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Overview

  • The Republic of Seychelles lies northeast of Madagascar, an archipelago of 115 islands with almost 98,000 citizens, three-quarters of whom live on the main island of Mahé. Seychelles has the highest gross domestic product (GDP) per capita in Africa, at nearly $17 billion (2019), but inequality is significant, placing the prospect of continued shared prosperity in tighter focus. Climate change also poses long-term sustainability risks. 

    Political Context 

    Independent since 1976, the 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 President James Michel narrowly elected for a third and last term by just 193 votes out of the 62,831 valid votes cast. Michel resigned in October 2016, and was replaced by his deputy, Danny Faure. In September 2016’s legislative elections the opposition coalition won the parliamentary elections for the first time. Presidential and parliamentary elections are schedule for October 2020.  

    Economic developments and outlook 

    Following the economic crisis and resulting sovereign debt default in 2008, the Republic of Seychelles through a prudent reform program made significant progress in achieving economic stability and fiscal sustainability. As a result, the economy grew by an average rate of 4.2% per annum between 2009 and 2019. With the help of an International Monetary Fund program, the government maintained its target of 2.5% primary balance and was on target to reduce the debt to GDP ratio to 50% by 2021. Prudent monetary policy also led to a build-up of the gross international reserves to 3.5 months of import coverage by 2019 from less than one month at end-2008. 

    The economic and social shock from COVID-19 (coronavirus) on the Seychellois economy is severe due to strong dependence on international tourism. Tourism accounts for approximately 30% of gross domestic product (GDP), making the country highly vulnerable to the current COVID-19 pandemic. The global outbreak is drastically reducing economic activity in 2020 as tourist arrivals are projected to decline by more than 50%. This is affecting other sectors such as transportation; art, recreation and entertainment; wholesale and retail trade; and the financial and insurance sector. GDP is expected to contract by 15.9% in 2020 compared to the pre-pandemic projected growth rate of 3.5%. Recovery is expected to begin in 2021 with a projected increase of 4.7% driven by a recovery in the tourist industry and a resumption in capital flows. If unmitigated, the poor are expected to bear a disproportionate impact of the economic shock. According to the 2013 household survey, about 6 out of 10 poor individual have a job, mostly in informal activities in the service sector that are expected to experience significant declines.   

    Development challenges 

    While the immediate priority is the containment of COVID-19 and recovery from its economic and social impact on the country, a focus on longer term structural issues is also warranted for a strong and resilient recovery.   

    Among Seychelles’ development challenges is the importance to focus on greater productivity, participation and performance of its economy as means to increasing shared prosperity. Some of the main institutional challenges in this regard are notably barriers to open and operate businesses, inefficiencies in public sector management, such as limited statistical capacity, scope for a more strategic and sustainable approach to social protection, as well as the need to broaden access to quality education and skills development. Climate change adaptation, including through strengthened disaster preparedness systems and enhanced coastal management, is also key.  

    Last Updated: Jul 31, 2020

  • World Bank Group Engagement in Seychelles 

    The World Bank has delivered a $15 million Development Policy Loan in July 2020 to support Seychelles in its COVID-19 response and prepare the foundations for a strong recovery. The Bank disbursed $7 million in April 2020 from a Catastrophe Draw Down Option (CAT-DDO) emergency credit line that had been in place since 2015. 

    The overarching objective of the World Bank Group’s (WBG) Seychelles Country Partnership Framework FY18-FY23, prepared in close consultation with the government, private sector and other development stakeholders, is to consolidate the country’s path to inclusive and sustainable prosperity. To that end, the strategy delineates two mutually reinforcing focus areas, namely shared prosperity, and inclusion and public-sector performance. This entails retooling the core economy of fisheries and tourism for sustainability and inclusion, along the lines of the government’s Blue Economy flagship program, and to strengthen management and resilience of natural endowments. 

    The CPF supports a shift in focus towards building the human capital of the bottom 40% of the population to enable them to participate in new expanding opportunities. Finally, it seeks to consolidate resilience in public finances by increasing their efficiency, improving the regulatory capacity of the state to foster space for the private sector, and setting the foundations for transparency and accountability.  

    As a means to support the country’s response to the social and economic fallout caused by COVID-19, the WBG has recently approved a $15 million credit from the International Bank for Reconstruction and Development (IBRD). The Development Policy Lending financing will be utilized to enhance the country’s response mechanisms in health, social protection and private sector, and to support the country’s post-crisis recovery through strengthened financial systems and climate resilience.

    Last Updated: Jul 31, 2020

  • Under the South West Indian Ocean Fisheries Governance and Shared Growth Program (SWIOFish3), the Bank is supporting the management and conservation of marine areas and strengthening seafood value chains in the Seychelles. The project is co-financed by a Seychelles Blue Bond ($15 million), which is supported by a $5 million guarantee from the International Bank of Reconstruction and Development and a further $5 million concessional loan from the Global Environment Facility (GEF). This first ever sovereign Blue Bond was issued by the government of Seychelles in October 2018. The Blue Bond is an innovative financing mechanism to mobilize private sector investment to support the ocean economy. The proceeds are used to capitalize a Blue Grants Fund and a Blue Investment Fund managed by the Seychelles Conservation and Climate Adaptation Trust (SeyCCAT) and the Development Bank of Seychelles (DBS).

    Proceeds from the bond will include support for the expansion of marine protected areas, improved governance of priority fisheries and the development of the Seychelles’ blue economy through activities such as promotion of best practices, implementation of fisheries management plans, stock rebuilding, improvement of value-chains and aquaculture development. 

    Last Updated: Jul 31, 2020

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

    Last Updated: Jul 31, 2020

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LENDING

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

*Amounts include IBRD and IDA commitments


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Additional Resources

Country Office Contacts

Main Office Contact
1 Rue Andriamifidy
BP 4140
Antananarivo 101, Madagascar
+261-20-22-560-00
For general information and inquiries
Rafael Saute
Sr. External Affairs Officer
Maputo, Mozambique
+258-21-482-944
rsaute@worldbank.org
For project-related issues and complaints
seychellesalert@worldbank.org