(Seychelles News Agency) - Fitch Ratings has affirmed Seychelles’ Long-term foreign currency Issuer Default Rating at “B” and Long-term local currency IDR at “B+”, saying the outlooks are positive, the islands’ government has said in a statement.

Quoting communication from the global rating agency, the Indian Ocean island nation’s finance ministry said today that Fitch has also affirmed Seychelles’ Country Ceiling at “B”.

“The outlook reflects strong budget discipline that has been enforced since the start of the IMF-supported programme at end-2008; the primary budget surplus which has averaged 8% of GDP since 2009 due to substantial reforms including a marked reduction in public sector employment; tighter control on expenditure; and reform in public companies,” said the statement.

It noted Fitch had said it expected the primary surplus to stand at 4% of GDP in 2014 and the following year, which is slightly lower than what the authorities targeted -- of 4.4% of GDP main because there were more conservative revenue assumptions. Seychelles’ fiscal deficit path remained encouraging to debt reduction and the agency expected public debt to drop to 54% of GDP by 2015 (from 70.5% in 2012).

It noted that revenue growth under-performed in 2013 because of shortfalls in VAT receipts and in excise revenues. There was lower than expected collection of revenue from the tourism sector which affected the level of collection, in addition to teething problems for the newly launched VAT system.

“The fall in excise revenues reflected a decline in imports of motor vehicles and reductions in some excise tax rates. The Seychelles’ authorities also attribute the fall in taxes to the appreciation of the exchange rate in 2013,” said Fitch.

The agency noted that beside the shortfalls, the authorities are on track to meet the end-year target under an IMF’s extended fund facility programme, adding that a primary surplus of $68m -- equivalent to 5.2% of GDP, shows the authorities’ commitment to fiscal discipline.

Inflation has slowed since its peak in mid-2012 (8.9%) to 3.8% in 2013, Fitch said, adding it expected on-going reforms in liquidity management to benefit economic stability in the longer term.

“Seychelles’ GDP per capita -- at US $13,600 -- is markedly higher than peers’, reflecting a high value added economy and a favourable business environment,” commented Fitch.

“Scores on UN human development indicators and World Bank governance indicators are also much higher than those of peers,” said the agency.

Seychelles unveiled painful IMF-led reforms in 2008 when the economy was on the verge of collapse. Inflation skyrocketed as the island nation relaxed foreign exchange controls, but the economy has stabilised according to the IMF, and statistics show inflation now stands at a 3.2%.