by current Deputy-President Danny Faure.

Last Updated: Oct 05, 2016

World Bank Group Engagement in Seychelles

The current WBG Country Partnership Strategy with Seychelles (2012–2015) has reached its final year of implementation and the institution is in the process of completing the preparation of a Systematic Country Diagnostic on the island nation, deemed a first step in the preparation of a new strategy. The World Bank program consists of a range of analytical work, much of which is financed through reimbursable arrangements, also known as Reimbursable Advisory Services (RAS), providing technical assistance in the areas of financial sector, Public Financial Management, State-owned enterprise reform, and the social sectors.  There are currently two Development Policy Lending operations in the Bank portfolio in Seychelles with a total commitment of $12 million.

Last Updated: Oct 05, 2016

The World Bank has delivered, in close collaboration with the International Monetary Fund (IMF), delivered two stand-alone Development Policy Loans (DPL) amounting to $18 million, and three operations totaling $7 million under a Development Policy Operation series approved by the World Bank Board in September 2013, 2014, and 2015. In addition, a DPL of $7 million with a Catastrophe Deferred Drawdown Option was approved in September 2014 to help strengthen the country’s ability to manage disaster risks.

These policy operations focus on catalyzing private sector growth, improving governance and public resource management, and building resilience. These reforms have been instrumental in improving the country’s business climate, enhancing fiscal transparency, improving public financial management and increasing fiscal oversight and control of public enterprises.

Last Updated: Oct 05, 2016

The World Bank works in collaboration with other development partners of Seychelles, including with the International Monetary Fund (IMF). 

Last Updated: Oct 05, 2016


LENDING

Seychelles: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments