Seychelles

Government and Politics
Presidential elections were held between December 3-5, 2015. As no candidate received more than 50% of the vote in the first round, a second round was held between December 16-18. Indeed, the vote echoed debate in many African nations on the mainland about leadership term limits. Incumbent President James Michel, who took office in April 2004, was re-elected, defeating Wavel Ramkalawan by just 193 votes in the second round, while the opposition cried foul over irregularities.

Economy
In mid-2008, Seychelles was pushed over the financial brink on which it had teetered for many years, due to the spike in commodity prices. Government revenue had been constrained by tax concessions to foreign investors in the growing tourism sector. The government instead borrowed on international capital markets to finance sustained spending. The pace of reform was too gradual to address the magnitude of the macroeconomic imbalances. An active parallel market emerged and foreign exchange shortages became endemic. Official reserves fell to very low levels. In 2007-08, the petroleum and food price shock hit Seychelles particularly hard and inflation shot up. When authorities missed payments on their private foreign debt, the government defaulted.

In early November 2008, all exchange restrictions were abolished and the currency floated. Fiscal policy was tightened and a basic monetary policy was introduced; the 2009 budget removed virtually all indirect product subsidies and broadened the tax base through IMF support. Throughout the next several years, rapid progress on macroeconomic stabilization allowed the focus to shift to structural reforms needed to make Seychelles more resistant to the risks it faced as a small island economy.

Following the 2008 default and recovery, debt structurings and prudent fiscal management allowed the country to stage an impressive turnaround. The archipelago relied on budget surpluses and concessional lending from multilaterals to finance investments in its electricity and water networks. The economy depended heavily on tourism and was forecast to expand by more than 4% in 2015, an important issue during a presidential election that allowed President James Michel's rival to denounce the economic imbalances as favoring the rich.