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- GDP (PPP):
- $2.3 billion
- 2.8% growth
- 2.2% 5-year compound annual growth
- $25,229 per capita
- Inflation (CPI):
- FDI Inflow:
Seychelles’ economic freedom score is 56.2, making its economy the 117th freest in the 2014 Index. Its score is 1.3 points higher than last year, reflecting notable improvements in four of the 10 economic freedoms including the control of government spending, labor freedom, and investment freedom. Seychelles is ranked 19th among 46 countries in the Sub-Saharan Africa region.
Seychelles’ economic freedom was first assessed in the 2009 Index, and its score has advanced since then by 8.4 points. Improved scores for six of the 10 economic freedoms, led by notable enhancements in the management of public spending and overall regulatory efficiency, have enabled Seychelles to advance from the status of economically “repressed.”
In the 2014 Index, Seychelles has achieved its highest economic freedom score ever. In addition to improving overall regulatory efficiency, the government has enhanced the investment regime and cut personal income and corporate tax rates. Implementing deeper institutional reform will be critical to improving competitiveness and ensuring broader-based economic development beyond the tourism sector.
The People’s Progressive Front has ruled Seychelles since 1977, when France Albert René seized power in a bloodless coup. In 2004, René ceded power to Vice President James Michel. Michel was elected to a third term in May 2011. The economy relies heavily on tourism and fishing, and services account for almost 80 percent of GDP. In early 2013, tropical cyclone Felleng produced torrential rain, flooding, and landslides that destroyed hundreds of houses. Since mid-2008, Seychelles has adhered to an IMF-negotiated economic reform agenda focused on reducing its debt-to-GDP ratio. The country is attempting to implement further reforms, including overhauling the tax system and deregulating the finance and communication sectors. Piracy caused losses of $17 million in 2012, not including lost revenues from fisheries.
Concerns about government corruption have focused on a lack of transparency in the privatization and allocation of government-owned land. A December 2011 report released by the auditor-general revealed nearly two decades of dysfunction in government finances, including unprofessional bookkeeping, illegal procedures, and embezzlement. Judges generally decide cases fairly but face interference in high-level cases.
The individual income tax rate is a flat 15 percent, and the top corporate tax rate is 33 percent. Other taxes include a vehicle tax, an interest tax, and (as of January 2013) a new value-added tax (VAT). Overall tax revenue equals 31.7 percent of gross domestic income. Government expenditures amount to 36 percent of GDP. Public debt is equal to over 80 percent of the domestic economy.
Launching a business takes 10 procedures, but no minimum capital is required. Completing licensing requirements costs less than 25 percent of the level of average annual income, but it takes over three months on average. The formal labor market is not fully developed. The government continues to subsidize the public utility but sold a minority stake in its loss-making national airline to Etihad Airways in 2012.
The average tariff rate for Seychelles was 28.3 percent as of 2007. Tariffs are a significant source of government revenue. Foreign investment in some sectors of the economy is controlled by the government. The financial system remains rudimentary. The banking sector consists of both state-owned and foreign financial institutions. A large part of the population lacks access to formal banking services.