Press Release No. 09/385

Press Release No. 09/385
November 3, 2009

An International Monetary Fund (IMF) mission headed by Atish Ghosh visited Mauritius during October 19-31, 2009 to conduct Article IV consultation with the authorities. The mission’s work focused on the impact of the global financial crisis on the Mauritian economy and the associated policy response. The mission met with Prime Minister Dr. The Honorable Navinchandra Ramgoolam, Dr. The Honorable Vice Prime Minister and Minister of Finance an Empowerment Rama Sithanen, Governor of the Bank of Mauritius Rundheersing Bheenick, other senior government officials, as well as representatives of the private sector and civil society.

At the end of the mission, Mr. Atish Ghosh, Mission Chief for Mauritius, issued the following statement today in Port Louis:

“Since the last Article IV consultation a year ago, Mauritius, like other emerging market countries, has been suffering from the fallout of the global financial crisis. The mission welcomes the prompt and comprehensive policy response, which included fiscal stimulus, monetary loosening, and direct measures, developed in cooperation with the private sector, to help preserve jobs (such as the Mauritius Approach, Work and Training Scheme, and targeted/time bound tax relief). This has not only helped cushion the economy from the impact of the crisis, it has also better positioned Mauritius to benefit from an upturn in the world economy.

“The economic outlook for Mauritius, as for the global economy, is subject to an unusually high degree of uncertainty. Still, there are some initial positive indications, including in the tourism and other export sectors; growth next year is expected to be considerably stronger than in 2009. The challenge now is to determine when to resume fiscal consolidation without jeopardizing the recovery by prematurely withdrawing stimulus. This calls for some stimulus measures to be held contingently in reserve and deployed only if the recovery seems to be faltering; the announced stimulus package has in part this contingent feature. As the effects of the global crisis pass, resuming efforts at fiscal consolidation and an effective debt management strategy should help place public debt back on a downward path.

“The Monetary Policy Committee (MPC), whose establishment in 2007 was a major step in enhancing the monetary policy framework, appropriately lowered the key policy interest rate last year and earlier this year in the face of weakening activity. Pending further indications on economic prospects, the interest rate should be maintained at its current level, remaining vigilant should inflationary pressures arise as the world economy recovers.

“The mission welcomes the structural reforms in recent years, which have contributed to raising Mauritius’s competitiveness. Maintaining reform momentum, as well as enhancing the quality, coverage, and timeliness of macroeconomic statistics to meet the IMF’s Special Data Dissemination Standard (SDDS), will further strengthen Mauritius’s ability to compete with other emerging market and advanced economies, including as an important international financial center.

“The IMF stands ready to continue to assist the authorities in the implementation of their

economic program, including through the provision of technical assistance, and looks forward to continued fruitful policy dialogue in the period ahead.”