Monetary and financial aspects of vulnerability and resilience : the case of Seychelles

Abstract

This chapter addresses the economic vulnerability of the Seychelles, a small open economy, and the policy measures taken so far in order to strengthen its economic resilience. The country has a number of inherent characteristics such as a high degree of economic openness and dependence on a narrow range of exports and on strategic imports which render it economically vulnerable. This chapter elaborates on the issue of building a sound economic environment by focusing on financial aspects. It gives a brief account of what the Seychelles has done to strengthen its economic resilience in the monetary and financial sectors. An important conclusion that emerges from this study is that the Seychelles, like many other small island developing states is particularly vulnerable in the financial area, and any discourse on resilience-building should therefore take into account the risks associated with exchange rates, international financial crises, and related factors. In order to strengthen the resilience of the country, the authorities are focusing on economic and financial measures with emphasis on corporate governance in management of risks. In spite of these measures, the country can only remain resilient if the authorities are able to develop a more robust financial sector that will protect the system from internal and external shocks.