Fitch downgrades Seychelles

Fitch Ratings said it downgraded Seychelles’ long-term foreign-currency issuer default rating to B from B+ with a stable outlook.

“General government debt/GDP is rising more sharply than we projected at our last full review in May (when we downgraded the IDRs by two notches), reflecting a slower recovery in tourism, extension of fiscal measures and greater exchange rate depreciation. There is also greater uncertainty over the financing of next year’s fiscal deficit. In addition, Fitch forecasts wider current account deficits than previously, a faster increase in net external debt/GDP, and overall external vulnerabilities remain high, despite foreign exchange reserves falling less than expected this year,” Fitch said in a press release.

The agency said it sees GDP shrinking 15.5% this year, citing the collapse in tourism, before an expected turnaround in 2022. This sector accounts for 25% of Seychelles’ GDP.

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