The successful economic policies pursued by the government have prompted the World Bank to promote Seychelles to the status of high income country and should guarantee the re-election of President James Michel at the next elections, due to be held in 2016.
In his report entitled ‘Seychelles Graduates to High Income Country Status’ published on the website of Future Directions International on Wednesday July 8, 2015, Leighton G. Luke, research manager with the Indian Ocean Research Programme, writes that reforms enacted following an economic crisis in 2008 are paying off and should guarantee the re-election of President James Michel at the next elections, due to be held in 2016.
He adds that in becoming an African success story, the Seychelles has embraced sound macroeconomic policies since facing a financial crisis in 2008. While still at risk of downturns in tourism and fisheries, its main industries, the economy is predicted to keep growing, incomes have risen, unemployment has fallen and inflation is stable.
The article adds that along with Equatorial Guinea, Seychelles is one of only two sub-Saharan African countries to make it into the World Bank’s list of high income countries.
“Unlike the infamous Central African kleptocracy, however, the Seychelles has been rather more successful at achieving a higher living standard for its entire population, a more even distribution of wealth, higher standards of education and health care, not to mention personal and media freedom,” writes Mr Luke in his assessment.
Under the Atlas method, the World Bank calculates gross national income (GNI) per capita as ‘the sum of value added by all resident producers plus any product taxes (less subsidies) not included in the valuation of output plus net receipts of primary income from abroad.’ That figure is then divided by the mid-year population and converted to US dollars. Countries with a per capita GNI of US $12,736.00 or more are classed as high income.
“Even despite its place at the lower end of a very wide spectrum, breaking into the ranks of higher-income countries nonetheless confirms the success of the macroeconomic settings and policies taken by James Michel, president since April 2004. The graduation onto the rich list represents a remarkable turnaround from 2008, when the country defaulted on an interest payment and had to seek a bailout from the International Monetary Fund. Structural reforms were implemented, including public sector redundancies, the floating of the national currency – the rupee – and the opening of the economy,” continues the analysis.
According to the World Bank, the Seychelles now has a GNI of US $13,990.00 and the unemployment rate stands at two per cent. The Seychelles has, in fact, surpassed near neighbour and fellow successful small island state Mauritius which, even with an average national income well above the sub-Saharan African standard at US$9710.00, remains in the upper middle income category.
The literacy rate in Seychelles is 91.8 per cent, a figure that compares well with that of Mauritius (90.6%), is not all that far behind developed countries and well above the sub-Saharan African average of 60 per cent. At 74 years, the average life expectancy enjoyed by the 92,000 citizens of Seychelles is comparable to the developed world average.
On the economic front, the Seychellois government now runs a budget surplus, inflation has dropped to 1.4% after peaking at over seven per cent in 2012, and economic growth of 3.7% is predicted for 2016 and 2017.
The report adds that the World Bank notes, however, that downsides exist in the potential for uncertainty in Western European and Russian tourism markets, the most important sources of inbound tourists to Seychelles, and the vulnerability of the country’s tuna fisheries industry to external demand and the vagaries of global commodity prices. Tourism and fisheries continue to be the two main industries.
President Michel, the report adds, enjoys a high level of public support, achieving 55.4% support in the 2011 presidential vote and outpolling his nearest rival by 14 per cent. As he approaches the end of his second term, there is, at this point at least, no reason to suppose that he will not stand for the presidency for a third and (constitutionally-mandated) final time. If the numbers keep falling in his favour, Michel’s probable victory would seem to be equally assured.