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by Jörg Billina, Euro on Sunday
Should the honeymoon be successful with as much feeling as possible? The Seychelles offer ideal external conditions for this. For the second time in a row, the archipelago in the Indian Ocean was recently named the World’s Most Romantic Destination by the British media group World Travel Awards. The Seychelles prevailed over competitors such as St. Lucia, Bali and the Maldives. It is quite possible that the tourism figures of the African state will continue to rise thanks to the award. According to the Seychelles Ministry of Tourism, 182,849 holidaymakers spent their holidays on the archipelago last year. They spent $221 million during their stay.
This was a sharp increase compared to 2020. However, we are still a long way from the record numbers from the pre-Corona year. In 2019, 384,294 guests came, leaving around 590 million US dollars on the islands. Tourism contributes 60 percent to the gross domestic product, the second most important economic factor is fishing.
The Seychelles are particularly popular with sun-seeking Russians. The airline Aeroflot now flies three times a week from Moscow to Victoria, the capital of the Seychelles on the main island of Mahé. Vacationers from other Eastern European countries, the United Arab Emirates and Saudi Arabia are also increasingly succumbing to the charms of the countless dream beaches.
The proceeds are badly needed by the Seychelles government. In 2021, new debt was 9.4 percent of gross domestic product. For the current year, the Fitch rating agency expects the budget deficit to fall to 4.4 percent. Thanks to the increasing income from tourism, the special social benefits that have become necessary in the course of the corona crisis are also falling. The government recently spent around seven percent of gross domestic product on this, more than many other African countries.
Long-term liabilities are also declining. While the debt ratio was still 90 percent in 2020, Fitch expects only 68 percent for 2023. In view of the good development, the rating agency raised the credit rating from “B” to “B+” in November. The outlook is rated as stable. The dollar bond, which runs until January 2026, is therefore still highly speculative. However, a loan agreement with the International Monetary Fund in the amount of 107 million dollars, which is tied to savings conditions, is providing relief. In addition, the risks are rewarded appropriately. The bond is currently yielding 7.9 percent, compared to the corresponding federal bond, this is a yield premium of more than eight percentage points.
Seychelles: budget deficit falls. reduction in overall debt. Chance of currency gains. High coupon.
Image sources: Maria Skaldina / Shutterstock.com, travellight / Shutterstock.com