Seychelles

Politics:

• Analysis

  Seychelles politics: Quick View - Seychelles looks for a seat on the UN Sec

  Event

  With its international reputation improving given its role in anti-piracy efforts and mediation in Madagascar's crisis, Seychelles intends to bid for a non-permanent seat on the UN Security Council in five years' time.

  Analysis

  Subject to approval from the AU, the president, James Michel, announced in early August to the annual gathering of Seychelles' ambassadors that the archipelago was seeking a seat at the UN Security Council for the 2017-18 term. The country is one of 72 not to have been represented on the Security Council; all but 12 countries in sub-Saharan Africa have sat on the Security Council at least once, including the island states of Mauritius (two two-year sessions: 1977-78 and 2001-02), Madagascar (one session: 1985-86) and Cape Verde (one session: 1992-93).

  In recent years Seychelles has significantly raised its diplomatic profile, international standing and credibility through its involvement in the international efforts against Somali-based piracy in the Indian Ocean. The archipelago has benefited from significant international support such as the EU, the US, various Gulf states, Japan and the UK-the latter, for example, in mid-August began construction of a new Regional Anti-Piracy Prosecution & Intelligence Co-ordination Centre-to bolster both its naval security and monitoring capabilities, as well as judicial reform to prosecute and jail pirates.

  More recently, the archipelago has been hosting negotiations between Madagascar's current president, Andry Rajoelina, and the former president he ousted three years ago, Marc Ravalomanana, who has been in exile in South Africa since then. Mediated by the 15-nation SADC, talks began on July 25th on the island of Desroches, 230 km from the main island of Mahe. They continued two weeks later, with the deadline extended to August 16th. While an agreement has so far proved elusive, Seychelles'-and Mr Michel's-role in hosting and mediating the process has improved its international reputation.

  August 14, 2012

• Background

  Seychelles: Political forces

  The SPPF has dominated all areas of politics

  Mr Rene and the SPPF have retained their hold on power since the 1977 coup, at first by outlawing other parties and, since 1993, via the election process. The regime has maintained majority support by spending heavily on both social services (including free education and health provision) and capital projects, particularly housing. The SPPF has a very strong nationwide structure, and membership of the party is the most effective way of securing a job in the state sector, which employs about 50% of the workforce. Cronyism and nepotism have long been a feature of political and business life in Seychelles.

  Poor economic policy (especially exchange-rate controls) has stifled the private sector and was the cause of serious macroeconomic imbalances in the late 1990s, leading to an acute shortage of foreign exchange. As a consequence, Mr Rene and the SPPF lost supporters, although well-timed government spending helped them to narrow victories in the 2001 and 2002 elections. The power of the SPPF was once again illustrated when Mr Michel won the July 2006 presidential election and the SPPF retained its majority in the legislative election in 2007, even though the economy has been struggling in recent years. The behind-the-scenes power of Mr Rene, who remains SPPF party chairman, is still substantial and is seen by some as an obstacle to Mr Michel pursuing more aggressive economic reforms.

  The opposition slowly gains ground

  Following the return to multiparty politics in 1993, the main opposition was provided by Mr Mancham, a former president, and the DP. Yet, although Mr Mancham secured 37% of the vote in the 1993 presidential election, the DP failed to become an effective opposition. Instead, the SNP—a merger between the three components of the former UO—has steadily emerged as the main opposition party. The SNP has campaigned on broadly free-market policies, as advocated by the Seychelles Chamber of Commerce, with populist measures aimed at lower-paid workers, which has meant that it has benefited from the poor economic performance of recent years.

  The SNP's strong showing in the December 2002 and May 2007 parliamentary elections has given it much greater representation on parliamentary committees. Although this will invigorate parliament, which had become a virtual rubber-stamp institution, the SNP holds no real power. The SNP initially protested against the "backdoor" transfer of power to Mr Michel, but it has since toned down its criticism, which it had found to be counterproductive. The retirement of Mr Mancham as the head of the DP in early 2005 and his replacement by the younger and more dynamic Nichol Gabriel meant that the DP and the SNP started to co-operate more closely.

  October 01, 2007

• Structure

  Seychelles: Political structure

  Official name

  Republic of Seychelles

  Form of state

  Unitary republic

  Legal system

  Based on English common law, the Napoleonic Code and the amended 1993 constitution

  National legislature

  National Assembly of 34 seats, elected by universal adult suffrage-25 seats are decided by simple majority, nine seats by proportional representation

  National elections

  May 2011 (presidential); September-October 2011 (legislative); next elections 2016 (presidential and legislative)

  Head of state

  President, elected by universal suffrage, empowered by the 1993 constitution to rule by decree, serves a five-year term; currently James Michel

  National government

  The president and his appointed Council of Ministers; last reshuffle in March 2012

  Main political parties

  The People's Party (also known as Parti Lepep; formerly the Seychelles People's Progressive Front-SPPF), the majority party, holds 33 seats in the National Assembly and was previously the sole legal party; the Seychelles National Party (SNP) and the New Democratic Party (NDP), boycotted the 2011 election. A new party, the Popular Democratic Party (PDP), established before 2011 election, holds one parliamentary seat

  Key ministers

  President, defence, legal affairs, information & hydrocarbons: James Michel

  Vice-president, public administration & ICT: Danny Faure

  Designated minister, community development, social affairs & sports: Vincent Meriton

  Education: MacSuzy Mondon

  Employment & human resources: Edith Alexander

  Environment & energy: Rolph Payet

  Finance, investment & trade: Pierre Laporte

  Foreign affairs: Jean Paul Adam

  Health: Mitcy Larue

  Home affairs & transport: Joel Morgan

  Natural resources & industry: Peter Sinon

  Land use & housing: Christian Lionnet

  Tourism & culture: Alain St Ange

  Central Bank governor

  Caroline Abel

  December 07, 2012

Economy:

• Background

  Seychelles: Population

  A small, but cosmopolitan population

  The total population was 81,117 at the last census, in August 2002, and is growing at about 1.4% per year. In mid-2003 the population was estimated at 82,800 (but fluctuates owing to emigration and the number of expatriate workers). Around 90% of the population live on the main island, Mahe (including the capital Victoria); 7% on Praslin and 3% on La Digue. The remaining islands are sparsely populated or uninhabited. The proportion of children is less than in most African countries, which reflects the relatively low population growth rate. Approximately 29% of the population is under 15 years old, while 65% is between 15 and 64 years old. Most Seychellois are descended from one of three groups: French settlers, freed African slaves (brought to the archipelago by the British in the 19th Century) or Indian labourers. There are also small minorities of Europeans, Indians and Chinese among the permanent inhabitants. Creole is the native language of over 90% of the population, but most islanders also speak English (the language of government and commerce) and French. Christianity is the dominant religion—87% of Seychellois are Catholic and 7% Anglican.

  The public sector is the biggest employer

  According to the 2002 census, Seychelles has 43,556 economically active persons, of which 33,058 were in formal employment. The remainder comprised the self-employed (4,802), part-time workers (1,146), unpaid family workers (726) and employers (443). A further 3,111 were unemployed—equivalent to 7.1% of the workforce; and expatriate workers numbered 4,242. According to government data, the total number of people in employment fell for three years running between 2001 and 2004 (from 41,631 in 2002 to 39,015 in 2004). Initial figures indicate that this rose to 40,629 in 2005.

  October 01, 2007

• Structure

  Seychelles: Economic structure

  Economic structure: Annual indicators

  	2008a	2009a	2010a	2011b	2012b
  GDP at market prices (SRs bn)	9.1	11.5	11.6	12.5	14.0
  GDP (US$ bn)	1.0	0.8	1.0	1.0	1.0
  Real GDP growth (%)	-1.0	0.5	6.7	5.0	3.5
  Consumer price inflation (av; %)	37.0	31.8	-2.4	2.6a	7.2
  Population (m)c	0.1	0.1	0.1b	0.1	0.1
  Exports of goods fob (US$ m)	436.1	432.0	400.2	479.9	514.7
  Imports of goods fob (US$ m)	-839.0	-733.1	-736.8	-877.2	-881.5
  Current-account balance (US$ m)	-201.3	-90.7	-225.1	-238.3	-193.0
  Foreign-exchange reserves excl gold (US$ m)	63.8	190.6	235.6	252.3a	299.8
  Exchange rate (av) SRs:US$	9.46	13.61	12.07	12.38a	13.74
  a Actual. b Economist Intelligence Unit estimates. c IMF mid-year estimates.

  Download the numbers in Excel

  Origins of gross domestic product 2009	% of total	Components of gross domestic product 2009	% of total
  Agriculture	2.0	Private consumption	74.4
  Industry	19.7	Government consumption	11.1
  Services	78.3	Gross domestic investment	22.0
  		Exports of goods & services	108.4
  		Imports of goods & services	115.9
  Principal exports 2008	US$ m	Principal imports 2007	US$ m
  Canned tuna	215.4	Food & live animals	183.1
  Frozen & fresh fish	7.0	Manufactures	174.0
  Prawns	1.8	Machinery & transport equipment	225.2
  Main destinations of exports 2011a	% of total	Main origins of imports 2011a	% of total
  France	25.7	Saudi Arabia	35.9
  UK	20.4	South Africa	12.6
  Japan	10.6	Spain	12.5
  Italy	9.7	France	8.8
  Netherlands	3.0	Singapore	6.2
  a Derived from partners' trade returns.

  Download the numbers in Excel

  Download text file (csv format)

  December 07, 2012

• Outlook

  Seychelles: Country outlook

  Seychelles: Country outlook

  FROM THE ECONOMIST INTELLIGENCE UNIT

  OVERVIEW: The ruling People's Party (PP) took all but one of the seats in the May 2011 parliamentary election following an opposition boycott, and will remain firmly in charge. The next presidential election is not due until 2016, since the incumbent president, James Michel, is only into the second year of his second term and is expected to remain in power. Although affected by the turmoil in Europe, real GDP growth will accelerate in 2013 to 3.8%, underpinned by ongoing reform and non-European tourism. Having spiked in 2012 owing to higher energy prices and a weakening rupee, inflation will moderate in the 2013-14 forecast period, even with the introduction of value-added tax (VAT) in 2013. The fiscal surplus is expected to widen to an average of 1.4% of GDP in 2013-14 on the back of robust growth and ongoing reform. The current-account deficit will edge down in 2013 and 2014 to 13.5% of GDP and 11.5% of GDP respectively, supported by growth in tourism.

  DOMESTIC POLITICS: The PP's overwhelming victory in the early parliamentary election in September-October 2011 as the result of a boycott by the two main opposition groups-the Seychelles National Party (SNP) and the smaller New Democratic Party-has cemented the party's hold on power. The Court of Appeal gave the new Popular Democratic Movement (PDM)-a party formed a month before the parliamentary poll by SNP defectors-one of parliament's nine proportional-representation (PR) seats in December, although doubts about the National Assembly's democratic legitimacy will persist. The PP's vote was largely unchanged from 2007, but most opposition supporters either heeded the boycott or spoiled their ballot papers. Effective voter turnout (excluding the 32% of the votes cast that were spoiled) dipped to 50.6%, from 83.8% in 2007, illustrating the significant support base retained by the SNP. This was despite divisions in the party between those advocating a hardline approach towards the party regime (including the party leader, Wavel Ramkalawan, the defeated candidate) and those favouring accommodation. The PDM failed to make a breakthrough, winning just 7.4% of the total votes cast. However, the party later secured its single parliamentary seat, having taken 10.9% of the valid votes cast-and thereby crossing the 10% threshold required for a PR seat-following an interpretation by the Court of Appeal (which overturned an earlier judgment by the Constitutional Court). The PP holds all 25 of the directly elected, constituency-based seats, as well as seven of the nine PR seats, giving the party complete control. The PP welcomed the court ruling giving a seat to the PDM, as the ruling party prefers having a token opposition presence in parliament to none at all, for public-relations purposes. However, the absence of the main opposition parties from parliament will have little practical significance as the Assembly has consistently operated as a rubber stamp for policies advanced by the much more powerful executive. For Mr Michel, the double election victory will allow him to impose his authority on the PP (which still harbours both quasi-socialist and mercantilist elements opposed to free markets) and push ahead with reforms, ensuring that Seychelles maintains good relations with donors. By boycotting the poll-and a by-election in August 2012-in protest at the make-up of the new electoral commission, the SNP risks marginalisation and further splintering, as members disillusioned by Mr Ramkalawan's intolerant approach defect. The PDM's share of the vote may have been small, but its parliamentary seat boosts its profile. That said, although the PDM leader, David Pierre, is the official leader of the parliamentary opposition, Mr Ramkalawan, re-elected as SNP leader by a huge majority in November 2011, will remain vocal. The Forum for Electoral Reform has been tasked with making recommendations to the government by end-2012 for a freer and fairer electoral framework to end the threat of further opposition boycotts. The PP is committed (at least in theory) to implementing any recommendations. Seychelles' elections have been largely free and fair, according to independent observers, but the PP has undoubtedly benefited from its control over the media, the civil service and the public purse. The PP has also hinted at holding fresh elections after the electoral and constitutional reform process is complete.

  INTERNATIONAL RELATIONS: The government's ongoing commitment to the comprehensive fiscal, monetary and structural reforms initiated in late 2008 will facilitate closer relations with key partners. Given Seychelles' commitment to its IMF programme, approved in late 2009 and extended to end-2013, donor funding will remain intact. The Fund's approval of reforms has enabled substantial debt relief from both, the Paris Club and commercial creditors. This process is largely complete, with no further write-downs planned. Seychelles will develop closer military ties with the US and the EU owing to its strategic location in the Indian Ocean. The spread of Somalia-based piracy to Seychelles' waters will entrench the archipelago's importance as a hub for anti-piracy operations funded and resourced by the EU and countries such as India, China and the United Arab Emirates (UAE). Seychelles' Southern African Development Community membership will facilitate ties with the African mainland, and the archipelago has hosted and mediated negotiations between the current and former leaders of Madagascar.

  POLICY TRENDS: The Economist Intelligence Unit expects Seychelles to continue to implement major reforms in 2013-14 as part of a Fund-backed programme. The first three-and-a-half years of reform-beginning in November 2008 with the free flotation of the currency, the removal of exchange controls and the adoption of tighter monetary and fiscal policy-have yielded impressive results. The rupee has stabilised, inflation has fallen back to single-digit levels, the perennial shortage of foreign-exchange reserves has eased considerably and the economy has rebounded. Seychelles' programme implementation continues to receive praise from the Fund, helped by broad-based public support for the process, and the three-year Extended Fund Facility (EFF) of December 2009 worth US$31m has been extended by a year. Seychelles has made good progress under the EFF despite delays to some structural reforms. These will continue, including an overhaul of the tax system, the restructuring of parastatal enterprises (and privatisation in some cases), the strengthening of the financial sector and deregulation, with the broad aims of putting the public finances on a sustainable footing and encouraging private-sector development. The Fund's endorsement will facilitate the engagement of other key donors and financiers such as the World Bank, which approved a new, three-year Country Partnership Strategy in 2012, worth about US$21m, three years after a US$9m development policy loan. The Bank will focus on civil service reform, restructuring social service provision, boosting the private sector and statistical capacity-building. Seychelles' debt burden will remain tolerable following the 2009-10 Paris Club write-offs of 45% of the country's obligations to the group, and the conversion of commercial debt (about 60% of the total) into new discount notes in early 2010, to cut the sum owed by half. Repayment will take place between 2016 and 2026. Seychelles' external debt burden fell from an estimated 205% of GDP in 2009 to a more sustainable 157% of GDP in 2010, and it will continue to decline over 2013-14. Debt owed to China and India is also being restructured. Strong fiscal discipline, including strict spending controls, produced an estimated primary budget surplus (excluding interest payments) of 4.5% of GDP in 2012-and an overall surplus of 0.8% of GDP, according to the Fund, in compliance with EFF targets. Seychelles will continue to post budget surpluses in 2013-14, enabling additional debt repayment, but will also increase spending on much-needed infrastructure improvements. Better expenditure management and the ongoing reform of parastatal enterprises will reduce the drain on the public purse. Revenue will benefit from sweeping tax reforms intended to clarify and simplify the system, including establishing a unified revenue commission, cutting business taxes and introducing personal income tax in 2010 (which replaced social security contributions), currently at 15%. A VAT set at 15%, to replace the goods and services tax, will come into force in January 2013. The adjustments may curb the overall tax take in the near term but will encourage economic activity and help to place the public finances on a sustainable footing in the medium term. The budget surplus is thus expected to widen, to 1.9% of GDP in 2014.

  ECONOMIC GROWTH: We estimate that real GDP growth will have slowed to 3.5% in 2012, supported by strong growth in visitor numbers and the positive impact of economic reforms. Despite ongoing economic weakness in Europe, the main tourism source market, the contraction in the number of European tourists is being more than compensated for by growth in visitors from elsewhere, especially the UAE and Russia. The number of visitors-which were up by 6.9% year on year in the first ten months-looks set to exceed 200,000 in 2012. Tourism, which accounts for about 25% of GDP, directly and indirectly, will remain the key growth driver throughout 2013-14. However, tourism will remain vulnerable to exogenous developments such as terrorism and prolonged economic weakness in the euro zone. There is also a danger that super-luxury tourism developments will become increasingly isolated from the mainstream economy, thereby limiting the wider trickle-down effects of tourism on growth. The positive effects of easing inflation and interest rates in 2013-14 may be undermined by ongoing fiscal prudence, curtailing domestic demand, while tuna canning (the main export activity) will be constrained by declining fish stocks and regional security risks. However, the benefits of structural reforms, in terms of healthier foreign-exchange reserves, a more stable currency, lower taxes and improvements to the regulatory environment, will underpin growth during 2013-14. And the debt restructuring concluded with commercial and official creditors in 2009-10 has freed up resources for investment and consumption. As a result, we expect real GDP growth to edge up to 3.8% in 2013 and 4.2% in 2014, helped by an improving global environment, ongoing structural reforms and infrastructure investment.

  EXTERNAL ACCOUNT: After narrowing to an estimated 19% of GDP in 2012, the current-account deficit will continue to narrow in 2013 and 2014, to 13.5% of GDP and 11.5% of GDP respectively, underpinned by tourism growth. Despite solid demand for imported consumer and capital goods, and Seychelles' limited range of exports, the trade deficit will edge down in 2013-14 owing to lower oil prices. Canned tuna earnings will be constrained by volatile fish catches and a lack of new investment. Seychelles re-exports a significant amount of refined oil products, but the net effect of lower oil prices in 2013 will be positive. The services account will remain comfortably in surplus in 2013-14, reflecting further growth in tourism receipts as increasing numbers of visitors from non-traditional markets compensate for lower numbers from Europe, the main source market. Although the current-account deficit will narrow, it will remain large, leaving Seychelles reliant on foreign direct investment inflows (mainly in tourism) to finance the shortfall.

  December 10, 2012

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Country Briefing

Land area

455 sq km, of which Mahé has 153 sq km and Praslin 38 sq km

Population

90,945 (Seychelles National Bureau of Statistics, 2010)

By island

Mahé: 78,539

Praslin: 8,603

La Digue & outer islands 3,803

Main town

Victoria, on the island of Mahé

Climate

Tropical

Weather at Seychelles international airport (sea level)

Hottest month, April, 26-31°C; coldest months, July-August, 24-29°C; driest month, June, 54 mm average rainfall; wettest month, January, 405 mm average rainfall

Languages

Creole, English, French

Measures

Metric system

Currency

Seychelles rupee (SRs)=100 cents

Time

Four hours ahead of GMT

Public holidays

Fixed date: January 1st, New Year's Day; May 1st, Labour Day; June 5th, Liberation Day; June 29th, Independence Day; August 15th, Assumption; November 1st, All Saints' Day; December 8th, Immaculate Conception; December 25th, Christmas Day

Variable date: Good Friday, Easter Sunday, Easter Monday, Corpus Christi

March 05, 2012