IMF Staff Completes 2019 Article IV Mission to Mauritius

IMF News, January 30, 2019

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An IMF mission led by Mahvash Qureshi visited Mauritius during January 16–30, 2019 to conduct the discussions for the 2019 Article IV consultations.
At the conclusion of the visit, Ms. Qureshi issued a statement in Port Louis on January 30, 2019.
Press contact listed: PRESS OFFICER: Lucie Mboto Fouda; Phone: +1 202 623-7100; Email: MEDIA@IMF.org.

Real GDP:
- Real GDP expanded by 3.8 percent in 2017.
- Real GDP growth is projected at 3.8 percent in 2018 and 3.9 percent in 2019.
- The mission noted growth in 2019 is expected to be driven by robust performance in the financial services, construction, and tourism sectors.
Inflation and labor market:
- Inflationary pressures have receded.
- The unemployment rate has fallen to its lowest level in a decade.
- With international oil prices expected to decline in 2019, inflation is projected to drop further.
External sector:
- The external balance continues to deteriorate due to a rising trade deficit in goods.
- The current account deficit is expected to widen to about 7 percent of GDP owing to higher capital imports associated with large-scale public infrastructure projects.
Fiscal and public debt:
- The fiscal deficit in FY2017/18 was about 0.3 percent of GDP lower than budgeted.
- Public sector debt decreased to 63.7 percent of GDP at the end of the fiscal year from 65.0 percent of GDP in FY 2016/17.
- Given the expansionary fiscal stance in FY2018/19 and external borrowing to finance public investment in infrastructure, public sector debt is projected to increase.

Key challenges identified:
- Boosting inclusive economic growth.
- Preserving fiscal sustainability.
- Regaining external competitiveness.
- Maintaining financial integrity and stability.
Fiscal policy advice:
- To preserve macroeconomic stability, especially given the rapidly aging population, the mission advised the authorities to adopt prudent fiscal policies that would set public sector debt firmly on a declining path into the medium term.
Monetary policy:
- The monetary policy stance is broadly appropriate at the current juncture.
- Given the upside risks to inflation, vigilance is warranted against any emerging inflationary pressures.

Reforms and initiatives noted:
- Adoption of the Business Facilitation Act.
- Finalization of the Financial Sector Blueprint.
- Programs to support youth skill development, small-scale entrepreneurs, and female labor force participation.
- Improvement in the World Bank’s Doing Business 2019 indicator.
Implementation and coordination:
- The mission recommended strengthening coordination and synergies between the various reforms and initiatives, and enhancing interaction among stakeholders to improve effectiveness and efficiency.
Anti–money laundering / countering the financing of terrorism (AML/CFT):
- The mission welcomed the authorities’ ongoing efforts to strengthen the AML/CFT framework in line with the Financial Action Task Force (FATF) recommendations.
- The mission reiterated the need for maintaining strong and independent institutions to address policy challenges and remain an attractive investment destination.

Activity in the offshore global business sector has remained broadly resilient while reforms to the sector are underway.
A prudent stance by financial services firms and supervisory agencies has helped to maintain financial stability.

The mission met with:
- The Prime Minister and Minister of Finance and Economic Development, Pravind Jugnauth.
- Minister of Financial Services, Good Governance and Institutional Reforms, Dharmendar Sesungkur.
- Governor of the Bank of Mauritius, Yandraduth Googoolye.
- The Financial Secretary, Dharam Dev Manraj.
- Other senior government officials, the opposition leader, representatives of the private sector, academia, civil society, unions, and the donor community.
The mission expressed gratitude for productive discussions, excellent cooperation, and hospitality.
The IMF stands ready to assist the authorities in the implementation of their economic program, including through the provision of technical assistance, and looks forward to continuing fruitful policy dialogue.

IMF Press Release No. 19/22 — January 30, 2019.