When Seychelles defaulted on its $230m 2011 bond in October 2008, Africa officially joined the global credit hangover. Representing around 40% of GDP, the debt obligation -- which was subsequently followed-up with a EUR54.7m privately-placed loan and two commercial bank loans -- was a classic sign of excess in a world where there was more money than sense.
The impact of the global crisis, principally the collapse in tourism revenues and years of pro-cyclical government spending, triggered the bond default - as well as a collapse in the country’s economic model. The island nation was subsequently, forced to go cap in hand to the IMF.
But the October 2008 default, together with government spending cuts and the liberalization of the foreign exchange market (which helped to fight inflation), has turbo-charged economic growth. On Tuesday, the IMF said the Indian Ocean archipelago's economy will grow 4.3 per cent this year, 4.8 per cent in 2012 and 5 per cent in 2013, after expanding 6.2 per cent in 2010.
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