Seychelles

The Republic of Seychelles, situated in the Western Indian Ocean, is a Small Island Developing State of 84,600 inhabitants, with a very high population density exceeding 500 hab/km2 on its main island, Mahé. Seychelles is ranked amongst the middle-income countries, with a GDP per capita estimated at €7 000, largely achieved through development of the country's tourism potential and exploitation of its fisheries resources. A high level of human development has also been attained (it is ranked 47th out of a total of 177 countries as per the Human Development Index for 2006) through continued public investment in social welfare services since its independence in 1976. The main pillars of the economy (tourism and fisheries) are intrinsically linked to the country's pristine natural and physical island/marine environment. This makes Seychelles extremely vulnerable to climate change and human-induced impacts, in particular urbanisation.

As from 1999, growing macroeconomic imbalances, linked to financing of large capital projects, coupled with less access to external funding and constraints in debt repayment, have led to a significant slowdown in economic activity. In 2002, public indebtedness reached a record level of 202% of GDP, with a significant decline in capital inflows and a negative growth rate. From 2003 onwards the Government therefore embarked on its home-grown Macroeconomic Reform Programme and, since then, overall growth prospects have improved slightly, with the economy growing by 4.5% in 2006 and recording fiscal surpluses and the payment of outstanding arrears with all multilateral institutions. Nonetheless, the economy remains particularly vulnerable to exogenous shocks, and very sensitive to further rises in oil prices as well as to interest rate increases linked to its high level of bilateral external indebtedness.

Seychelles has made some progress in promoting democratic values since 1993 (start of a multiparty system), but remains a young democracy, with a relatively good track record on human rights. However, certain improvements are still required in relation to media coverage, the judiciary and electoral process; governance commitments should in principle address certain of these issues.

This Strategy Paper is based on the 2006 evaluation of EC-Seychelles cooperation and also results from a close dialogue with Government, civil society, EU Member States and other partners. The overall objective of the EC-Seychelles cooperation, under the 10th EDF, is to contribute to the sustainable economic and equitable social development of the Seychelles. The programming of 10th EDF funds remains oriented towards one focal area of intervention, namely the environment sector and, more specifically, the water and sanitation sub-sector. EC support will contribute to the sustainable delivery of water to the country at large.

Moreover, the country has expressed its strong interest for support on governance-related issues. Such EC support would, in principle, be a continuation of the assistance currently being provided under the 9th EDF Capacity Building project. Consequently, support in the non-focal area will be focussed on interventions in governance capacity building. It will also provide for a Technical Cooperation Facility (TCF) to assist in financing studies for project preparation as well as training needs. Thus, approximately 85% of the National Indicative Programme (NIP) "A-Envelope" (€ 5.0 mio) will be allocated to the focal area for the reinforcement of environmental management (water and sanitation). The remaining 15% on the "A-Envelope" (€ 0.90 mio) will be reserved for governance capacity building and the TCF.