Event

The opposition, the Seychelles Democratic Alliance (Linyon Demokratik Seselwa – LDS), has won the parliamentary elections for the first time in almost four decades. After three days of voting, LDS – a coalition of several opposition parties – secured 5 seats more than the incumbent People’s Party (Parti Lepep – PL) of current President James Alix Michel. In the past legislature, the PL held all but one seat in parliament attributable to a boycott of the 2011 poll by the main opposition party that claimed elections would not be fair. After the political shake-up in parliament, President Michel decided to resign mid-October. He said the decision was based on the constitutional amendment approved in April limiting presidential terms to two, even though it did not apply retrospectively. The vice president of the Seychelles, Danny Faure, will complete the remaining 4 years of Michel’s third term.

Impact on country risk

The PL has ruled the Seychelles since the socialist coup d’état of 1977 and the ensuing multi-party democracy in 1993. However, cracks appeared in its popularity due to the growing divide between rich and poor. In the presidential election of December 2015, the opposition presented its first successful challenge to the incumbent party as for the first time no candidate secured an outright majority in the first round. The second run-off gave presidential incumbent James Michel only a narrow victory of 50.2% of the vote. It seems the opposition has now capitalised its increasing popularity, resulting in a historical win in parliamentary elections. The opposition promises to boost economic growth (estimated at 3.3% in 2016), address the relatively high inequality and poverty and fight corruption. Nevertheless, it should be noted that since the country defaulted in 2008 the government has been dedicated to ameliorate the Seychelles’ economic fundamentals. Since then, the government has adhered to strict fiscal guidelines and booked fiscal surpluses (in 2016 a surplus of 1.9% of GDP is forecasted). Several years of fiscal discipline have also led to a significant reduction in the public debt burden from 83% of GDP in 2010 to an expected 65% of GDP in 2016. In addition, the government is seeking to diversify its economy, which is heavily reliant on tourism, and improve its World Bank Ease of Doing Business ranking (95th out of 189 economies in 2016). The new parliament and the president are likely to broadly continue the current policy, reinforcing political stability. Nevertheless, parliament might challenge new ministerial appointments and block legislation.

Analyst: Jolyn Debuysscher, j.debuysscher@credendogroup.com