Mauritius: Selected Issues

April 29, 2019

Preview Citation

Format: Chicago

Mauritius: Selected Issues, (USA: International Monetary Fund, 2019) accessed September 18, 2024

Summary

This Selected Issues paper develops a Financial Conditions Index (FCI) for Mauritius—an instrument to gauge the operational state of the financial sector and predict real economy activity. The evolution of Mauritius’ financial services sector has been supported by a vibrant offshore corporate sector. Given the strong macro-financial linkages, it is imperative to closely monitor domestic financial developments. Financial developments are broader than monetary developments depicting money supply and interest rates. The FCI is a robust predictor of real GDP growth in Mauritius. The FCI can also help inform macroprudential policy decisions. Decisions on setting the countercyclical capital buffer of Basel III could be informed by analyzing developments in the FCI. As historically Mauritius has not experienced drastic swings in financial credit, testing the constructed FCIs for predicting boom-bust episodes is difficult. Nevertheless, the FCI signaled lax financial conditions in 2009 and again in 2012 that likely contributed to accelerated credit growth in 2012–2013 and a subsequent acceleration in nonperforming loans during 2014–2016.

Subject: Aging, Exports, Financial conditions index, Financial sector policy and analysis, Income, International trade, National accounts, Population and demographics, Private savings

Keywords: Aging, Constructed FCIs, CR, Export basket, Exports, Financial conditions index, GDP, Global, Income, ISCR, Mauritius, Private saving, Private savings, Saving, Saving rate, Statistics Mauritius

Publication Details

Pages:

41
Volume:

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DOI:

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Issue:

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Series:

Country Report No. 2019/109
Stock No:

1MUSEA2019002
ISBN:

9781498311991
ISSN:

1934-7685

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