IMF Staff Completes 2024 Article IV Mission to Mauritius

IMF News, February 23, 2024

Source details

Canonical URL: IMF Staff Completes 2024 Article IV Mission to Mauritius

Other formats

Bibliographic details

Published: February 23, 2024

Economic performance and recent developments

The Mauritian economy rebounded strongly from the pandemic.
Real GDP growth reached 8.9 percent in 2022.
Rapid growth was sustained in 2023—estimated at 6.9 percent—with output now having exceeded its pre-pandemic level.
Vibrant tourism, social housing construction, and continued strong performance of transport and financial services buoyed growth.
Average headline inflation declined from 10.8 percent in 2022 to 7.0 percent in 2023.
January 2024 inflation recorded 5.2 percent year-on-year.
The external current account deficit is estimated to have narrowed significantly in 2023.
Foreign exchange reserves stood at US$ 7.3 billion at end-2023.

Outlook and risks

Real GDP growth is projected at 4.9 percent in 2024, driven by construction as major social housing and public transportation projects are ramped up and the recovery of tourism to pre-pandemic levels.
Headline inflation is projected to ease to 4.9 percent on average in 2024, mainly reflecting international oil and food price dynamics.
Downside and other risks highlighted:
- A deterioration in global growth could depress tourism.
- Higher-than-anticipated fuel and food prices due to spillovers from Russia’s invasion of Ukraine and the conflict in Gaza and Israel could exacerbate inflation, worsen the external position, and weaken the recovery.
- Extreme climate events could weaken tourism and damage local infrastructure, thus weakening growth.

Policy priorities and recommendations

Recalibrate the macroeconomic policy mix to rebuild macroeconomic buffers eroded due to the pandemic and to maintain financial stability.
Fiscal policy:
- The fiscal stance in fiscal year 2023-24 is expected to be expansionary—with the primary fiscal deficit projected to widen to 2.9 percent of GDP, excluding grants.
- Implement the authorities’ medium-term growth-friendly fiscal consolidation plan to reduce public debt and rebuild fiscal buffers, including by mobilizing additional tax revenue and reducing current spending, while protecting the most vulnerable.
Monetary policy:
- The monetary policy stance has remained broadly accommodative while inflation has declined and remains above BOM’s target range of 2-5 percent.
- BOM should stand ready to tighten its stance should inflationary pressures reemerge.
- Strengthen the effectiveness of the new monetary policy framework including by further enhancing its communication strategy.
External and financial buffers:
- Rebuilding macroeconomic buffers, including foreign reserves, would help enhance the resilience of the economy in the face of shocks.
- Strengthening the resilience of the financial sector and managing macro-financial risks will support financial stability.
- Continue close monitoring of financial sector risks, including with the global business companies operating in the Mauritius International Financial Center.
Structural reforms:
- Sustain compliance with Anti Money Laundering/Combating the Financing of Terrorism (AML/CFT) standards.
- Improve governance.
- Reduce skill mismatches in the labor market.
- Foster digitalization and climate-resilient infrastructure investment to support private sector investment and promote economic diversification.

IMF staff statement following the 2024 Article IV mission to Mauritius (mission led by Mariana Colacelli; mission visit January 9–18, 2024; virtual discussions continued up to February 21, 2024).