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Mauritius: 2005 Article IV Consultation—Staff Report; Public Information Notice on the Executive Board Discussion; and Statement by the Executive Director for Mauritius

Author(s):
International Monetary Fund
Published Date:
June 2006
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I. Recent Economic and Political Developments

1. The economy has been increasingly affected by the phasing out of textile quotas (Box 1) and, more recently, by higher prices for imports of petroleum products. Growth has fallen during the past few years, reflecting a marked contraction of activities in the export processing zone (EPZ), dominated by textile manufacturing, and unemployment has risen (Figure 1). The surplus of the external current account has recently turned into a deficit, owing to a decline in exports and a price-related surge in imports of petroleum products.

Figure 1.Recent Economic Developments

2. The real effective exchange rate has depreciated, and net official foreign reserves have dropped (although they remain at a relatively comfortable level), owing to the deterioration of the current account as a rising merchandise trade deficit is no longer offset by tourism receipts. The exchange rate depreciation was in part also related to the ample liquidity (see below). Mauritius continues to have a managed floating exchange rate regime, with the exchange rate being freely determined in the interbank market, and the Bank of Mauritius’s (BoM) interventions in the foreign exchange market aimed only at mitigating excess short-term volatility.

Mauritius: Real and Nominal Exchange Rate Indexes

Source: BoM and IMF staff estimates.

Selected Economic and Financial Indicators, 2000/01-2004/05 1/
Prov.Est.
2000/012001/022002/032003/042004/05
(Annual percentage changes)
GDP at constant market prices6.02.52.94.23.5
Consumer prices (period average)4.46.35.14.15.6
Unemployment rate (in percent)9.19.710.210.311.0
Real effective exchange rate 2/2.8-1.4-1.7-3.8-6.0
(In percent of GDP at market prices)
Central government fiscal balance (including grants)-5.7-6.0-6.2-5.4-5.0
External current account balance (including transfers)3.45.42.40.8-3.0
Central government domestic debt42.448.857.751.354.1

Sources: Mauritian authorities; and IMF staff estimates and projections.

Fiscal year (July-June).

Trade-weighted period averages (a negative sign signifies depreciation). Based on the consumer price index.

Sources: Mauritian authorities; and IMF staff estimates and projections.

Fiscal year (July-June).

Trade-weighted period averages (a negative sign signifies depreciation). Based on the consumer price index.

Box 1.Mauritius: Impact of Elimination of Trade Preferences

The textile and clothing industry in Mauritius benefited from the Multi-Fiber Agreement, which restricted exports from countries with lower production costs. Because of its higher labor cost, Mauritius is expected to lose market share to more competitive suppliers such as China and India, whose textile exports were restricted by the quota system.

The EPZ sector has already started to feel the impact of the quota phaseout. The EPZ sector, which grew on average, by more than 6 percent a year during 1995–2000, contracted by 18 percent during 2001–04. Following the expiration of textile quotas at end-2004, EPZ exports fell by 12 percent in the first quarter of 2005, compared with the same quarter of 2004, and employment fell by 13 percent during the same period as enterprises shut down. In comparison, most other major textile-exporting African countries (Kenya, Lesotho, Madagascar, and Swaziland) have suffered much smaller declines or just a slowdown of textile exports.

Mauritius: Contribution of the Export Processing Zone (EPZ) and sugar sector to GDP, Employment, and Exports
2000/012001/022002/032003/04Est.

2004/05
(Share in GDP)
EPZ9.99.68.57.5
Sugar4.03.93.53.5
Total14.013.512.011.1
(Share in employment)
EPZ18.817.817.815.313.6
Sugar6.86.45.04.54.4
Total25.524.222.819.818.0
(Share in exports of goods and services)
EPZ42.439.336.835.329.7
Sugar9.810.79.59.810.0
Total52.350.046.245.139.6

Sources: Central Statistics Office; and IMF staff estimates.

Sources: Central Statistics Office; and IMF staff estimates.

Textile and Apparel: Hourly Compensation for Selected Countries, 2002 1/
Textile IndustryApparel Industry
Bangladesh0.250.39
China, coastal area0.690.88
China, other than coastal area0.410.68
India0.570.38
Madagascar0.33
Mauritius1.331.25
Pakistan0.340.41
Sri Lanka0.400.48

Source: U.S. International Trade Commission.

Including wages and fringe benefits.

Source: U.S. International Trade Commission.

Including wages and fringe benefits.

The sugar sector will also experience difficulties because of the planned reduction in EU sugar prices in the European Union (EU). Mauritius’s sugar export price to the EU (its main market) has been guaranteed at more than three times world market levels for a given quota during the past decade.1

Simulations show that the economy will continue to be adversely affected during the next few years. The negative impact on real GDP growth is projected to average 1.2 percentage points over the next five years (assuming that some of the textile and sugar sectors’ competitiveness is restored). By end-2009/10, the external current account balance is expected to decline by 4.1 percent of GDP because of the shock, and net international reserves are expected to be 3.4 months of imports lower.

1The European Commission has proposed a liberalization of the EU sugar market, including a reduction of guaranteed import prices by 39 percent over the next few years.

3. The 2004/05 (July–June) cash budget deficit of the central government was maintained at 5 percent of GDP, as targeted, but a broader definition of the public sector deficit shows a worsening overall situation. This is also worrisome as public sector debt levels are already high. Specifically, the suspension of an automatic price adjustment mechanism for petroleum products in early 2005 during the run-up to general elections, coupled with rapidly rising import costs, resulted in an operational deficit of the State Trading Company (STC) that amounted to 0.6 percent of GDP.1 In addition, a sizable amount of government debt was converted from short-term obligations to longer-term debt (with interest payable upon maturity), significantly reducing interest payments on a cash basis.2 Fully accounting for the STC deficit and for cash interest payments on an accrual basis would have increased the overall fiscal balance to about 6½ percent of GDP.

4. Prior to the July 2005 elections, the outgoing government approved a budget for 2005/06 that was based on an optimistic growth outlook. It envisaged a cash deficit of the central government of just below 5 percent of GDP and began to implement wide-ranging reductions of import duties on consumer goods. Plans were announced to eliminate all import duties over the next few years.

5. The opposition Social Alliance coalition won the elections with a clear majority. In light of the adverse external developments, it had stressed the need to identify new sources of growth, mitigate the social impact of the economy’s needed transformation, and reduce unemployment, including through the promotion of small and medium enterprises and a focus on attracting foreign direct investment.

6. Inflation has picked up since mid-2004, reflecting ample liquidity and higher import prices for petroleum products. More recently, price developments have moderated owing to the suspension of the adjustment of domestic oil prices in response to international prices and slower growth in monetary aggregates associated with the loss of foreign reserves. On financial sector issues, new central bank and banking laws were passed in 2004, and the BoM issued several prudential regulations to strengthen supervision, in line with the recommendations of the Financial Sector Assessment Program. The decline of textile production caused a temporary increase in nonperforming loans, but strengthened provisioning requirements and closer supervision have led to a gradual improvement in overall financial soundness indicators.

Mauritius: Inflation Rate and Broad Money Growth, Jan. 1999 - May 2005

Source: BoM

II. Report on Policy Discussions

7. The policy discussions focused on the short- and medium-term risks to sustained growth posed by the phasing out of trade preferences for textiles and sugar. They also covered the recent surge of world oil prices. To maintain high growth rates and to reverse the recent rise in unemployment, the authorities recognized the need for comprehensive structural reforms to diversify the economy and enhance competitiveness. Macroeconomic stability would also need to be safeguarded to help preserve social cohesion and create a favorable investment climate.

A. Medium-Term Outlook and Challenges

8. The new authorities are hopeful that, with appropriate macroeconomic and structural policies, a number of sectors could significantly increase their contribution to growth over the next few years. They recognize the need to attract significant foreign direct investment to these activities; to this end, they are taking steps to improve the overall business climate by streamlining business permits and the current investment incentives scheme. These sectors are tourism, financial services, information and communications technology (ICT), and products and services related to fishing activities (Box 2).

Box 2.Mauritius: Sources of Growth

In light of the decline in textile and sugar activities, a number of industries with significant growth potential have been identified which could enable Mauritius to resume a pattern of high and job-creating growth in the medium term.

  • Tourism: In the short term, the authorities expect to increase overall hotel occupancy by admitting additional airlines during the high season and tapping into new markets, including in the region, during the low season. In the medium term, they expect benefits from adding conference and shopping activities to the traditional holiday tourism concept. The sector may create significant job opportunities, including for lower-skilled workers.
  • Financial services: Efforts are under way to negotiate bilateral tax agreements with emerging economies in Africa and Asia to enhance the attractiveness of offshore activities. Focused training efforts are needed to meet the sector’s human resource requirements.
  • Information and communication technology: While still limited in its contribution to GDP, the sector is developing rapidly, focusing on business process outsourcing, software development, and call centers that benefit from Mauritius’s ethnic and linguistic diversity. The sector is not expected to provide significant employment opportunities but will likely boost the economy’s overall productivity.
  • Seafood hub: Efforts are under way to develop Mauritius into a regional platform for the storage, processing, and distribution of seafood and to offer repairs and maintenance services to fishing boats. The employment effects are potentially significant.

9. In welcoming these initiatives, the staff stressed the need to take early and decisive action, particularly in structural reforms, so as to remove impediments to growth and boost overall competitiveness. Such efforts need to be underpinned by macroeconomic policies geared toward maintaining stability and moving toward a sustainable fiscal position. In the structural area, measures are required to increase labor market flexibility so as to facilitate the movement of workers currently hampered by cumbersome firing rules. Such efforts should be accompanied by well-targeted training programs for the largely unskilled jobless and school graduates to create the competencies needed in the expanding sectors. The authorities should also explore the extent to which the current centralized wage-setting mechanism (with its focus on using inflation as a floor for wage increases) is compatible with allowing wage adjustments to reflect productivity changes at the plant level (see below). The withdrawal of the public sector from commercial activities over the medium term could also provide opportunities for growth and job creation.

10. In the fiscal area, the staff pointed out that there is ample room to reduce the fiscal deficit through steps to boost the revenue base and curb expenditures, particularly on transfers and subsidies. In this regard, particular attention needs to be paid to ensuring full cost recovery by public enterprises that are providing public utilities or commercializing certain commodities (such as petroleum products), so as to avoid indirect budgetary pressures.

11. The authorities recognized the need to develop a comprehensive policy agenda early on in order to bolster investor confidence. They agreed that the stakeholders needed to examine thoroughly the key elements of the reform agenda. They were confident that concrete steps in the main areas would be identified in early 2006 to guide the preparation of the 2006/07 budget.

12. To illustrate the benefits of early and decisive reforms, two medium-term scenarios were discussed. Under the “baseline” scenario, with the existing policy agenda, real GDP growth would remain at about 3 percent, insufficient to create significant employment opportunities. A slow recovery of exports would be unable to reverse the current account deficit and the associated loss of reserves. The fiscal deficit would worsen over time, and public sector debt would become unsustainable.

13. The “strong reform scenario” assumes that the fiscal deficit is gradually reduced to sustainable levels, creating, in conjunction with early labor market reform, renewed momentum for private sector activity. Real GDP growth would return to about 5 percent following the period of adjustment to the reduction of trade preferences. The current account would recover over time from the deterioration of the terms of trade, driven mainly by strengthening exports, following a modest real depreciation of the currency.

Mauritius. Medium-Term Scenarios, 2005/06-2010/11
Baseline Scenario
Projections
2005/062006/072007/082008/092009/102010/11
Real GDP (annual percentage change)2.72.93.13.23.23.3
External current account balance (percent of GDP)-2.3-2.5-1.8-0.9-0.5-0.4
Exports, f.o.b. (annual percentage change)-8.52.20.40.80.62.6
Terms of trade (annual percentage change)-2.3-2.1-1.6-1.2-1.1-0.5
Net international reserves of the BoM (months of imports, c.i.f.)5.54.54.03.73.73.6
Central government fiscal deficit, including grants (percent of GDP)-6.0-5.8-9.3-8.4-8.5-8.7
Public sector debt (percent of GDP)72.475.379.280.082.284.0
Strong Reform Scenario
Projections
2005/062006/072007/082008/092009/102010/2011
Real GDP (annual percentage change)3.54.75.05.15.15.2
External current account balance (percent of GDP)-1.5-1.1-0.30.10.30.3
Exports, f.o.b. (annual percentage change)-2.33.54.65.03.23.9
Terms of trade (annual percentage change)-2.2-2.0-1.3-0.50.00.1
Net international reserves of the BoM (months of imports, c.i.f.)5.75.35.25.35.55.8
Central government fiscal deficit, including grants (percent of GDP)-5.1-2.7-5.0-2.9-2.7-2.6
Public sector debt (percent of GDP)70.670.169.565.462.759.9

Source: IMF staff projections.

Source: IMF staff projections.

14. In the strong reform scenario, fiscal adjustment would be achieved as follows. Revenue would stabilize at about 20 percent of GDP, as the already announced gradual elimination of import tariffs is offset by a broadening of the base for income and consumption taxes (see below), and the implementation of a modern unified tax authority. Overall expenditure would gradually decline, owing largely to lower transfers and subsidies (particularly to public enterprises), thus freeing up resources for priority areas (education and infrastructure) to foster competitiveness while ensuring that public debt declines over time (Box 3). The authorities concurred with the main elements of this reform agenda.

Central Government Finances under the Strong Reform Scenario(In percent of GDP)
2005/062009/10
Revenue20.220.3
Of which:Taxes on imports4.01.9
Taxes on goods and services9.711.2
Income tax3.54.5
Expenditure25.323.0
Of which:Wages and salaries6.36.0
Interest payments4.14.4
Current transfers and subsidies9.26.0
Capital expenditure3.54.3
Overall deficit-5.1-2.7

Source: IMF staff projections.

Source: IMF staff projections.

Box 3.Mauritius: Fiscal Sustainability

Mauritius’s domestic public debt has increased rapidly over the past decade, raising concerns about debt sustainability in the medium term. The debt-to-GDP ratio stood at 72 percent at the end of June 2005, up from 55 percent in 1995, reflecting persistent budget deficits over the period 1996-2005 (averaging about 5 percent of GDP a year).

Mauritius: Ratio of Public Sector Debt to GDP

(In percent of GDP)

Source: IMF staff projections.

To return public debt to a more sustainable path, the central government would have to reduce its overall budget deficit gradually to about 3 percent of GDP through a combination of revenue-enhancing and expenditure-reducing measures. Under this assumption, the debt-to-GDP ratio would be reduced to about 60 percent by the end of the decade, keeping public debt on a sustainable path under virtually all standard stress tests (see Appendix I). However, should growth not pick up as envisaged, debt levels would remain virtually unchanged—if growth were 1½ percentage points lower than projected, the debt-to-GDP ratio would not fall significantly below 70 percent of GDP, stressing the need for further fiscal consolidation.

B. Fiscal Issues

15. Regarding the 2005/06 budget, the authorities were concerned that less buoyant economic activity would lower revenue collections below original projections. They also recognized that the emergence of a sizable and widening deficit of the STC, while not directly affecting the central government balance, would jeopardize Mauritius’s overall fiscal position.

16. They proposed to offset the shortfall in revenue collections by reducing capital outlays while carrying out a broader review of their medium-term spending needs and priorities. On the STC deficit, they recognized the need to adjust to petroleum retail prices periodically; owing to the mechanism’s suspension for about six months in 2005, they considered that the initial retail price adjustments would need to be substantial.

17. The staff encouraged the authorities to move on both fronts without delay. On the quarterly automatic adjustment of petroleum prices, it recommended that they consider more frequent adjustments or adopt a formula using a moving average of import prices, so as to smooth the impact of price adjustments.

18. The staff also recommended using the review of the 2005/06 budget to take the first steps toward fiscal sustainability. While the authorities recognized the need to begin moving toward a sustainable fiscal deficit, they stressed that they needed time to define a comprehensive strategy. They expect to have a medium-term plan in place by early 2006, when preparations for the 2006/07 budget begin.

19. Overall, the authorities agreed that they had significant scope to reduce the fiscal deficit by broadening the revenue base and streamlining outlays for transfers and subsidies. The staff advised the authorities on concrete steps (already identified by FAD technical assistance) to strengthen tax administration, and urged them to conduct a thorough review of current transfers and subsidies, with a view to better targeting individuals with identified needs and realizing budgetary savings (Box 4). The staff also recommended improving debt management, including through a further diversification of debt instruments so as to tailor them better to investors’ needs; this step could result in some budgetary savings. The authorities agreed to explore all proposals.

20. The authorities also reported that they intended to review efforts to implement a medium-term expenditure framework. Earlier efforts to develop medium-term spending plans had lost momentum, and only limited progress has been made in some ministries (such as education). The staff welcomed this initiative, emphasizing that it would help to prioritize outlays in a coherent manner, and encouraged the authorities to seek technical assistance in this area (including from the World Bank).

21. The staff encouraged the authorities to review the current pension system. Although not an immediate issue, Mauritius’s aging population could lead to a significant rise of fiscal liabilities over the medium term. The authorities noted that they were already examining various reform options, with assistance from the World Bank.

Box 4.Mauritius: Fiscal Measures to Ensure Sustainability

There is ample scope to reduce the fiscal deficit to sustainable levels through steps to broaden the tax base and streamline expenditure. The authorities should consider the following concrete actions.

Broadening the revenue base

  • Reduce the value-added tax threshold to annual sales of MUR 2 million
  • Lower the threshold for large tax-payers to an annual turnover of MUR 100 million
  • Streamline current income tax breaks and credits
  • Update taxpayer register and enforce filing by all registered taxpayers
  • Introduce advance tax payments for all businesses
  • Establish the Mauritius Revenue Authority in line with international best practices; strengthen the audit function and clear accountability of all services to its Director General make its Director General accountable for all services

Streamlining expenditure

  • Strengthen the financial health of public enterprises to reduce their reliance on budgetary transfers
  • Review a large number of untargeted subsidies and transfers and limit budgetary support to well-defined low-income or other needy segments of the population

C. Exchange Rate, Money, and Banking Issues

22. The BoM agreed that the exchange rate needed to play a central role in facilitating the country’s adjustment to a less favorable external environment. Although not ruling out the need for intermittent intervention—given the openness of capital markets—to smooth possible excessive short-term pressures on the rupee, they concurred with the staff’s advice to allow the exchange rate to move to a level that was in line with the country’s deteriorated external environment and to shield foreign reserves. This would help bolster the economy’s competitiveness (Box 5).

23. In light of the ample liquidity situation, the staff recommended tightening monetary conditions so as to help reduce inflationary pressures (Box 6). This would also help to increase the effectiveness of monetary policy (see below). In concurring with this recommendation, the authorities noted that fiscal adjustment would be required to make sufficient credit available to the private sector.

Box 5.Mauritius: The Real Effective Exchange Rate and Preferential Trade Arrangements

Despite rising unit labor costs and other input prices over the past 25 years, textile and clothing and sugar producers have remained competitive because of preferential trade arrangements. Global textile quotas favored Mauritius and kept textile prices high, and sugar trade arrangements with the EU and the United States guaranteed high sugar export prices. These implicit subsidies on Mauritius’s export prices have positively affected the terms of trade and the external account balance.

Against the background of this favorable terms of trade position, an empirical study compared the real effective exchange rate that is consistent with the long-run trends of the domestic and external balances with the observed real effective exchange rate.1 The study reveals that the actual exchange rate has been close to its equilibrium value, indicating the appropriateness of exchange rate policies given the fundamentals. This said, the study shows that domestic factors, particularly persistent fiscal deficits and rising labor costs, necessitated a depreciation of the real effective exchange rate over time.

The end of the preferential trade agreements has a permanent, adverse effect on Mauritius’s terms of trade. The restoration of external balance would require a depreciation of the real effective exchange rate. If the exchange rate is not allowed to depreciate sufficiently, the country’s external and savings-investment balances will deteriorate. Reforms implemented to bolster competitiveness would reduce the required extent of the exchange rate’s depreciation.

Real effective exchange rate

1See the companion Selected Issues paper for a detailed analysis of Mauritius’s real effective exchange rate

Box 6.Mauritius: Determinants of Inflation

A study examined data between 1977 and 2004 to identify the key domestic and external determinants of inflation.1 It found that changes in broad money had a strong impact on inflation, whenever supply exceeded money demand (the latter has grown strongly during the period under consideration, largely reflecting rapid financial deepening). By contrast, and in line with earlier findings by the BoM, the pass-through of exchange rate changes to domestic prices was found to be limited.

The results confirm the need to keep the increase of the money supply in line with changes in demand to avoid inflationary pressures. Regarding the limited impact of the exchange rate, the result may underestimate the current pass-through because domestic price controls were more common in the past. This said, the remaining administered prices only delay the needed adjustments.

1See the companion Selected Issues paper for a more comprehensive analysis.

24. Accordingly, the staff encouraged the authorities to manage liquidity more actively. Noting the authorities’ concern that the BoM had so far relied on its own securities for its open market operations, which entailed significant costs to the BoM, the staff stressed that the use of these instruments was indispensable as long as alternatives had not been fully developed and accepted by the market. It also noted that the BoM’s financial position had so far not been jeopardized by the use of these instruments.3 The authorities are looking forward to IMF technical assistance to diversify their range of instruments.

25. More active liquidity management would also strengthen the BoM’s efforts to use interest rates to signal the desired stance of its monetary policy. At present, the BoM uses the Lombard rate for signaling purposes, but it has been unable to influence other key market interest rates. The staff suggested that the BoM move toward short-term rates as the operational target while underpinning its signaling through interest rates by managing liquidity more actively. The authorities concurred with the thrust of this recommendation.

26. The authorities are monitoring closely the effects of the deteriorating external environment on the financial sector. The exposure of Mauritian banks to the textile and sugar sectors has declined steadily over the past few years, to around 14 percent of bank loans. Provisioning requirements have been strengthened, resulting in a reduction of the ratio of nonperforming loans to capital and reserves. The authorities expect that possible further provisioning needs would be met from profits (which are comfortable), without affecting capital.4 Nevertheless, the BoM is considering heightened collateral requirements for new lending, and is closely monitoring a comprehensive set of financial indicators.

27. Regarding the potential effect of an exchange rate depreciation on the banking system, the staff agreed that the small net open position in foreign exchange suggests a limited degree of vulnerability.5 That said, the authorities were encouraged to begin collecting information on corporate debt-to-equity ratios and the currency composition of corporate debt, so as to assess the indirect credit risk that could arise from the credit worthiness of firms borrowing in foreign currency.

28. Overall, the financial system is liquid and well-capitalized. The authorities have recently begun to publish key financial soundness indicators on a consolidated basis.

29. The monetary authorities indicated that they did not intend to adopt a formal inflation-targeting scheme until they had addressed institutional issues, external conditions had improved, and fiscal consolidation was well under way. They welcomed the forthcoming technical assistance from MFD to help them meet the preconditions for such a step, including inflation forecasting and modeling capabilities, more effective monetary policy instruments, and sufficiently deep and diversified capital markets.

30. The BoM has made progress in implementing the Banking Act and the BoM Act (both approved in 2004). Both Acts reflect recommendations by the FSAP conducted in 2002 and subsequent technical assistance. Specifically, the autonomy of the central bank was strengthened; rules for an orderly resolution of failed banks were introduced; and provisions were made to enable the BoM to apply sanctions against cases of noncompliance with AML/CFT (anti-money laundering and combating the financing of terrorism) regulations.6 The new banking regulations include guidance on credit classification for provisioning, credit concentration limits, credit risk management, and related-party transactions. The authorities intend to establish a deposit insurance.

31. Regarding offshore financial activities, the authorities have moved toward a single license for domestic and offshore banks and intend to harmonize the tax treatment of both activities shortly. The unified treatment of all banking activities is expected to enhance the overall attractiveness of Mauritius’s financial system.

D. Structural Issues

32. Discussions focused on labor market issues and the role of the public sector in commercial activities, with an emphasis on their role in fostering economic growth. The outlook for the textile and sugar sectors and the authorities’ plans to restructure them were also reviewed.

33. On labor market issues, the need to increase labor flexibility and the effects of the centralized wage-bargaining system on labor costs were reviewed. The authorities concurred with the staff’s view that labor flexibility would facilitate the deployment of workers from declining to expanding sectors. In that regard, the staff urged the authorities to carefully review current hiring and firing rules. In recognizing the need for such a review, the authorities stressed that more flexible rules had already been applied to the EPZ and that similar arrangements were envisaged for the ICT sector.

34. Regarding the centralized wage-settlement mechanism, the authorities emphasized that it was geared toward offsetting some loss of purchasing power, while additional decentralized negotiations would allow wages to better reflect sectoral differences in productivity. The World Bank is analyzing the impact of the wage-settlement mechanism on labor costs in the whole economy and at the sectoral level. The staff encouraged the authorities to quickly advance the policy actions in this area, taking into account the rising trend of labor costs over the past few years, as well as private sector concerns about the impact of the current wage-settlement arrangements on employment and investment.

35. The staff agreed with the authorities that the current unemployment benefit system did not discourage job searches because there were no recurrent unemployment benefits. The current system consists largely of lump-sum payments to individuals when their job terminates; the payments increase with the years of employment, but the amounts are not large enough to discourage the unemployed from searching new jobs. The authorities underscored that overall benefits were insufficient to sustain extended periods of unemployment.

36. The role of the public sector in commercial activities was also discussed. The authorities explained that the country’s small market size and lack of competition in certain activities called for the involvement of public enterprises to ensure a steady supply of key commodities at a reasonable cost. The staff encouraged them to consider measures that could attract additional private sector interest in these areas, with a view to strengthening growth and investment. Generally, the authorities agreed that the financial soundness of public enterprises needed to be monitored carefully so as to avoid costs to the budget.

37. On textile and sugar activities, the authorities explained their restructuring plans and accompanying measures aimed at mitigating the impact of the phasing out of trade preferences. On textiles, they were encouraging firms to cooperate in business planning, market development, and financial restructuring to strengthen their operations; some had already succeeded in moving to higher-quality products and had secured long-term contracts with international high-end retailers. In the context of bilateral trade negotiations with a number of emerging markets, the authorities were seeking access for Mauritian textile products to certain high-quality segments of these markets.

38. Efforts are also under way to restructure the sugar sector. The authorities have encouraged firms to move toward the production of goods with higher value added (such as refined sugar) and to explore fully the scope for side products that could be used for energy generation (such as ethanol).7 To reduce costs, the authorities intend to implement a program to combine plantations into larger, more efficient units and to support investment in irrigation. They were also hopeful that negotiations with the EU could result in more gradual price reductions and some financial support for their restructuring efforts.

39. The staff recognized the need for a sectoral strategy that would take into account the potential loss of employment and livelihoods for a large number of smallholder households. However, the staff urged the authorities to use great care in designing sectoral measures to avoid creating any disincentives for existing sugar activities. In the current difficult fiscal situation, the authorities need to minimize their recourse to fiscal incentives.

E. External Sector Issues

40. The authorities have begun to phase out all import tariffs to bolster external competitiveness. Furthermore, they have embarked on bilateral trade negotiations with major Asian economies (India, Pakistan) to secure market access for their textile sector. They are aware of the need to coordinate these steps with the Southern African Development Community (SADC) and Common Market for Eastern and Southern Africa (COMESA) to avoid conflicts with regional trade arrangements. There have been no other changes to Mauritius’s trade and exchange system since the last Article IV consultation.

41. Mauritius is not very vulnerable to shocks to its external debt-servicing capacity because its external public debt is low (14½ percent of GDP). Nonetheless, the authorities were encouraged to strengthen their collection of detailed data on private external debt so as to make future vulnerability assessments more comprehensive.

42. Despite the deterioration of Mauritius’s external environment, largely as a result of the erosion of trade preferences, the authorities saw no need to consider financial support from the Fund, including under the IMF’s Trade Integration Mechanism (TIM), at this stage. They pointed at the comfortable reserve level, equivalent to 6 months of imports, and expressed their confidence that a strong reform package would prevent a further significant worsening of their external and reserve positions. However, they asked for closer IMF involvement in designing and implementing reform measures.

F. Statistical Issues

43. Mauritius’s data availability is adequate for surveillance purposes. Recent discrepancies between monetary and fiscal statistics and the emergence of significant errors and omissions in the balance of payments data has been addressed. The authorities have also begun to publish quarterly national accounts data. On the staff’s suggestion to move the fiscal accounts to an accrual basis, they considered that further technical work was needed, particularly on the valuation of public sector assets and liabilities. Regarding external debt data, the authorities should explore discrepancies between official and external data (which indicate that the total stock of external debt could be higher than officially recorded).

III. Staff Appraisal

44. Economic conditions in Mauritius and its outlook have deteriorated markedly since the last Article IV consultation as a result of adverse external developments. The effects of the phasing out of trade preferences for textiles and sugar and the recent surge in world oil prices pose significant policy challenges in the short and medium term. Economic management is further complicated by the country’s high domestic public debt, which severely limits the scope for using fiscal policy to reenergize the economy.

45. The new government’s recognition of the need for fundamental reforms to boost competitiveness and ensure fiscal sustainability is welcome. A comprehensive policy response, combining appropriate macroeconomic and structural reforms, will be required. It would also help to restore investor confidence early on. As the authorities recognize, they need to redouble their efforts to attract foreign direct investment to the sectors that could help rekindle growth and job creation.

46. A more flexible labor market will be key to facilitating the transition of workers from declining sectors to growing ones. Hiring and firing rules for the entire economy need to be adjusted to the more flexible standards applied to some sectors, and the impact of the current centralized wage-settlement mechanism on labor cost and competitiveness must be examined without delay. These efforts need to be underpinned by well-targeted training programs so as to provide growing sectors with skilled workers.

47. A medium-term fiscal strategy needs to be formulated as soon as possible to move the public sector deficit toward sustainable levels. The authorities are encouraged to follow through with their plan to gradually phase out all import tariffs, also to bolster competitiveness, but need to implement measures to offset the associated revenue loss. There is ample scope to broaden the tax base and streamline expenditure while protecting the needs of disadvantaged groups more effectively through well-targeted transfers and subsidies. The financial soundness of public enterprises needs to be monitored carefully to avoid any cost to the budget.

48. Immediate measures need to be put in place to avoid a further deterioration of Mauritius’s overall fiscal position in 2005/06. The authorities need to reinstate the automatic price adjustment mechanism for domestic retail prices of petroleum products without delay and should begin implementing revenue-enhancing measures that have already been identified. The schemes to support the textile and sugar sectors that are under consideration should not lead to additional budgetary outlays.

49. Over the short term, monetary and exchange rate policies will play a crucial role in supporting external competitiveness while maintaining macroeconomic stability. The exchange rate needs to be allowed to move to a level commensurate with the worsened external environment and to protect international reserves. In parallel, liquidity conditions should be tightened to keep inflation low.

50. The risks to the banking sector from the deteriorating external environment require constant monitoring. While the authorities have stepped up efforts in this area, further actions, including the collection and monitoring of corporate debt information, are required.

51. The staff agrees that the current conditions are not favorable for moving to a formal inflation-targeting regime. Before such a step should be seriously considered, monetary policy instruments have to be sharpened, the external environment needs to become more predictable, and fiscal consolidation should be advanced. Meanwhile, the authorities are encouraged to work with forthcoming technical assistance from the IMF to meet the technical preconditions for such a step.

52. The staff stands ready to support the authorities’ reform efforts through stepped-up policy and technical advice, including, as requested, in formulating of the macroeconomic framework and budget for 2006/07.

53. It is proposed that the next Article IV consultation be held on the standard 12- month cycle.

Table 1.Mauritius: Selected Economic and Financial Indicators, 2000/01-2010/011 1/
Baseline Scenario Projections
2000/012001/022002/03Prov.

2003/04
Est.

2004/05
2005/062006/072007/082008/092009/102010/11
(Annual percentage changes, unless otherwise indicated)
National income, prices, and employment
Real GDP6.02.52.94.23.52.72.93.13.23.23.3
GDP deflator4.36.45.96.14.15.75.35.85.95.96.2
Domestic demand at current prices2/3/6.67.511.39.714.48.18.48.48.58.89.6
Consumer prices (period average)4.46.35.14.15.67.26.26.56.56.56.5
Unemployment rate (in percent)9.19.710.210.311.0
External sector (in U.S. dollar terms)
Exports, f.o.b.7.6-3.215.75.44.2-8.52.20.40.80.62.6
Imports, f.o.b. 3/-5.7-5.419.18.317.3-3.32.91.11.52.83.3
Nominal effective exchange rate 4/0.9-5.8-4.5-5.9-8.9
Real effective exchange rate 2/2.8-1.4-1.7-3.8-6.0
Terms of trade-2.50.90.1-0.9-3.3-2.3-2.1-1.6-1.2-1.1-0.5
Central government budget
Revenue and grants-3.411.319.911.17.05.08.14.74.76.99.5
Of which: tax revenue-0.96.620.312.312.65.36.85.84.36.69.6
Expenditure and net lending7.312.517.87.75.89.87.221.02.68.410.3
(Annual change in percent of beginning of period M2)
Money and credit
Net foreign assets7.49.07.01.42.4-5.6-3.3-1.5-0.30.91.0
Domestic credit5.37.76.519.110.410.111.710.59.68.48.7
Net claims on government-1.11.32.211.93.64.84.77.56.89.29.2
Credit to private sector6.46.34.37.26.85.47.03.02.9-0.8-0.5
Broad money (annual percentage growth)9.913.011.714.48.58.68.49.09.49.39.7
Yield on treasury bill (weighted average/primary auctions)11.410.59.14.76.78.09.09.010.010.010.0
Income velocity of broad money (GDP/M2)1.31.21.21.21.21.21.21.21.21.21.2
(In percent of GDP at market prices)
Central government budget
Overall balance (including grants)-5.7-6.0-6.2-5.4-5.0-6.0-5.8-9.3-8.4-8.5-8.7
Domestic financing4.55.36.15.74.86.16.09.68.68.88.9
Of which: banking system (net)-0.81.01.78.43.13.83.75.95.35.45.5
External financing-2.80.70.1-0.30.2-0.1-0.3-0.3-0.3-0.3-0.2
Domestic debt of central government42.448.857.751.354.156.057.762.565.868.971.8
External debt of central government7.85.05.95.54.74.74.23.63.02.52.3
Gross domestic investment23.321.622.924.222.221.920.520.320.119.719.4
Public6.86.97.97.77.57.57.06.96.86.86.8
Private16.115.314.314.514.714.413.513.413.213.012.6
Gross national savings26.727.025.325.019.219.618.018.519.119.319.0
Public-3.2-1.9-0.8-0.8-1.1-2.5-2.3-5.8-4.9-5.0-5.2
Private29.928.926.125.820.322.120.324.324.024.324.2
External current account balance 5/3.45.42.40.8-3.0-2.3-2.5-1.8-0.9-0.5-0.4
Total external debt (including the debt of state-owned firms)22.221.819.115.514.514.516.015.213.011.910.8
(In percent of exports of goods and nonfactor services)
Total external debt36.635.832.827.825.026.428.526.522.120.118.4
Of which: government8.910.510.49.28.88.47.05.74.74.23.9
Total external debt service9.88.48.26.56.55.44.84.34.13.83.3
Of which: interest payments1.81.41.21.00.90.90.80.90.90.70.6
(In U.S. dollars, unless otherwise indicated)
Net international reserves of the Bank of Mauritius786.01,010.31,366.81,550.51,473.31,278.81,079.1965.8918.0931.3955.9
In months of imports, c.i.f. 3/4.76.57.37.56.15.54.54.03.73.73.6
Net international reserves of the banking system1,081.31,344.01,637.51,757.61,649.41,454.91,255.21,141.91,094.11,107.41,132.0
In months of imports, c.i.f. 3/6.48.48.68.56.86.25.24.74.44.34.3
Memorandum item:
GDP at current market prices (in millions of Mauritian rupees)126,063137,466149,853165,686178,491193,803210,068229,075250,557273,880300,504

Sources: Bank of Mauritius; Central Statistics Office; Ministry of Finance; and IMF staff estimates and projections.

Fiscal year (July-June).

Excluding changes in stocks.

Excluding the acquisition of aircraft and ships.

Trade-weighted period averages (a negative sign signifies a depreciation).

Including transfers, aircraft, and ships.

Sources: Bank of Mauritius; Central Statistics Office; Ministry of Finance; and IMF staff estimates and projections.

Fiscal year (July-June).

Excluding changes in stocks.

Excluding the acquisition of aircraft and ships.

Trade-weighted period averages (a negative sign signifies a depreciation).

Including transfers, aircraft, and ships.

Table 2.Mauritius: Balance of Payments, 2000/01-2010/11 1/(In millions of U.S. dollars, unless otherwise indicated)
Baseline Scenario Projections
2000/012001/022002/03Prov.

2003/04
Est.

2004/05
2005/062006/072007/082008/092009/102010/11
Current account balance154.3246.7122.547.6-184.6-142.4-159.5-115.7-59.8-30.8-24.8
In percent of GDP3.45.42.40.8-3.0-2.3-2.5-1.8-0.9-0.5-0.4
Trade balance-252.9-204.4-297.9-374.7-692.1-773.2-808.1-829.9-854.4-921.8-965.9
Exports, f.o.b.1,639.01,586.01,834.81,934.52,015.71,844.51,886.01,893.51,908.71,920.01,970.2
Percentage change7.6-3.215.75.44.2-8.52.20.40.80.62.6
Of which: export processing zone (EPZ)1,177.11,088.21,106.91,162.71,061.6876.7865.3854.1843.1832.1821.3
sugar272.9296.1285.4323.6356.8320.6294.0232.4173.7129.1118.4
Imports, f.o.b.-1,891.9-1,790.4-2,132.7-2,309.2-2,707.7-2,617.7-2,694.1-2,723.4-2,763.1-2,841.8-2,936.1
Percentage change-5.7-5.419.18.317.3-3.32.91.11.52.83.3
Of which: EPZ-607.9-554.4-560.1-599.6-566.2-453.6-416.3-390.4-385.3-380.3-375.4
petroleum products-213.5-180.9-216.7-252.1-369.4-490.9-536.3-538.9-546.9-560.5-574.7
aircraft and ships-14.4-52.1-37.0-8.0-4.10.00.00.00.00.00.0
Services (net)332.0394.0345.1402.0454.2559.3589.5652.2729.8823.4870.6
Of which: tourism387.5409.6433.7563.6566.4645.7675.9729.9798.3875.2939.1
credit562.8630.1620.2798.8832.1865.3909.1973.71,053.01,138.81,219.9
debit-175.3-220.5-186.5-235.2-265.7-219.6-233.2-243.7-254.7-263.6-280.8
Income (net)12.2-8.2-1.6-35.7-4.611.4-3.3-3.1-2.9-2.7-2.6
Current transfers (net)63.065.376.956.057.860.162.565.067.670.373.1
Capital and financial account-95.7-256.7-219.2-62.3116.9142.4159.5115.759.830.824.8
Capital account-1.4-1.0-2.0-1.4-1.0-1.5-1.5-1.5-1.5-1.5-1.5
Financial account-94.2-255.7-217.2-60.9117.9143.9161.0117.261.332.326.3
Direct investment197.348.260.634.4-30.618.025.045.055.055.055.0
Abroad-4.7-1.51.9-17.9-28.5-14.0-15.0-15.0-15.0-15.0-15.0
In Mauritius202.049.758.852.3-2.132.040.060.070.070.070.0
Portfolio investment-139.0-19.9-21.2-26.5-11.2-34.7-32.0-15.7-4.76.117.2
Other investment33.3-39.582.766.951.6-33.9-31.6-25.4-36.8-15.4-21.4
Government-16.635.4-2.6-5.57.38.05.01.5-1.99.33.3
Other public sector37.2-51.4-80.7-92.1-40.5-57.0-51.6-41.8-49.8-39.7-39.7
Other 2/12.7-23.5166.0164.584.815.015.015.015.015.015.0
Errors and omissions 3/-58.69.996.714.767.70.00.00.00.00.00.0
Overall balance185.8244.5339.4135.7-108.2-194.5-199.6-113.3-47.813.424.5
Reserve assets of the Bank of Mauritius-185.8-244.5-339.4-135.7108.2194.5199.6113.347.8-13.4-24.5
Memorandum items:
Current account balance, excluding aircraft and ships168.7298.9159.455.6-180.5-142.4-159.5-115.7-59.8-30.8-24.8
In percent of GDP3.76.63.10.9-2.9-2.3-2.5-1.8-0.9-0.5-0.4
Overall balance (in percent of GDP)4.15.46.72.3-1.8-3.1-3.2-1.8-0.70.20.4
Net international reserves of the banking system 4/1,081.31,344.01,637.51,757.61,649.41,454.91,255.21,141.91,094.11,107.41,132.0
Net international reserves of the Bank of Mauritius 4/786.01,010.31,366.81,550.51,473.31,278.81,079.1965.8918.0931.3955.9
In months of imports, c.i.f. 5/4.76.57.37.56.15.54.54.03.73.73.6
Total external debt-service ratio (in percent of exports of goods and services)9.88.48.26.56.55.44.84.34.13.83.3
Mauritian rupees per U.S. dollar (period average)6/27.5930.2329.0228.0428.96
Mauritian rupees per U.S. dollar (end of period) 6/29.3630.1629.5028.4629.61

Sources: Bank of Mauritius; Ministry of Finance; Mauritius Sugar Syndicate; and IMF staff estimates and projections.

Fiscal year (July-June).

Including movements in international reserves of commercial banks.

Including valuation adjustments.

End of period.

Excluding the acquisition of aircraft and ships.

Market rate.

Sources: Bank of Mauritius; Ministry of Finance; Mauritius Sugar Syndicate; and IMF staff estimates and projections.

Fiscal year (July-June).

Including movements in international reserves of commercial banks.

Including valuation adjustments.

End of period.

Excluding the acquisition of aircraft and ships.

Market rate.

Table 3.Mauritius: Summary of Public Sector Finances, 2001/02-2010/11 1/
ActualActualBudgetBaseline Scenario Projections
Prov.Rev est.Staff Proj.
2001/022002/032003/042004/052005/062005/062006/072007/082008/092009/102010/11
(In millions of Mauritiar rupees)
Total revenue and grants25,27030,29833,67636,04938,78237,86840,91842,85144,86947,97052,545
Tax revenue21,51925,87929,06832,71935,06634,44936,79138,93840,60143,27347,417
Nontax revenue3,4354,0563,9202,4733,2152,9183,4323,7134,0614,4394,871
External grants317363618444496496689195200250250
Capital revenue69.7413.85.05.05.45.46.57.17.8
Total expenditure and net lending33,56939,53342,56745,04648,35049,44253,02064,13465,80871,33478,653
Current expenditure27,88131,53834,88538,06241,38442,67645,69356,14557,07061,78268,173
Wages and salaries8,8549,36610,90111,68212,32512,32513,35914,33915,43316,59618,209
Other goods and services2,9273,1683,5023,7464,3444,3444,7095,1355,6166,1396,736
Interest payments4,5416,3906,5867,1846,8098,1018,81917,21615,67617,92820,436
External interest207189206216270270275301317286251
Domestic interest 2/4,3346,2026,3806,9686,5397,8318,54416,91415,35917,64320,185
Current transfers and subsidies11,55812,61413,89715,45017,90617,90618,80619,45620,34521,11922,792
Capital expenditure5,0437,0157,0786,3427,0536,8537,3267,9898,7399,55210,481
Net lending 3/645980604642-87-8700000
Overall public sector balance-8,299-9,235-8,891-10,058-12,244-13,411-13,939-23,120-22,776-25,202-27,945
Central government overall balance-8,299-9,235-8,891-8,997-9,568-11,574-12,102-21,283-20,939-23,365-26,108
Parastatal balance000-1,061-2,676-1,837-1,837-1,837-1,837-1,837-1,837
Financing8,2999,2358,89110,05812,24413,41113,93923,12022,77625,20227,945
External (net)1,03087-486438-346-280-594-703-686-686-724
Disbursements1,7389233961,368667667667667667667667
Amortization-708-836-882-930-1,013-947-1,261-1,370-1,353-1,353-1,391
Domestic7,2699,1489,3789,62012,59013,69114,53323,82323,46225,88828,669
Banking system (net)1,3142,49613,8706,5608,7799,1349,65215,37015,14916,64218,354
Nonbank5,9556,803-3,4623,0603,8114,5574,8818,4528,3149,24610,315
(In percent of GDP, unless otherwise indicated)
Total revenue and grants18.420.220.320.219.519.519.518.717.917.517.5
Of which: tax revenue15.717.317.518.317.617.817.517.016.215.815.8
Of which: taxes on imports4.34.44.54.33.93.93.83.32.52.12.1
taxes on goods and services7.99.39.49.89.69.69.69.69.69.69.6
income tax2.52.72.83.33.33.33.33.33.33.33.3
nontax revenue2.52.72.41.41.61.51.61.61.61.61.6
Total expenditure and net lending24.426.425.725.224.325.525.228.026.326.026.2
Current expenditure20.321.021.121.320.822.021.824.522.822.622.7
Of which: wages and salaries6.46.36.66.56.26.46.46.36.26.16.1
other goods and services2.12.12.12.12.22.22.22.22.22.22.2
interest payments3.34.34.04.03.44.24.27.56.36.56.8
current transfers and subsidies8.48.48.48.79.09.29.08.58.17.77.6
Capital expenditure3.74.74.33.63.53.53.53.53.53.53.5
Net lending 2/0.50.70.40.40.00.00.00.00.00.00.0
Overall public sector balance after grants-6.0-6.2-5.4-5.6-6.2-6.9-6.6-10.1-9.1-9.2-9.3
Public sector primaray balance 4/-2.7-1.9-1.4-1.6-2.7-2.7-2.4-2.6-2.8-2.7-2.5
Overall central government balance after grants-6.0-6.2-5.4-5.0-4.8-6.0-5.8-9.3-8.4-8.5-8.7
Central government primary balance 4/-2.7-1.9-1.4-1.0-1.4-1.8-1.6-1.8-2.1-2.0-1.9
Overall public sector financing6.06.25.45.66.26.96.610.19.19.29.3
External0.70.1-0.30.2-0.2-0.1-0.3-0.3-0.3-0.3-0.2
Domestic5.36.15.75.46.37.16.910.49.49.59.5
Of which: banking system1.01.78.43.74.44.74.66.76.06.16.1
Memorandum items:
Central government domestic debt (in percent of GDP)48.857.751.354.153.556.057.762.565.868.971.8
Nominal GDP (in millions of Mauritian rupees)137,466149,853165,686178,491199,000193,803210,068229,075250,557273,880300,504

Sources: Ministry of Finance; Bank of Mauritius; and IMF staff estimates and projections.

Budgetary central government, Government Finance Statistics basis, unless otherwise indicated; fiscal year from July to June.

Deferred interest payments on treasury bills during 2004/05-2006/07 are due in 2007/08.

In 2000/01 and 2001/02, net lending includes the repayment of US$33 million, US$111 million, and US$6 million of the international floating rate note of US$150 million, respectively.

Overall balance after grants, excluding interest payments.

Sources: Ministry of Finance; Bank of Mauritius; and IMF staff estimates and projections.

Budgetary central government, Government Finance Statistics basis, unless otherwise indicated; fiscal year from July to June.

Deferred interest payments on treasury bills during 2004/05-2006/07 are due in 2007/08.

In 2000/01 and 2001/02, net lending includes the repayment of US$33 million, US$111 million, and US$6 million of the international floating rate note of US$150 million, respectively.

Overall balance after grants, excluding interest payments.

Table 4.Mauritius: Monetary Survey, 2003-2011
Baseline Scenario Projections
JuneJuneJuneJuneJuneJuneJuneJuneJune
200320042005200620072008200920102011
(In millions of Mauritian rupees; end of period)
Net foreign assets48,30150,01353,44644,92239,46336,77936,27538,21140,605
Monetary authorities40,31744,12043,62238,30832,35028,98227,96229,42931,417
Commercial banks7,9845,8929,8246,6147,1137,7978,3138,7829,188
Domestic credit107,517131,068145,802161,294180,703199,688218,617236,685257,124
Claims on government (net)21,31236,00041,10748,40456,21969,75383,064102,869124,386
Monetary authorities-11,285-9824535,76711,72515,09216,11319,64622,658
Commercial banks32,59636,98240,65442,63744,49454,66066,95283,223101,728
Claims on private sector 1/86,20695,068104,695112,890124,484129,936135,553133,816132,738
Broad money (M2)123,365141,099153,084166,216180,166196,468214,892234,895257,729
Money (M1)17,43721,32122,64624,37126,20428,25330,50832,94835,644
Quasi money105,928119,777130,438141,845153,962168,215184,384201,948222,085
Money market instruments 2/03,8373,735000000
Other items (net)32,45336,14542,42940,00040,00040,00040,00040,00040,000
(Annual change in millions of Mauritian rupees)
Net foreign assets7,7701,7123,433-8,524-5,459-2,684-5051,9362,395
Monetary authorities9,8483,804-499-5,314-5,958-3,367-1,0201,4671,988
Commercial banks-2,078-2,0923,932-3,210499684516469407
Domestic credit7,19423,55114,73315,49219,40918,98518,92918,06820,439
Claims on government2,45414,6895,1077,2977,81513,53413,31219,80521,517
Claims on private sector 1/4,7418,8639,6278,19611,5945,4515,617-1,737-1,078
Broad money (M2)12,92617,73411,98513,13313,95016,30118,42420,00322,834
Money (M1)2,3063,8841,3251,7251,8332,0482,2552,4402,696
Quasi money10,62013,84910,66011,40712,11714,25316,16917,56420,138
(Annual change in percent)
Domestic credit7.221.911.210.612.010.59.58.38.6
Claims on government13.068.914.217.816.124.119.123.820.9
Claims on private sector 1/5.810.310.17.810.34.44.3-1.3-0.8
Broad money (M2)11.714.48.58.68.49.09.49.39.7
Money (M1)15.222.36.27.67.57.88.08.08.2
Quasi money11.113.18.98.78.59.39.69.510.0
(As a percent of beginning-of-period M2)
Net foreign assets7.01.42.4-5.6-3.3-1.5-0.30.91.0
Domestic credit6.519.110.410.111.710.59.68.48.7
Claims on government (net)2.211.93.64.84.77.56.89.29.2
Claims on private sector 1/4.37.26.85.47.03.02.9-0.8-0.5

Sources: Bank of Mauritius; and IMF staff estimates.

Including claims on public enterprises.

Central bank bills held by nonbanking financial institutions.

Sources: Bank of Mauritius; and IMF staff estimates.

Including claims on public enterprises.

Central bank bills held by nonbanking financial institutions.

Table 5.Mauritius: GDP and Savings-Investment Balance, 2000/01-2010/11
Baseline Scenario Projections
2000/012001/022002/03Prov.

2003/04
Est.

2004/05
2005/062006/072007/082008/092009/102010/11
(Annual percentage changes)
Real GDP6.02.52.94.23.52.72.93.13.23.23.3
Agriculture, forestry, hunting, and fishing18.1-4.9-8.03.63.21.10.1-1.2-1.4-3.2-1.9
Sugarcane growing30.5-8.4-12.94.82.7-0.5-2.7-5.7-6.6-11.5-9.3
Mining and quarrying-1.9-26.9-32.10.80.00.00.00.00.00.00.0
Manufacturing6.90.6-1.70.0-1.8-2.10.21.52.42.63.0
Export processing zone5.2-0.9-6.0-6.4-10.8-12.2-7.4-4.0-1.6-0.7-0.4
Electricity, gas, and water13.56.24.14.23.85.05.05.05.05.05.0
Construction7.15.88.34.81.94.04.04.04.04.04.0
Wholesale and retail trade2.73.22.22.73.63.13.13.13.13.13.1
Hotels and restaurants6.42.23.12.73.24.04.04.04.04.04.0
Transport, storage, and communications11.08.37.36.84.83.03.03.03.03.03.0
Financial intermediation5.5-1.25.36.05.34.64.23.93.93.93.9
Real estate, renting, and business activities7.46.76.06.15.95.04.44.44.44.54.5
Public administration, defense, and social security4.15.05.85.04.64.94.94.94.94.94.9
Education6.35.15.45.66.26.06.06.06.06.06.0
Health and social work5.77.37.97.16.76.16.16.16.16.16.1
Other services5.96.16.47.06.86.06.06.06.06.06.0
GDP at factor cost (GDP at basic prices)7.73.72.94.03.12.62.93.13.33.23.4
Net indirect taxes (taxes on products net of subsidies)-5.7-7.42.86.36.43.53.03.03.03.03.0
GDP deflator4.36.45.96.14.15.75.35.85.95.96.2
GDP at market prices10.69.09.010.67.78.68.49.09.49.39.7
(In percent of GDP at market prices)
External current account balance3.45.42.40.8-3.0-2.3-2.5-1.8-0.9-0.5-0.4
Gross National Savings26.727.025.325.019.219.618.018.519.119.319.0
Private29.928.926.125.820.322.120.324.324.024.324.2
Government-3.2-1.9-0.8-0.8-1.1-2.5-2.3-5.8-4.9-5.0-5.2
Investment23.321.622.924.222.221.920.520.320.119.719.4
Private16.115.314.314.514.714.413.513.413.213.012.6
Government6.86.97.97.77.57.57.06.96.86.86.8
Consumption75.074.376.275.381.781.583.082.581.981.782.0
Private61.060.462.161.067.667.669.969.669.269.269.4
Government14.013.814.114.314.014.013.012.912.712.612.6

Source: Mauritius Central Statistics Office; and IMF staff estimates.

Source: Mauritius Central Statistics Office; and IMF staff estimates.

Table 6.Mauritius: Selected Economic and Financial Indicators, 2000/01-2010/111/
Strong Reform Scenario Projections
2000/012001/022002/03Prov.

2003/04
Est.

2004/05
2005/062006/072007/082008/092009/102010/11
(Annual percentage changes, unless otherwise indicated)
National income, prices, and employment
Real GDP6.02.52.94.23.53.54.75.05.15.15.2
GDP deflator4.36.45.96.14.15.84.84.84.64.64.5
Domestic demand at current prices2/3/6.67.511.39.714.48.29.19.29.59.710.0
Consumer prices (period average)4.46.35.14.15.67.25.75.45.04.74.5
Unemployment rate (in percent)9.19.710.210.311.0
External sector (in U.S. dollar terms)
Exports, f.o.b.7.6-3.215.75.44.2-2.33.54.65.03.23.9
Imports, f.o.b. 3/-5.7-5.419.18.317.3-1.22.83.34.22.83.1
Nominal effective exchange rate 4/0.9-5.8-4.5-5.9-8.9
Real effective exchange rate 4/2.8-1.4-1.7-3.8-6.0
Terms of trade-2.50.90.1-0.9-3.3-2.2-2.0-1.3-0.50.00.1
Central government budget
Revenue and grants-3.411.319.911.17.09.610.410.710.68.69.7
Of which: tax revenue-0.96.620.312.312.68.310.212.510.58.49.7
Expenditure and net lending 5/7.312.517.87.75.810.0-0.121.41.47.89.1
(Annual change in percent of beginning-of-period broad money)
Money and credit
Net foreign assets7.49.07.01.42.4-3.7-0.61.32.02.32.2
Domestic credit5.37.76.519.110.49.210.48.78.17.67.7
Net claims on government-1.11.32.211.93.62.31.32.31.41.31.2
Credit to private sector6.46.34.37.26.86.99.16.46.76.36.5
Broad money (annual percentage growth)9.913.011.714.48.59.59.710.010.09.910.0
Yield on treasury bill (weighted average/primary auctions)11.410.59.14.76.7
Income velocity of broad money (GDP/M2)1.31.21.21.21.21.21.21.21.21.21.2
(In percent of GDP at market prices)
Central government budget
Overall balance (including grants)-5.7-6.0-6.2-5.4-5.0-5.1-2.7-5.0-2.9-2.7-2.6
Domestic financing4.55.36.15.74.85.33.05.33.22.92.8
Of which: banking system (net)-0.81.01.78.43.11.81.01.81.11.01.0
External financing-2.80.70.1-0.30.2-0.1-0.3-0.3-0.3-0.2-0.2
Domestic debt of central government42.448.857.751.354.154.752.853.351.649.948.2
External debt of central government7.85.05.95.54.74.74.13.52.92.42.2
Gross domestic investment23.321.622.924.222.222.421.521.722.022.122.3
Public6.86.97.97.77.57.46.76.56.76.76.7
Private16.115.314.314.514.715.014.815.115.315.415.5
Gross national savings26.727.025.325.019.220.920.421.422.122.422.5
Public-3.2-1.9-0.8-0.8-1.1-1.61.6-0.71.41.61.8
Private29.928.926.125.820.322.518.822.120.720.820.8
External current account balance 3/3.45.42.40.8-3.0-1.5-1.1-0.30.10.30.3
Total external debt (including the debt of state-owned firms)22.221.819.215.514.514.315.714.812.611.410.4
(In percent of exports of goods and nonfactor services)
Total external debt36.635.832.927.825.025.527.325.721.820.419.1
Of which: government8.910.510.49.28.88.16.75.64.74.34.1
Total external debt service9.88.48.26.56.55.24.64.24.13.83.4
Of which: interest payments1.81.41.21.00.90.80.80.90.80.70.6
(In millions of U.S. dollars, unless otherwise indicated)
Net international reserves of the Bank of Mauritius7861,0101,3671,5511,4731,3661,2961,3281,4031,5091,620
In months of imports, c.i.f. 3/4.76.57.37.56.15.75.35.25.35.55.8
Net international reserves of the banking system1,0811,3441,6381,7581,6491,5431,4721,5041,5791,6851,796
In months of imports, c.i.f. 3/6.48.48.68.56.86.46.05.96.06.26.4
Memorandum item:
GDP at current market prices (in millions of Mauritian rupees126,063137,466149,853165,686178,491195,454214,488235,901259,535285,333313,728

Sources: Bank of Mauritius; Central Statistics Office; Ministry of Finance; and IMF staff estimates and projections.

Fiscal year (July-June).

Excluding changes in stocks.

Including the acquisition of aircraft and ships.

Trade-weighted period averages (a negative sign signifies a depreciation).

Including transfers, aircraft, and ships.

Sources: Bank of Mauritius; Central Statistics Office; Ministry of Finance; and IMF staff estimates and projections.

Fiscal year (July-June).

Excluding changes in stocks.

Including the acquisition of aircraft and ships.

Trade-weighted period averages (a negative sign signifies a depreciation).

Including transfers, aircraft, and ships.

Table 7.Mauritius: Indicators of Financial and External Vulnerability, 2000/01-2004/05 1/
2000/012001/022002/032003/042004/05
Financial indicators
Total public sector debt, in percent of GDP63.970.280.269.971.8
Broad money (percent change; 12-month basis)9.913.011.714.48.5
Private sector credit (percent change; 12-month basis)8.18.25.810.310.1
Treasury Bill rate (weighted average of primary auctions)11.410.59.14.76.7
External indicators
Exports (percentage change, in U.S. dollar terms)7.6-3.215.75.44.2
Imports (percentage change, in U.S. dollar terms) 2/-5.7-5.419.18.317.3
Terms of trade (percentage change)-2.50.90.1-0.9-3.3
Current account balance, in percent of GDP3.45.42.40.8-3.0
Capital and financial account balance, in percent of GDP-2.1-5.6-4.2-1.11.9
Net international reserves of the Bank of Mauritius
In millions of U.S. dollars 3/7861,0101,3671,5511,473
In months of prospective imports, c.i.f. 2/4.76.57.37.56.1
Net international reserves of the banking system
In millions of U.S. dollars1,0811,3441,6381,7581,649
In months of prospective imports, c.i.f. 2/6.48.48.68.56.8
Total external debt
In percent of exports of goods and nonfactor services36.635.832.827.825.0
Total external debt service
In percent of exports of goods and nonfactor services9.88.48.26.56.5
Of which: interest payments1.81.41.21.00.9
Of which: principal repayments8.07.07.05.55.6
Exchange rate (Mauritian rupees per U.S. dollar; period average)27.630.229.028.029.0
Financial market indicators
Mauritius stock exchange index (SEMDEX; July 1989 = 100) 5/388359454635736
Change in percent 4/-4.9-7.626.739.815.9
Foreign currency long-term debt rating by Moody’s 5/Baa2Baa2Baa2Baa2Baa2

Sources: Mauritian authorities; and IMF staff estimates and projections

Fiscal year (July-June).

Excluding the acquisition of aircraft and ships.

The reserves of the Bank of Mauritius are not pledged as collateral for short-term liabilities, nor are they sold forward.

End of period.

Bonds rated "Baa2" by Moody’s are considered as medium-grade obligations

Sources: Mauritian authorities; and IMF staff estimates and projections

Fiscal year (July-June).

Excluding the acquisition of aircraft and ships.

The reserves of the Bank of Mauritius are not pledged as collateral for short-term liabilities, nor are they sold forward.

End of period.

Bonds rated "Baa2" by Moody’s are considered as medium-grade obligations

Table 8.Mauritius: Financial Soundness Indicators for the Banking Sector, 2001-04(In percent, unless indicated otherwise)
Dec. 01Dec. 02Dec. 03Dec. 04June 05
Capital adequacy
Regulatory capital to risk-weighted assets1/*13.012.314.215.015.0
Regulatory Tier I capital to risk-weighted assets 2/*12.713.013.713.714.4
Total (regulatory) capital to total assets8.47.28.07.87.8
Asset composition and quality
Share of loans (exposures) per risk-weight (RW) category
RW = 0%6.89.55.26.46.5
RW = 20%0.40.44.86.76.4
RW = 50%8.97.07.99.610.1
RW = 100%83.883.282.177.377.0
Total exposures/Total assets59.251.647.845.946.1
Sectoral distribution of loans to total loans
Agriculture8.39.79.17.57.0
Of which: sugar7.08.68.06.46.0
Manufacturing18.216.114.813.614.0
Of which: export enterprise certificate holders10.89.47.56.16.2
Traders14.114.114.914.515.2
Personal and professional9.59.29.810.010.4
Construction14.213.914.216.217.0
Of which: housing11.010.59.010.811.5
Tourism/hotels 3/*14.115.015.915.414.3
Other21.621.321.222.822.0
Foreign currency loans to total loans13.110.310.912.212.1
NPLs to gross loans - excluding accrued/unpaid interest8.08.39.68.17.6
NPLs net of provisions to capital*37.834.028.122.421.9
Large exposure to capital*270.1263.7220.9200.0228.0
Earnings and Profitability
ROA (Pre-tax net income/average assets)*2.32.02.12.1
ROE (Pre-tax net income/average equity)*20.618.119.219.2
Interest margin to gross income*30.132.632.134.7
Noninterest expenses to gross income*20.823.123.927.7
Expenses/revenues10.310.510.610.2
Earnings/employee - in Rs 000s1,6701,8192,2122,433
No. of employees3,3623,4563,5684,0804,206
Liquidity
Liquid assets to total assets*29.232.736.637.937.7
Liquid assets to total short-term liabilities*60.265.371.071.771.4
Funding volatility ratio21.116.413.914.014.6
Demand deposits/Total liabilities10.910.310.310.710.8
FX deposits to total deposits12.111.711.013.815.2
Sensitivity to market risk
Net open positions in FX to capital*3.27.520.81.93.1

Total of Tier I and Tier 2 less investments in subsidiaries and associates.

Does not reflect deductions for investments in subsidiaries and associated companies. numbers from 2001 onwards may not refer to the exact same industries as those before that date.

Refers to hotels and hotel management certificate companies only up to 2000, entire tourism industry after that date.

Part of the core set of financial soundness indicators.

Total of Tier I and Tier 2 less investments in subsidiaries and associates.

Does not reflect deductions for investments in subsidiaries and associated companies. numbers from 2001 onwards may not refer to the exact same industries as those before that date.

Refers to hotels and hotel management certificate companies only up to 2000, entire tourism industry after that date.

Part of the core set of financial soundness indicators.

APPENDIX I: Mauritius: Public and External Debt Sustainability

Figure 1.Mauritius: Public Debt Sustainability: Bound Tests—Baseline 1/

(Public debt in percent of GDP)
(Public debt in percent of GDP)

Sources: IMF, country desk data, and staff estimates.

1/ Shaded areas represent actual data. Individual shocks are permanent one-half standard deviation shocks. Figures in the boxes represent average projections for the respective variables in the baseline and scenario being presented. Ten-year historical average for the variable is also shown.

2/ Permanent one-fourth standard deviation shocks are applied to real interest rate, growth rate, and primary balance.

3/ Onetime real depreciations of 30 percent and 10 percent of GDP shock to contingent liabilities occur in 2006, with real depreciation defined as nominal depreciation (measured by percentage fall in dollar value of local currency) minus domestic inflation (based on GDP deflator).

Figure 2.Mauritius: Public Debt Sustainability: Bound Tests—Strong Reform Scenario 1/

(Public debt in percent of GDP)
(Public debt in percent of GDP)

Sources: IMF, country desk data, and staff estimates.

1/ Shaded areas represent actual data. Individual shocks are permanent one-half standard deviation shocks. Figures in the boxes represent average projections for the respective variables in the baseline and scenario being presented. Ten-year historical average for the variable is also shown.

2/ Permanent one-fourth standard deviation shocks are applied to real interest rate, growth rate, and primary balance.

3/ Onetime real depreciations of 30 percent and 10 percent of GDP shock to contingent liabilities occur in 2006, with real depreciation defined as nominal depreciation (measured by percentage fall in dollar value of local currency) minus domestic inflation (based on GDP deflator).

Figure 3.Mauritius: External Debt Sustainability: Bound Tests 1/

(External debt in percent of GDP)
(External debt in percent of GDP)

Sources: IMF, country desk data, and staff estimates.

1/ Shaded areas represent actual data. Individual shocks are permanent one-half standard deviation shocks. Figures in the boxes represent average projections for the respective variables in the baseline and scenario being presented. Ten-year historical average for the variable is also shown.

2/ Permanent one-fourth standard deviation shocks are applied to real interest rate, growth rate, and current account balance.

3/ Onetime real depreciation of 30 percent occurs in 2006/07.

Table 1.Mauritius: Public Sector Debt Sustainability Framework, 2000/01-2010/11(In percent of GDP, unless otherwise indicated)
Baseline
ActualProjections
2000/012001/022003/032003/042004/052005/062006/072007/082008/092009/102010/11Debt-stabilizing primary balance9/
Baseline: Public sector debt 1/63.970.280.269.971.872.475.379.280.082.284.0-0.2
o/w foreign-currency denominated20.019.917.814.313.312.110.99.78.67.66.7
Change in public sector debt-1.46.310.1-10.32.00.52.93.90.92.21.8
Identified debt-creating flows (4+7+12)7.31.10.2-2.81.11.21.03.82.32.42.0
Primary deficit1.32.62.11.41.62.72.42.62.82.72.5
Revenue and grants18.018.420.220.320.219.519.518.717.917.517.5
Primary (noninterest) expenditure19.321.022.321.721.822.321.921.320.720.220.0
Automatic debt dynamics 2/0.7-1.5-1.9-4.3-0.5-1.5-1.41.3-0.5-0.3-0.5
Contribution from interest rate/growth differential 3/-1.9-2.0-1.5-3.7-1.0-1.5-1.41.3-0.5-0.3-0.5
Of which contribution from real interest rate1.7-0.50.3-0.61.30.30.63.41.82.12.0
Of which contribution from real GDP growth-3.6-1.4-1.9-3.1-2.3-1.8-2.0-2.1-2.3-2.3-2.5
Contribution from exchange rate depreciation 4/2.60.5-0.4-0.60.4
Other identified debt-creating flows5.20.00.00.00.00.00.00.00.00.00.0
Privatization receipts (negative)5.20.00.00.00.00.00.00.00.00.00.0
Recognition of implicit or contingent liabilities0.00.00.00.00.00.00.00.00.00.00.0
Other (specify, e.g. bank recapitalization)0.00.00.00.00.00.00.00.00.00.00.0
Residual, including asset changes (2-3) 5/-8.75.19.9-7.50.9-0.71.90.0-1.4-0.2-0.2
Public sector debt-to-revenue ratio 1/354.8381.6397.0344.6355.7370.4386.4423.1446.8469.5480.5
Gross financing need 6/36.539.046.751.947.338.339.140.041.344.444.0
in billions of U.S. dollars1.71.82.43.12.92.42.52.52.72.93.0
Scenario with key variables at their historical averages 7/72.473.372.470.169.168.1-2.2
Scenario with no policy change (constant primary balance) in 2005-201072.473.776.876.677.979.0-0.2
Key Macroeconomic and Fiscal Assumptions Underlying Baseline
Real GDP growth (in percent)6.02.52.94.23.52.72.93.13.23.23.3
Average nominal interest rate on public debt (in percent) 8/7.45.66.65.56.26.36.310.98.68.99.1
Average real interest rate (nominal rate minus change in GDP deflator, in percent)3.2-0.80.7-0.62.10.61.05.12.73.02.9
Nominal appreciation (increase in US dollar value of local currency, in percent)-11.1-2.62.23.7-3.2
Inflation rate (GDP deflator, in percent)4.36.45.96.14.15.75.35.85.95.96.2
Growth of real primary spending (deflated by GDP deflator, in percent)-2.611.69.21.51.13.31.50.30.90.62.7
Primary deficit1.32.62.11.41.62.72.42.62.82.72.5

Indicate coverage of public sector, e.g., general government or nonfinancial public sector. Also whether net or gross debt is used.

Derived as [(r - π(1+g) - g + αε(1+r)]/(1+g+π+gπ)) times previous period debt ratio, with r = interest rate; π = growth rate of GDP deflator; g = real GDP growth rate; α = share of foreign-currency denominated debt; and ε = nominal exchange rate depreciation (measured by increase in local currency value of U.S. dollar).

The real interest rate contribution is derived from the denominator in footnote 2/ as r - π (1+g) and the real growth contribution as -g.

The exchange rate contribution is derived from the numerator in footnote 2/ as αε(1+r).

For projections, this line includes exchange rate changes.

Defined as public sector deficit, plus amortization of medium and long-term public sector debt, plus short-term debt at end of previous period.

The key variables include real GDP growth; real interest rate; and primary balance in percent of GDP.

Derived as nominal interest expenditure divided by previous period debt stock.

Assumes that key variables (real GDP growth, real interest rate, and other identified debt-creating flows) remain at the level of the level of the last projection year.

Indicate coverage of public sector, e.g., general government or nonfinancial public sector. Also whether net or gross debt is used.

Derived as [(r - π(1+g) - g + αε(1+r)]/(1+g+π+gπ)) times previous period debt ratio, with r = interest rate; π = growth rate of GDP deflator; g = real GDP growth rate; α = share of foreign-currency denominated debt; and ε = nominal exchange rate depreciation (measured by increase in local currency value of U.S. dollar).

The real interest rate contribution is derived from the denominator in footnote 2/ as r - π (1+g) and the real growth contribution as -g.

The exchange rate contribution is derived from the numerator in footnote 2/ as αε(1+r).

For projections, this line includes exchange rate changes.

Defined as public sector deficit, plus amortization of medium and long-term public sector debt, plus short-term debt at end of previous period.

The key variables include real GDP growth; real interest rate; and primary balance in percent of GDP.

Derived as nominal interest expenditure divided by previous period debt stock.

Assumes that key variables (real GDP growth, real interest rate, and other identified debt-creating flows) remain at the level of the level of the last projection year.

Table 2.Mauritius: Public Sector Debt Sustainability Framework, 2000/01-2010/11(In percent of GDP, unless otherwise indicated)
Strong Reform Scenario
ActualProjections
2000/012001/022003/032003/042004/052005/062006/072007/082008/092009/102010/11Debt-stabilizing primary balance9/
Baseline: Public sector debt1/63.970.280.269.971.870.670.169.565.462.759.9-1.1
o/w foreign-currency denominated20.019.917.814.313.312.313.612.910.810.09.3
Change in public sector debt-1.46.310.1-10.32.0-1.2-0.5-0.5-4.1-2.7-2.8
Identified debt-creating flows (4+7+12)7.31.20.0-2.91.1-0.4-3.5-1.4-3.4-3.2-3.1
Primary deficit1.32.71.91.41.61.7-0.9-1.6-1.7-1.8-1.7
Revenue and grants18.018.420.220.320.220.220.320.520.620.320.3
Primary (noninterest) expenditure19.321.122.121.721.821.919.418.918.918.618.5
Automatic debt dynamics 2/0.7-1.5-1.9-4.3-0.5-2.1-2.60.2-1.7-1.5-1.4
Contribution from interest rate/growth differential 3/-1.9-2.0-1.5-3.7-1.0-2.1-2.60.2-1.7-1.5-1.4
Of which contribution from real interest rate1.7-0.50.3-0.61.30.20.43.41.51.61.6
Of which contribution from real GDP growth-3.6-1.4-1.9-3.1-2.3-2.3-3.0-3.2-3.3-3.0-3.0
Contribution from exchange rate depreciation 4/2.60.5-0.4-0.60.4
Other identified debt-creating flows5.20.00.00.00.00.00.00.00.00.00.0
Privatization receipts (negative)5.20.00.00.00.00.00.00.00.00.00.0
Recognition of implicit or contingent liabilities0.00.00.00.00.00.00.00.00.00.00.0
Other (specify, e.g. bank recapitalization)0.00.00.00.00.00.00.00.00.00.00.0
Residual, including asset changes (2-3) 5/-8.75.010.1-7.50.9-0.83.00.8-0.70.50.4
Public sector debt-to-revenue ratio 1/354.8381.6396.7343.7355.7349.2344.6339.6318.0308.5295.7
Gross financing need 6/36.539.146.751.947.338.634.836.634.332.330.6
in billions of U.S. dollars1.71.82.43.12.92.52.32.52.52.52.5
Scenario with key variables at their historical averages 7/70.672.872.771.070.770.2-1.3
Scenario with no policy change (constant primary balance) in 2005-2010M70.672.074.373.173.373.3-2.3
Key Macroeconomic and Fiscal Assumptions Underlying Baseline
Real GDP growth (in percent)6.02.52.94.23.53.54.75.05.15.15.2
Average nominal interest rate on public debt (in percent) 8/7.45.66.65.56.26.25.710.37.37.57.5
Average real interest rate (nominal rate minus change in GDP deflator, in percent)3.2-0.80.7-0.62.10.50.95.52.72.83.0
Nominal appreciation (increase in US dollar value of local currency, in percent)-11.1-2.62.23.7-3.2
Inflation rate (GDP deflator, in percent)4.36.45.96.14.15.84.84.84.64.64.5
Growth of real primary spending (deflated by GDP deflator, in percent)-2.612.27.82.41.15.0-5.52.34.93.45.1
Primary deficit1.32.71.91.41.61.7-0.9-1.6-1.7-1.8-1.7

Indicate coverage of public sector, e.g., general government or nonfinancial public sector. Also whether net or gross debt is used.

Derived as [(r - π(1+g) - g + αε(1+r)]/(1+g+π+gπ)) times previous period debt ratio, with r = interest rate; π = growth rate of GDP deflator; g = real GDP growth rate; α = share of foreign-currency denominated debt; and ε = nominal exchange rate depreciation (measured by increase in local currency value of U.S. dollar).

The real interest rate contribution is derived from the denominator in footnote 2/ as r - π (1+g) and the real growth contribution as -g.

The exchange rate contribution is derived from the numerator in footnote 2/ as αε(1+r).

For projections, this line includes exchange rate changes.

Defined as public sector deficit, plus amortization of medium and long-term public sector debt, plus short-term debt at end of previous period.

The key variables include real GDP growth; real interest rate; and primary balance in percent of GDP.

Derived as nominal interest expenditure divided by previous period debt stock.

Assumes that key variables (real GDP growth, real interest rate, and other identified debt-creating flows) remain at the level of the last projection year.

Indicate coverage of public sector, e.g., general government or nonfinancial public sector. Also whether net or gross debt is used.

Derived as [(r - π(1+g) - g + αε(1+r)]/(1+g+π+gπ)) times previous period debt ratio, with r = interest rate; π = growth rate of GDP deflator; g = real GDP growth rate; α = share of foreign-currency denominated debt; and ε = nominal exchange rate depreciation (measured by increase in local currency value of U.S. dollar).

The real interest rate contribution is derived from the denominator in footnote 2/ as r - π (1+g) and the real growth contribution as -g.

The exchange rate contribution is derived from the numerator in footnote 2/ as αε(1+r).

For projections, this line includes exchange rate changes.

Defined as public sector deficit, plus amortization of medium and long-term public sector debt, plus short-term debt at end of previous period.

The key variables include real GDP growth; real interest rate; and primary balance in percent of GDP.

Derived as nominal interest expenditure divided by previous period debt stock.

Assumes that key variables (real GDP growth, real interest rate, and other identified debt-creating flows) remain at the level of the last projection year.

Table 3.Country: External Debt Sustainability Framework, 2000/01-2010/11(In percent of GDP, unless otherwise indicated)
ActualProjections
2000/012001/022002/032003/042004/052005/062006/072007/082008/092009/102010/11Debt-stabilizing non-interest current account 6/
Baseline: External debt22.321.719.415.714.514.516.015.213.012.211.3-1.0
Change in external debt-3.0-0.5-2.3-3.7-1.2-0.11.5-0.7-2.3-0.8-0.9
Identified external debt-creating flows (4+8+9)-8.2-6.4-6.2-3.92.91.61.70.6-0.4-0.8-0.8
Current account deficit, excluding interest payments-4.5-6.3-3.1-1.42.51.82.01.30.40.00.0
Deficit in balance of goods and services-1.7-4.2-0.9-0.53.93.43.42.81.91.51.4
Exports60.760.759.356.558.154.756.157.558.859.258.9
Imports59.056.558.356.161.958.159.660.360.760.760.3
Net non-debt creating capital inflows (negative)-4.3-1.1-1.2-0.60.5-0.3-0.4-0.7-0.9-0.8-0.8
Automatic debt dynamics 1/0.61.0-1.9-1.9-0.10.10.10.00.00.00.0
Contribution from nominal interest rate1.10.90.70.60.50.50.50.50.50.40.4
Contribution from real GDP growth-1.5-0.6-0.6-0.7-0.5-0.4-0.4-0.5-0.5-0.4-0.4
Contribution from price and exchange rate changes 2/0.90.7-2.0-1.7-0.1
Residual, incl. change in gross foreign assets (2-3) 3/5.35.93.90.1-4.0-1.7-0.2-1.4-1.80.0-0.1
External debt-to-exports ratio (in percent)36.735.832.827.825.026.428.526.522.120.619.1
Gross external financing need (in billions of US dollars) 4/0.1-0.10.10.10.40.30.30.20.20.10.1
in percent of GDP1.5-1.21.82.36.34.74.73.82.92.32.0
Scenario with key variables at their historical averages 5/14.511.98.14.22.10.2-0.6
Key Macroeconomic Assumptions Underlying Baseline
Real GDP growth (in percent)6.02.52.94.23.52.72.93.13.23.23.3
GDP deflator in US dollars (change in percent)-3.6-2.910.39.80.8-0.5-2.2-2.6-1.9-0.21.0
Nominal external interest rate (in percent)4.53.93.63.43.43.43.33.33.33.43.0
Growth of exports (US dollar terms, in percent)6.4-0.28.89.38.7-3.83.32.93.53.63.9
Growth of imports (US dollar terms, in percent)-1.5-4.315.010.216.9-4.23.21.62.02.93.8
Current account balance, excluding interest payments4.56.33.11.4-2.5-1.8-2.0-1.3-0.40.00.0
Net non-debt creating capital inflows4.31.11.20.6-0.50.30.40.70.90.80.8

Derived as [r - g - ρ(1+g) + εα(1+r)]/(1+g+ρ+gρ) times previous period debt stock, with r = nominal effective interest rate on external debt; ρ = change in domestic GDP deflator in US dollar terms, g = real GDP growth rate ε = nominal appreciation (increase in dollar value of domestic currency), and α = share of domestic-currency denominated debt in total external debt.

The contribution from price and exchange rate changes is defined as [-ρ(1+g) + εα(1+r)]/(1+g+ρ+gρ) times previous period debt stock. ρ increases with an appreciating domestic currency (ε > 0) and rising inflation (based on GDP deflator).

For projection, line includes the impact of price and exchange rate changes.

Defined as current account deficit, plus amortization on medium- and long-term debt, plus short-term debt at end of previous period.

The key variables include real GDP growth; nominal interest rate; dollar deflator growth; and both non-interest current account and non-debt inflows in percent of GDP.

Long-run, constant balance that stabilizes the debt ratio assuming that key variables (real GDP growth, nominal interest rate, dollar deflator growth, and non-debt inflows in percent of GDP) remain at their levels of the last projection year.

Derived as [r - g - ρ(1+g) + εα(1+r)]/(1+g+ρ+gρ) times previous period debt stock, with r = nominal effective interest rate on external debt; ρ = change in domestic GDP deflator in US dollar terms, g = real GDP growth rate ε = nominal appreciation (increase in dollar value of domestic currency), and α = share of domestic-currency denominated debt in total external debt.

The contribution from price and exchange rate changes is defined as [-ρ(1+g) + εα(1+r)]/(1+g+ρ+gρ) times previous period debt stock. ρ increases with an appreciating domestic currency (ε > 0) and rising inflation (based on GDP deflator).

For projection, line includes the impact of price and exchange rate changes.

Defined as current account deficit, plus amortization on medium- and long-term debt, plus short-term debt at end of previous period.

The key variables include real GDP growth; nominal interest rate; dollar deflator growth; and both non-interest current account and non-debt inflows in percent of GDP.

Long-run, constant balance that stabilizes the debt ratio assuming that key variables (real GDP growth, nominal interest rate, dollar deflator growth, and non-debt inflows in percent of GDP) remain at their levels of the last projection year.

APPENDIX II: Mauritius: Relations with the Fund

(As of September 30, 2005)

I. Membership Status

Joined on September 23, 1968; Article VIII.

II. General Resources Account

SDR MillionPercent of Quota
Quota101.60100.00
Fund holdings of currency78.7277.48
Reserve position in Fund22.8822.52

III. SDR Department

SDR MillionPercent of Allocation
Net cumulative allocation15.74100.00
Holdings17.85113.35

IV. Outstanding Purchases and Loans

None.

V. Latest Financial Arrangements

TypeApproval DateExpiration DateAmount

Approved

(SDR million)
Amount Drawn

(SDR million)
Stand-By3/1/858/31/8649.0049.00
Stand-By5/18/838/17/8449.5049.50
Stand-By12/21/8112/20/8230.0030.00

VI. Projected Obligations to Fund

None.

VII. Implementation of HIPC Initiative

Not applicable

VIII. Safeguards Assessments

Not applicable.

IX. Exchange Rate Arrangement

The currency of Mauritius is the Mauritian rupee, and the exchange rate regime is a managed float with no preannounced path for the exchange rate. The exchange rate is currently determined in the interbank foreign exchange market. The exchange arrangement is free of multiple currency practices and restrictions on the making of payments and transfers for current international transactions. Mauritius also maintains a liberal capital account. On September 22, 2005, the US$1 was equivalent to MUR 28.88.

X. Article IV Consultation

Mauritius is on the standard 12-month cycle. The last Article IV consultation discussions were held during March 19–April 1, 2004. The staff report (Country Report No. 05/281, 6/21/04) was considered by the Executive Board on July 23, 2004. A Financial System Stability Assessment was completed by a joint IMF–World Bank team on June 5, 2003.

XI. Technical Assistance (1997–2005)

FAD advisor on introduction of a value-added tax system, October 1997–June 1999.

MAE mission on monetary operations, banking supervision, and payment system structures, January–February 1998.

MAE missions on bank supervision: the first of three in April–June 1998; the second in September–December 1998; and the third in February–April 1999.

MAE mission on monitoring of the financial system under Article IV surveillance and on monetary operations, January 1999.

STA mission on quarterly national accounts, February–March 1999.

MAE mission on monetary operations, May 1999.

MAE missions on bank supervision: the first of three in June–August 1999; the second in October–December 1999; and the third in February–March 2000.

MAE missions on monetary operations: the first of two in August–September 1999; and the second in November 1999.

MAE general advisor to the Governor of the Bank of Mauritius, February 2000–February 2002.

STA mission on quarterly balance of payments statistics, March 2000.

STA mission on quarterly national accounts and General Data Dissemination System (GDDS), June 2000.

MAE missions on bank supervision: the first of three in August 2000; the second in November–December 2000; and the third in February–March 2001.

MAE–LEG joint mission on the revision of the Bank of Mauritius Act and the Banking Act, March-April 2001.

FAD mission on tax reform, May 2001.

MAE missions on bank supervision during 2001: the first of three in May–June 2001; the second in September 2001; and the third in November-December 2001.

STA mission on the Coordinated Portfolio Investment Survey 2001, May 2001.

STA mission to prepare a Report on the Observance of Standards and Codes (ROSC) for data compilation and dissemination, July 2001.

STA mission on government finance statistics, January 2002.

STA mission on monetary and financial statistics, March–April 2002.

MAE missions on general central banking during 2002: the first of three in February–April 2002; the second in June 2002; and the third in October–November 2002.

MAE missions on bank supervision during 2003: the first of four in February-March 2002; the second in May–June 2002; and the third in September–October 2002; and the fourth in November–December 2002.

MAE missions on bank supervision during 2003: the first of three in February–March 2003. Joint MAE–World Bank mission on anti–money laundering and combating the financing of terrorism, February-March 2003.

FAD mission on revenue administration and tax policy, February 2004.

FAD mission on revenue administration and tax policy, May 2004.

MFD mission on banking supervision and legislation, October 2004.

MFD mission on banking supervision, January 2005.

FAD mission on revenue administration and tax policy, January 2005.

MFD mission on banking supervision, April 2005.

Resident Representative: None

APPENDIX III: World Bank Group

(As of September 22, 2005)

The Bank Group strategy and lending operations

1. A member of the World Bank since its independence in 1968, Mauritius is a development success story. In 1968, the country was poor, with a nominal per capita income of about US$260. Today, nominal income per capita is US$5,100. The country graduated from the International Development Association (IDA), the World Bank’s soft-lending arm for the poorest countries), in FY1975, and the last IDA credit was made in July 1974. In the 1980s, the World Bank supported macroeconomic and sectoral policy reforms through quick-disbursing loans. After the success of the structural adjustment effort, the country turned to more traditional project lending.

2. The World Bank’s role in Mauritius is evolving, reflecting the country’s past success in gaining access to capital markets. Because of its relatively high income, Mauritius is one of only a few African countries eligible for International Bank for Reconstruction and Development loans (most African countries borrow from the IDA). The World Bank currently has one active project totaling $12.4 million in the environment sewerage and sanitation sectors, of which $7.6 million was disbursed as of August 29, 2005.

3. The Bank also supports the government of Mauritius through analytical and advisory assistance. The Bank has carried out a country procurement assessment review, a public expenditure review to assess the sustainability of the new economic agenda, a transport action plan, and a report on modernizing the pension system. The Bank has also been supporting the government with a medium-term economic framework (MTEF), and a labor market study. An investment climate assessment and country economic memorandum are under way.

4. The World Bank’s last country assistance strategy (CAS) from May 7, 2002, supported the government’s five-year Economic Agenda for the New Millennium (NEA), with policy advice and direct budget assistance, around the three objectives of (i) increasing Mauritius’s competitiveness; (ii) bringing about deeper social development and social cohesion; and (iii) preserving and protecting Mauritius’s fragile environment. A new Bank strategy for Mauritius is under preparation.

5. The International Finance Corporation’s (IFC) main focus for future activity in Mauritius is support for financial market deepening and development and advisory work and investments in private infrastructure. IFC is also actively seeking projects with Mauritian sponsors investing elsewhere in Africa. In 2003, IFC began an advisory mandate for structuring private participation in the water and sewer utility, but this project is currently on hold, awaiting a decision from the Mauritian government. IFC has committed no new investments since 1996; the portfolio has steadily decreased as investments have been repaid and/or exited and now consists of two equity positions for a total of US$1 million. IFC is currently discussing the provision of a US$75 million line of credit to a local bank. It is also exploring ways and means to provide technical assistance support to the textile industry, following the end of the Multi-Fiber Agreement.

6. The Multilateral Investment Guarantee Agency (MIGA) has been actively supporting Mauritian investors venturing abroad, particularly into sub-Saharan Africa. The agency is working to further strengthen relations with the local business community, creating synergies that will continue to support development into the Southern African Development Community region and other regions of Africa. For the second year running, the Board of Investment (BOI) office has supported and facilitated MIGA’s missions to Mauritius. These missions have firmly put MIGA as a value adding institution to cross-border investors to and from Mauritius. The BOI office has helped to identify more than 30 investors with the potential to use MIGA services. Mauritian investors have benefited substantially in recent years from MIGA guarantees for their investments in continental Africa and elsewhere, with total gross exposure currently at US$53.1 million, and net exposure at US$48.1 million, for projects in Burundi, Mozambique, and Pakistan.

7. Mauritius is not an active participant in World Bank Institute programs, but discussions are under way to help position the country as a global knowledge hub.

IMF-World Bank collaboration in specific areas

8. Overall, the staffs of the IMF and the World Bank maintain a collaborative relationship in supporting sound budgetary and fiscal management. The World Bank is supporting the government’s MTEF, has prepared a public expenditure review, and has provided just-in-time advice on a budget framework paper to lead the 04/05 budget cycle, which feeds into the IMF’s work on budgetary management and macroeconomic policy. Cooperation is also taking place on financial sector reforms and trade and labor market issues (the World Bank completed a Trade Mauritius Membership in SADC Note in FY04 and is undertaking a labor market review). Areas in which the World Bank leads

9. World Bank support is demand driven. Areas where it has taken the lead are related to specific sector advice, such as the environment, sewerage and sanitation, education and training, social welfare, pensions, the transport sector, MTEF, health, insurance, procurement, restructuring the EPZ sector, and privatization, as well as through a number of analytical studies as described above, including an ongoing investment climate assessment.

Areas in which the IMF leads

10. Areas where the IMF takes the lead role relate to policy advice and reforms with respect to (i) overall economic policy advice and targets for macroeconomic targets (ii) tax policy and administration (iii) budgetary accounting (iv) treasury procedures (v) public sector wage policy and (vi) monetary management and exchange rate policy. The Bank team actively participates in discussions between the IMF and the government in these areas, however, especially with respect to the setting of overall macroeconomic targets.

Questions may be referred to Mr. Robert Keyfitz (email:rkeyfitz@worldbank.org).

APPENDIX IV: Mauritius: Statistical Issues

The quality and timeliness of Mauritius’s reporting of core data, as well as of other economic and financial statistics to the IMF is, in general, satisfactory for conducting surveillance. Efforts are under way to improve the frequency and quality of fiscal data, particularly their consistency with monetary sector data. The authorities already publish economic data for Mauritius, including a monthly bulletin published by the Bank of Mauritius (BoM) and a number of statistics reports published by the Central Statistics Office (CSO), which are accessible on the Internet. Mauritius started participating in the IMF’s General Data Dissemination System (GDDS) in September 2000. Metadata updates were received in September 2005 and are currently being reviewed by IMF staff. The authorities have shown interest in subscribing to the Special Data Dissemination Standard (SDDS), but improvements in the periodicity and timeliness of several data series are required before subscription can take place.

Real sector

Mauritius’s annual national accounts are based on the concepts and definitions recommended by the System of National Accounts 1993. National accounts data are prepared by the CSO on a calendar-year basis and cover all transactions categories except financial transactions. Estimating GDP on the basis of production uses the ratios from the Census of Economic Activities (CEA), which are compiled every five years. Following the 2002 CEA, a major revision of the national accounts was undertaken and completed in September 2005. Most government operations and external transactions other than goods are recorded on a cash basis rather than on an accrual basis. GDP estimates on the basis of expenditure are not derived independently because household final consumption expenditure is determined as a residual. Although the household budget survey, complied every five years, generates an independent estimate, this estimate is considerably lower than the one resulting from the commodity-flow approach. GDP volume change is published as real growth rates over the previous year. Following IMF technical assistance in 1999 and 2000, the CSO started to compile national accounts on a quarterly basis from 1999, and publication started in August 2005. Improvements in the timeliness and quality of domestic production indicators are still needed.

The consumer price index is regularly rebased as consumption patterns and relative prices change. In July 2002, a new series of the consumer price index was introduced (July 2001- June 2002=100), with weights derived from the 2001/02 household budget survey that followed the Classification of Individual Consumption According to Purpose to classify goods and services. Producer price indices of agriculture and manufacturing, input costs of construction, the wage rate, and employment have been developed, but are not reported to the IMF for publication in its International Financial Statistics (IFS).

Government finance

Mauritius continues to be a regular and timely reporter of fiscal data for surveillance, including quarterly data and annual projections. The July 2001 mission to collect data for the ROSC highlighted statistical improvements needed in the fiscal data, especially to reduce duplication in data collection, publish quarterly central government data, and improve the timeliness of consolidated government data. The data for surveillance purposes would be enhanced significantly if they contained information on the overall public accounts, in particular off-budget accounts should be included in general government accounts and the scope of reporting could be improved to include nonfinancial public sector corporations in data on the nonfinancial public sector. Follow-up technical assistance was provided in January 2002 to assist the authorities with the compilation of nonfinancial public sector data. The authorities reported data for the consolidated central government for publication in the IMF’s Government Finance Statistics (GFS) Yearbook. Starting with data for fiscal year ending in June 2002, the authorities also report data for the consolidated general government sector. Although, the authorities produce quarterly GFS data for budgetary central government, they do not report these for publication in IFS.

Monetary accounts

The authorities report money and banking statistics on a timely and regular basis. In March 2002, the IMF provided technical assistance to implement the Monetary and Financial Statistics Manual (MFSM). The BoM successfully implemented the compilation procedures for the new Depository Corporations Survey (DCS) as recommended in the MFSM and compiled data in this framework for the period beginning in August 2001. However, the monetary survey is still used for monetary policy purposes (in the Monetary Targeting Framework) and for reporting to the Fund. In June 2005, the BoM started sending monetary data to STA using also the new standardized report forms.

Balance of payments

Mauritius provides quarterly balance of payments and international investment position data to the IMF’s Statistics Department on the basis of the classification system of the fifth edition of the Balance of Payments Manual. Coverage is limited for data in the financial account of the balance of payments and in the international investment position statement, particularly those on direct investment and portfolio investment. To address these gaps, a 2001 ROSC mission recommended the establishment of a survey of enterprises, banks and other financial institutions, both onshore and offshore, to obtain data on claims and liabilities regarding nonresidents. The authorities are investigating the possibility of conducting such a survey

Mauritius. Table of Common Indicators Required for Surveillance (as of July 28, 2005)
Date of latest observationDate receivedFrequency of data 6/Frequency of reporting 6/Frequency of publicationMemo Items 7/
Data quality methodological soundness 8/Data quality accuracy and reliability 9/
Exchange RatesJul-05DDD
International Reserve Assets and Reserve Liabilities of the Monetary Authority 1/May-05MMM
Reserve/Base MoneyMay-05MMM
Broad MoneyMay-05MMM
Central Bank Balance SheetMay-05MMM
Consolidated Balance Sheet of the Banking SystemMay-05MMM
Interest Rates 2/May-05MMM
Consumer Price IndexJun-05MMM
Revenue, Expenditure, Balance and Composition of Financing 3/—General Governments4/Mar-05QQQ
Revenue, Expenditure, Balance and Composition of Financing 3/—Central GovernmentMar-05QQQ
Stocks of Central Government and Central Government-Guaranteed Debt 5/Mar-05QQQ
External Current Account BalanceQ1-05QQQ
Exports and Imports of Goods and ServicesQ1-05QQQ
GDP/GNP2004AAA
Gross External DebtMar-05QQQ

Includes reserve assets pledged or otherwise encumbered as well as net derivative positions

Both market-based and officially determined, including discount rates, money market rates, rates on treasury bills, notes and bonds

Foreign, domestic and domestic nonbank financing

The general government consists of the central government (budgetary funds, extra budgetary funds and social security funds) and state and local governments

Including currency and maturity composition

Daily (D), Weekly (W), Monthly (M), Quarterly (Q), Annually (A), Irregular (I), Not Available (NA)

These columns should only be included for countries for which a Data ROSC (or a substantive update) has been prepared

Reflects the assessment provided in the data ROSC or the Substantive Update (published on… and based on the findings of the mission that took place during…) for the data set corresponding to the variable in each row. The assessment indicates whether international standards concerning concepts and definitions, scope, classification/sectorization and basis for recording are fully observed (O), largely observed (LO), largely not observed (LNO) or not observed (NO)

Same as footnote 8, except referring to international standards concerning source data, statistical techniques, assessment and validation of source data, assessment and validation of intermediate data and statistical outputs and revision studies.

Includes reserve assets pledged or otherwise encumbered as well as net derivative positions

Both market-based and officially determined, including discount rates, money market rates, rates on treasury bills, notes and bonds

Foreign, domestic and domestic nonbank financing

The general government consists of the central government (budgetary funds, extra budgetary funds and social security funds) and state and local governments

Including currency and maturity composition

Daily (D), Weekly (W), Monthly (M), Quarterly (Q), Annually (A), Irregular (I), Not Available (NA)

These columns should only be included for countries for which a Data ROSC (or a substantive update) has been prepared

Reflects the assessment provided in the data ROSC or the Substantive Update (published on… and based on the findings of the mission that took place during…) for the data set corresponding to the variable in each row. The assessment indicates whether international standards concerning concepts and definitions, scope, classification/sectorization and basis for recording are fully observed (O), largely observed (LO), largely not observed (LNO) or not observed (NO)

Same as footnote 8, except referring to international standards concerning source data, statistical techniques, assessment and validation of source data, assessment and validation of intermediate data and statistical outputs and revision studies.

APPENDIX V
Millennium Development Goals1/
19901997200020032015

Target
General Social Indicators
Population, total (millions)1.11.11.21.2..
Adult literacy rate (% of people ages 15 and over)....84.3....
Fertility rate, total (births per woman)2.32.02.02.0..
Life expectancy at birth, total (years)69.470.471.772.3..
Goal 1: Eradicate extreme poverty and hunger
Target: Halve between 1990 and 2015 the proportion of people whose income is less than one dollar a day and who suffer from hunger
1.Prevalence of underweight in children (under five years of age)..........
2.Population below minimum level of dietary energy consumption (%)..6.0..6.03.0
Goal 2: Achieve universal primary education
Target: Ensure that, byt 2015, children everywhere will be able to complete a full course of primary schooling
3.Net primary enrollment ratio (% of relevant age group)94.997.695.896.6100.0
4.Proportion of pupils starting grade 1 who reach grade 598.499.499.3..100.0
5.Youth literacy rate (% ages 15-24)....94.5..100.0
Goal 3: Promote gender equality
Target: Eliminate gender disparity in primary and secondary education, preferably by 2005, and to all levels of education no later than 2015
6.Ratio of girls to boys in primary and secondary education (%)100.4100.598.3100.3100.0
7.Ratio of young literate females to males (% ages 15-24)....101.7....
8.Share of women employed in the nonagricultural sector (%)36.736.738.638.5..
9.Proportion of seats held by women in national parliament (%)7.08.08.06.0..
Goal 4: Reduce child mortality
Target: Reduce by two-thirds, between 1990 and 2015, the under-five mortality rate.
10.Under 5 mortality rate (per 1,000)25.0..20.018.08.3
11.Infant mortality rate (per 1,000 live births)21.0..17.016.0..
12.Immunization, measles (% of children ages 12-23 months)76.087.084.094.0..
Goal 5: Improve maternal health
Target: Reduce by three-fourths, between 1990 and 2015, the maternal mortality ratio.
13.Maternal mortality ratio (modeled estimate, per 100,000 live births)....24.0....
14.Births attended by skilled health staff (% of total)....98.5....
Goal 6: Combat HIV/AIDS, malaria, and other diseases
Target: have halted by 2015, and begun to reverse, the spread of HIV/AIDS. Have halted by 2015, and begun to reverse, the incidence of malaria and other major diseases.
15.Prevalence of HIV, total (% of population aged 15-49)..........
16.Contraceptive prevalence rate (% of women ages 15-49)75.0..26.0....
17.Incidence of tuberculosis (per 100,000 people)67.765.764.964.1..
18.Number of children orphaned by HIV/AIDS..........
19.Tuberculosis cases detected under DOTS (%)..31.933.228.1..
Goal 7: Ensure environmental sustainability
Target: Integrate the principles of sustainable development into country policies and program and reverse the loss of environmental resources. Halve by 2015 the proportion of people without sustainable access to safe drinking water. By 2020, to have achieved a significant improvement in the lives of at least 100 million dwellers.
20.Forest area (% of total land area)8.4..7.9....
21.Nationally protected areas (% of total land area)..........
22.GDP per unit of energy use (2000 PPP $ per kg oil equivalent)..........
23.CO2 emissions (metric tons per capita)1.11.72.4....
24.Access to an improved water source (% of population)100.0....100.0..
25.Access to improved sanitation (% of population)99.0....99.0..
Goal 8: Develop a global partnership for development
Target: Develop further an open rule-based, predictable, nondiscriminatory trading and financial system. Address the special needs of the least-developed countries and landlocked countries and small island developing states Deal comprehensively with the debt problems of developing countries through national and international measures in order to make debt sustainable in the long term. In cooperation with developing countries, develop and implement strategies for decent and productive work for youth. In cooperation with the private sector, make available the benefits of new technologies, especially information and communications.
26.Unemployment, youth total (% of total labor force ages 15-24)..........
27.Fixed line and mobile phone subscribers (per 1,000 people)54.5232.5386.1552.2..
28.Personal computers (per 1,000 people)3.878.9100.5116.5..

Source: World Development Indicators database, April 2005.

Includes only indicators for which data are available for any given year.

Source: World Development Indicators database, April 2005.

Includes only indicators for which data are available for any given year.

1A mechanism to adjust retail prices in line with import prices on a quarterly basis was introduced in April 2004. The STC holds a monopoly for imports and sales of key commodities, including petroleum products, flour, and rice. The STC covers its financing needs through domestic commercial loans, which are subsequently offset through budgetary transfers. The second large public enterprise, the Central Electricity Board, has, at present, a satisfactory financial position, which is attributable partly to increases in electricity charges in 2004.
2The conversion of short-term to three-year treasury paper reduces cash interest payments by about 1 percent of GDP a year during 2004/05–2006/07 but leads to an increase of cash interest payments of 2.2 percent of GDP in 2007/08.
3The BoM recorded a small deficit in 2003/04 and a surplus in 2004/05.
4The Basel capital ratio stands at 15 percent, largely Tier 1.
5The net open position was about 3 percent of capital (June 2005).
6BoM regulations require all banks to apply the higher of the home or the host country’s AML/CFT requirements.
7During the sugar harvest season, these products already cover about 40 percent of Mauritius’s electricity needs.

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