eychelles’ economic freedom score is 66.3, making its economy the S 60th freest in the 2021 Index. Its overall score has increased by 2.0 points, primarily because of an improvement in government integrity. Seychelles is ranked 4th among 47 countries in the Sub-Saharan Africa region, and its overall score is above the regional and world averages.
The economy of Seychelles continued its rise in the moderately free ranks this year. To accelerate the momentum toward greater economic WORLD RANK: REGIONAL RANK: freedom and advance its goal of diversification, the government will need to intensify efforts to liberalize labor and financial markets, address 60 4 ongoing shortcomings in the judicial system, and prioritize the anticor- ruption work it began in 2016. ECONOMIC FREEDOM STATUS: MODERATELY FREE IMPACT OF COVID-19: As of December 1, 2020, no deaths had been attributed to the pandemic in Seychelles, but the economy was forecast to contract by 13.8 percent for the year.
ECONOMIC FREEDOM SCORE
66.3 ▲ UP 2.0 POINTS
0 50 60 70 80 100 REGIONAL AVERAGE WORLD (SUB-SAHARAN AFRICA REGION) 55.7 61.6 AVERAGE
HISTORICAL INDEX SCORE CHANGE (SINCE 2009): +18.5
RECENT FREEDOM TREND QUICK FACTS
POPULATION: UNEMPLOYMENT: 0.1 million n/a 66.3 GDP (PPP): INFLATION (CPI): 64.3 $3.1 billion 1.8% 61.8 61.6 61.4 3.9% growth in 2019
5-year compound FDI INFLOW: $125.5 million annual growth 4.3% $30,260 per capita PUBLIC DEBT: 58.3% of GDP
2019 data unless otherwise noted. Data compiled as of September 2020
BACKGROUND: The Republic of Seychelles gained independence from the United Kingdom in 1976, and France-Albert René of the People’s Party seized power in a bloodless coup in 1977. In 1993, he was elected to serve as Seychelles’ first president. In 2004, he ceded power to Vice President James Michel, who was elected to his third five-year presidential term in 2015. In 2016, Michel resigned and transferred power to Vice President Danny Faure. Faure was defeated in October 2020 elections by Wavel Ramkalawan of the LDS alliance, which also increased its majority in parliament. Seychelles enjoys a stable economic environ- ment with lucrative fishing and tourism industries. In recent years, the government has encouraged foreign investment to upgrade hotels and other services while also moving to reduce dependence on tourism by promoting the development of farming, fishing, and small-scale manufacturing.
366 2021 Index of Economic Freedom WORLD AVERAGE | ONE-YEAR SCORE CHANGE IN PARENTHESES 12 ECONOMIC FREEDOMS | SEYCHELLES
RULE OF LAW GOVERNMENT SIZE
(–3.0) (+5.2) (+11.1) (+0.1) (+2.0) (No change)
65.3 51.6 64.4 76.9 60.9 93.2 Property Judicial Government Tax Government Fiscal Rights E ectiveness Integrity Burden Spending Health
The courts enforce interests in real property, including The individual income tax rate is a flat 15 percent, and the top mortgages and liens. The legal system blends English corporate tax rate is 33 percent. Other taxes include interest, common law, the Napoleonic Code, and customary law. The vehicle, and value-added taxes. The overall tax burden equals independence of the judiciary has strengthened, but court 31.5 percent of total domestic income. Government spending cases can last years. Government corruption stems from a has amounted to 36.1 percent of total output (GDP) over the lack of transparency in the privatization and allocation of past three years, and budget surpluses have averaged 0.5 government-owned land and businesses. An anticorruption percent of GDP. Public debt is equivalent to 58.3 percent
.commission established in 2016 is active. of GDP
REGULATORY EFFICIENCY OPEN MARKETS
(+2.2) (+8.5) (+1.7) (–3.6) (No change) (No change)
67.5 71.3 80.3 79.0 55.0 30.0 Business Labor Monetary Trade Investment Financial Freedom Freedom Freedom Freedom Freedom Freedom
Starting a business and obtaining electricity have become Seychelles has two preferential trade agreements in force. less costly. Seychelles has improved construction permitting The trade-weighted average tariff rate is 5.5 percent, and 11 by making internal processes more efficient. The unemploy- nontariff measures are in effect. Foreign investment in some ment rate was more than halved in 2019. According to the sectors remains restricted. The government acknowledges World Bank, subsidies accounted for more than 20 percent of the benefits of foreign investment but has done little to the government’s budget for 2020. enhance the investment environment. The banking sector includes both state-owned and foreign financial institutions. Financing options for the private sector are limited.
The Heritage Foundation | heritage.org/Index 367