Fitch upgrades Seychelles

Fitch Ratings said it upgraded Seychelles' long-term foreign-currency issuer default rating to BB- from B+.

“Seychelles is on track to reduce its debt/GDP to around 56% by end-2024, after it peaked at 92.2% in 2020, aided by a combination of strong growth, sharp narrowing of primary deficits, reduced external borrowing, as well as a strengthening of the exchange rate. Interest-rate risks are fairly low, with 65% of external debt borrowed on concessional terms,” Fitch said in a press release.

Additionally, the agency boosted its growth projections for 2022, owing to a strong tourism recovery, to 10.4% (previously 6%), and local authorities expect tourist arrivals in 2023 to beat pre-pandemic 2019 levels.

However, Fitch cautioned that “A significant further worsening of economic prospects worldwide, particularly in western Europe, which leads to diminishing appetite for luxury tourism, is the main downside risk to Seychelles, given the extremely open nature of the economy (tourism directly accounts for about 25% of GDP).”

The outlook is stable.

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