Press Release: IMF Staff Statement at the Conclusion of a Staff Visit to Mauritius

IMF News, February 20, 2009

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Canonical URL: Press Release: IMF Staff Statement at the Conclusion of a Staff Visit to Mauritius

Mission led by Christina Daseking, Advisor in the IMF’s African Department.
Visit occurred during February 17-20, to review recent economic developments and discuss macroeconomic policies in light of the global financial crisis.
Meetings held with:
- Prime Minister Navinchandra Ramgoolam
- Minister of Finance and Economic Empowerment Ramakrishna Sithanen
- Governor Rundheersing Bheenick
- Other senior government officials, private sector representatives, and donors.
Team expressed gratitude for the authorities’ hospitality and noted the benefit of fruitful discussions.

“As a result of sustained economic reforms over the last few years, Mauritius’s macroeconomic fundamentals are solid.”
Fiscal position improved and the public debt-to-GDP ratio declined.
Economic growth reached its highest level in a decade in 2008.
Mauritian banking system described as remaining well capitalized and liquid, despite stress in banks in many countries.
Inflation fell to just above 5 percent in January, measured on a year-on-year basis; the mission considered this measure more appropriate than the frequently used backward-looking average for guiding monetary policy.

A sharply deteriorating external environment is posing significant challenges.
Projected economic growth: 2 percent in 2009.
Comparison: more than 5 percent in 2008.
Current account deficit expected to rise to 11 percent of GDP, notwithstanding falling prices for food and fuel.
Price developments: falling food and fuel prices contributing to lower inflation.

Welcomed the government’s proactive policy response in the form of a fiscal stimulus package and co-ordinated monetary easing.
Emphasized need to remain vigilant to:
- Maximize the impact of the stimulus while containing fiscal and balance of payments pressures.
- Improve the efficiency of public spending.
- Further support private investment by removing administrative bottlenecks.
Recommended measures to address global recession effects:
- Strengthen competitiveness.
- Protect the most vulnerable groups through reforms of state enterprises.
- Replace poorly targeted price subsidies and social programs with a well-targeted social safety net.
On monetary policy and exchange rate front:
- In considering further easing, continue to prevent excessive exchange rate movements.
- Maintain a prudent level of international reserves.

The IMF will maintain a close policy dialogue with the authorities and continue to provide technical assistance to Mauritius.
A team expected to return to Mauritius for the next Article IV consultation in the second half of this year.

Press Release No. 09/43