## Press Release: Statement at the Conclusion of the 2012 Article IV Consultation Mission to Mauritius

_IMF News, January 25, 2012_

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## Bibliographic details
- Published: January 25, 2012

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### Mission visit and contacts
- IMF mission led by Martin Petri visited Port Louis during January 11–25, 2012 to conduct discussions for the Article IV consultation.
- The mission met with The Honorable Prime Minister Dr. Navinchandra Ramgoolam; The Honorable Vice Prime Minister and Minister of Finance and Economic Development Xavier-Luc Duval; Governor of the Bank of Mauritius Rundheersing Bheenick; other senior government officials; and representatives of the National Assembly, the private sector, and civil society.

### Economic performance and growth outlook
- Real growth at market prices in 2011 estimated at 4.1 percent.
- Taking account of the slowdown in the world economy and a moderately expansionary fiscal stance, economic growth is projected to decline moderately to somewhat less than 4 percent in 2012.
- The challenge for 2012 and beyond: maintain growth through increased public and private investment and productivity advances, while continuing medium-term fiscal consolidation to reduce economic vulnerabilities.

### Inflation and monetary policy
- Recent developments in inflation are mainly due to administered prices and one-time exogenous factors.
- Year-on-year inflation in 2012 is expected to be 5 percent.
- The monetary policy stance appears broadly appropriate at this time; future rate adjustments will depend on economic developments.
- The Bank of Mauritius (BOM) had to remove excess liquidity from the market during 2011 with negative effects on its income position, a situation likely to persist in 2012 and that is necessary from a macroeconomic perspective.
- Recommendation: coordination between BOM policies and the government’s financing strategy to contribute to a smooth operation of the money and debt markets.
- Assessment: the banking sector appears robust, and the financial system has proved resilient.

### Fiscal policy, public finance, and execution risks
- With the 2012 budget, the government intends to keep Mauritius on a sustained growth path.
- Compared to 2011, the overall fiscal deficit is projected to increase mainly on account of capital investment and spending from special funds.
- Implementation constraints could result in lower than intended spending as happened during 2011.
- With a small output gap estimated for Mauritius in 2012, the mission recommends a cautiously expansionary fiscal stance with careful execution of capital spending.
- Additional fiscal recommendations:
  - Tight financial controls on public enterprise finances.
  - Improvements in the targeting of social benefits.
  - Support for the authorities’ medium-term fiscal consolidation plans to reduce fiscal and external vulnerabilities.

### Structural reforms and competitiveness
- Structural reforms implemented steadily over the years have contributed to raising Mauritius’ competitiveness.
- Further reform priorities to raise standards of living and strengthen competitiveness:
  - Reduce critical structural bottlenecks in infrastructure.
  - Build human capital through education.
  - Improve the targeting of social benefits.
  - Reform the parastatal sector.
- Objective: further strengthen Mauritius’ ability to compete in the world economy, including as an international financial and services center.

### IMF support
- The IMF stands ready to assist the authorities in the implementation of their economic program, including through the provision of technical assistance.
- The IMF looks forward to continued fruitful policy dialogue in the period ahead.

*IMF Press Release No. 12/23 — January 25, 2012*

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## References

- [Mauritius and the IMF](http://www.imf.org/external/country/MUS/index.htm)
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_Source: https://www.imf.org/en/news/articles/2015/09/14/01/49/pr1223_