This country profile was published in November 2008 in our annual 'Africa in 2009' issue. The next edition, 'Africa in 2010' will be on sale 23 November 2009.

Click on the drop-down menu above to see the Seychelles's Top Companies and Top Banks.

President James Michel promised a business friendly revolution upon coming into power in 2004, but not much has changed for the better since then. In fact, the country's currency and sovereign debt ratings fell through the basement as the government announced consecutive failures - the first in July and the second in October - to pay the principal due on a $230m bond to private creditors. To avoid bankruptcy the government has had to restructure its external debt, valued at $800m or more than 175% of GDP, and to accept a currency float that produced an immediate and dramatic 43% depreciation in early November.

The IMF has now leant a sympathetic ear to the island's plight having earlier warned about the government's over-spending and failure to act against inflation. The next steps will involve a fiscal tightening and a reform of monetary policies, in line with IMF advice. In view of these imminent adjustments, the GDP growth prediction of 4.2% in 2009 may have to be revised downwards.

Even before the reform programme started in earnest, the government said it would try to reverse the direction of the current budget deficit, which stood at 9.2% of GDP. It began raising utility and fuel prices, cutting subsidies to parastatals and removing price controls on imports. The measures to streamline the budget will be the most painful.

There are fears that the global credit crunch could hit tourism, which employs almost one-third of the population. In 2007, visitor numbers increased by 15% year-on-year to more than 160,000 and a new $253m, UAE-funded resort is due to open in 2010, adding to those financed by Kuwait and Saudi Arabia. Bahrain's Bank Muscat International was given a licence to operate an offshore bank in March in a joint venture with the Seychelles' Nouvobanq.

Traditional exports such as tuna can also be expected to decline because of over-fishing and rising sea temperatures; overall catches dropped by a third in 2007. Tuna exports have been earning $180m a year and account for more than three-quarters of export revenues. But Seychelles' companies have reported that catches have fallen 18% over the last two years.

The government is trying to play up its good governance credentials. In February 2008, it agreed to compensate oppositionists, led by pastor Wavel Ramkalawan of the Seychelles National Party, who were beaten by the police for protesting government control of the media in 2006. Despite that violence, the political atmosphere in the country has been generally peaceful. Since 2007, Michel and Ramkalawan have been holding regular face-to-face meetings to discuss government business and seek common ground on issues such as the establishment of a human rights commission. Those meetings have been enlightening for Ramkalawan, who said after one such meeting in reference to the presidency: "Sometimes in my reflection, I thank God for the fact that I did not win."

Michel has announced a commission to review the country's 15-year-old constitution with representatives of civil society and the major political parties. He has also promised widespread reform of the judicial system. A major focus of government policy is on strengthening the police and fighting the illicit drugs trade as drugs from Asia, especially India, use the poorly policed waters of the archipelago's 115 islands. The National Drugs Bureau is being established this year in order to better coordinate government action.