Seychelles has experienced recurrent foreign exchange problems because of its limited export potential and fluctuations in tourist traffic. Growing national income has been accompanied by pressures for increased imports of manufactured consumer goods that cannot be produced domestically. In 1991 the government took measures to restrain imports, and in 1992 it imposed surcharges on luxury goods, in addition to taking other actions to restrict domestic spending.
Until 1987 the nation's principal export was fresh and frozen fish, followed by high-quality copra, for which Pakistan, the leading importer, paid premium prices. Cinnamon bark and shark fins were the only other exports of consequence. Reexports, mainly of tourist-related duty-free items and petroleum products for aircraft and ships, were considerably higher than earnings from merchandise exports. From 1987 onward, canned tuna dominated the islands' export trade. With a value of SRe64.1 million, canned tuna constituted 73 percent of all domestic exports in 1991. Fresh and frozen fish exports brought SRe17.7 million, but copra and cinnamon had shrunk to insignificant levels.
France had been the principal destination of Seychelles exports for many years, sometimes absorbing more than 60 percent of the islands' products. In 1991 the Seychelles trade pattern shifted sharply in favor of Britain (52.7 percent of total exports), followed by France (22.8 percent), and Reunion (13.6 percent). Both Reunion and Mauritius are leading customers for frozen fish.
Seychelles imports a broad range of foods, manufactured goods, machinery, and transportation equipment. The largest single category is petroleum fuels and lubricants, although much of this is reexported through servicing of ships and aircraft. Seychelles' main suppliers in 1991 were Bahrain, South Africa, Britain, Singapore, and France. Because of its high import dependence, the country's visible trade is always heavily in deficit. In 1991 its total of domestic exports and reexports (SR258 million) was only 28 percent of total imports (SR910 million). Gross receipts from tourism usually cover some 60 percent of imports but fall short of bridging the gap in the balance of payments. In 1993 Seychelles joined the Preferential Trade Area for Eastern and Southern Africa, which should improve its trade because of greater currency convertibility, particularly with Mauritius.
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