Fitch Ratings: Seychelles maintains ‘BB-‘ rating with positive outlook

The Ratings, which came out on Friday, stated that tourist arrivals and tourism earnings increased by 5.7 percent and 5.8 percent respectively in 2023. (Gerard Larose)

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Seychelles has maintained a credit rating of ‘BB-‘ with a positive outlook from Fitch Ratings with key drivers being relatively high-income levels, strong World Bank Governance Indicators, and a stabilisation of the tourism industry.

The Ratings, which came out on Friday, stated that tourist arrivals and tourism earnings increased by 5.7 percent and 5.8 percent respectively in 2023, reflecting a stabilisation after 82 percent and 59 percent increases in 2022.

“Europe remains the top source of tourists, 73 percent share in 2023, with Germany and Russia topping arrivals since the start of 2024. The average expenditure per tourist remains above the authorities’ target of $2,800,” added the Ratings.

According to the Ratings, the economy of Seychelles grew by 1.9 percent year-on-year over the first three quarters of 2023.

Fitch estimates that “the economy grew by 2.5 percent in 2023 and will average 4 percent in 2024-25, driven by stable tourism and growth in the information and communication technology sector. Authorities have revised down their estimate of potential growth from 3.5 percent to 3 percent, given weak productivity growth in the large tourism sector, and limits to the expansion of tourism facilities in the medium term.”

However, the island nation in the western Indian Ocean still has climate change vulnerabilities.

“Seychelles is heavily exposed to risks from rising sea levels, with impacts already being felt primarily through rising intensity and frequency of storms that are rendering some coastal infrastructure unusable,” stated Fitch Ratings.

It added that “In the short term, Seychelles’ tourism industry faces constraints in expansion due to the saturation of coastal infrastructure, which effectively acts as a cap on potential growth, currently estimated at 3 percent.

Fitch foresees a strong likelihood of Seychelles continuing to receive multilateral technical and financial support for climate change adaptation in the medium term, which will result in an increase in budgetary spending on climate-related issues.