{
  "title": "Public Information Notice: IMF Concludes Article IV Consultation with Mauritius",
  "publication": "IMF News, May 22, 2001",
  "sourceUrl": "https://www.imf.org/en/news/articles/2015/09/28/04/53/pn0152",
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  "summary": "Public Information Notices (PINs) form part of the IMF's efforts to promote transparency of the IMF's views and analysis of economic developments and policies.",
  "publishDate": "2001-05-22",
  "sections": [
    {
      "heading": "Background: recent developments and outlook",
      "content": "- On May 14, 2001, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Mauritius.\n- Growth and output:\n  - Real GDP growth is now projected to grow at 7.8 percent in 2000/01, up from 3.6 percent in 1999/2000.\n  - Real GDP annual percentage change: 1996/97: 5.8; 1997/98: 6.0; 1998/99: 5.9; 1999/00: 3.6; Prov. 2000/01: 7.8.\n- Inflation and labor market:\n  - Consumer price inflation declined to 5.3 percent in 1999/2000 from 7.9 percent in 1998/99, and is likely to decrease further to about 4.5 percent in 2000/01.\n  - Unemployment rose to 7.2 percent in 1999/2000 and close to 8 percent in 2000/01.\n  - Real wage growth in excess of increases in productivity contributed to rising unemployment.\n- External sector:\n  - Terms of trade declined by 4.4 percent (mainly from higher oil prices).\n  - Real effective appreciation of the Mauritian rupee of 5.6 percent.\n  - Current account balance shifted to a surplus of 0.5 percent of GDP in 1999/2000 from a deficit of 1.6 percent of GDP in 1998/99.\n  - Current account deficit expected to revert to about -1.2 percent of GDP in 2000/01 as currency appreciation effects are felt and global slowdown takes hold.\n  - Overall balance of payments likely to remain in surplus at about 2 percent of GDP, reflecting November 2000 receipts of about 5.7 percent of GDP from the partial privatization of Mauritius Telecom.\n  - Net international reserves of the banking system projected import cover at end-June 2001: five months.\n- Fiscal developments:\n  - Overall fiscal deficit (including parastatals) increased to 5.5 percent of GDP in 1999/2000 from 4.0 percent of GDP in 1998/99, reflecting large operating losses by the state oil company and electricity utility.\n  - Reforms in July 2000: significant reductions in external tariffs (mainly on raw materials and intermediates) and certain income tax and indirect tax reductions.\n  - Despite domestic petroleum and electricity price increases in September 2000, overall fiscal deficit in 2000/01 likely to widen to 7.6 percent of GDP.\n  - Public sector net borrowing requirement in 2000/01 will be sharply reduced by privatization proceeds.\n  - Privatization: November 2000 sale of 40 percent of Mauritius Telecom for US$261 million (or 5.7 percent of GDP) to France Telecom.\n- Monetary and exchange rate policy:\n  - Lombard rate changes: 14 percent in December 1999; lowered to 13 percent in March 2000 and to 11.5 percent in June 2000; raised to 12.0 percent in late-September and to 12.5 percent in November 2000.\n  - The rupee had been appreciating in real terms through much of 1999 and 2000; allowed to respond to market pressures since October 2000 and by January 2001 had depreciated in real effective terms by 7.5 percent.\n  - Bank of Mauritius actions: targeted subsidies to export processing zone firms; reintroduced a 50 percent surrender requirement on export proceeds of the Mauritius Sugar Syndicate in mid-2000."
    },
    {
      "heading": "Executive Board assessment and policy recommendations",
      "content": "- General assessment:\n  - Directors were encouraged by the rebound in economic activity following the severe drought in 1999/2000 and noted that inflation was on a declining trend.\n  - Directors welcomed recent government steps, including adjustments of petroleum and electricity prices, but stressed that much more needed to be done due to prior fiscal deterioration.\n- Fiscal policy recommendations:\n  - Encourage the authorities to initiate the process of medium-term deficit reduction with up-front actions in the forthcoming 2001/02 budget.\n  - Complementary institutional reforms recommended: establishment of a medium-term framework and greater transparency in the tax regime.\n  - Note: new spending initiatives could add to immediate fiscal pressures and risk an unsustainable debt burden without remedial actions.\n- Monetary and institutional recommendations:\n  - Directors welcomed recent tightening of monetary policy and the reversal of the real currency appreciation.\n  - Endorsed proposed revisions to the Bank of Mauritius (BOM) Act to:\n    - Strengthen the central bank's institutional framework.\n    - Give the BOM greater independence.\n    - Mandate that price stability be its primary objective.\n    - Allow for a market-determined exchange rate.\n    - Increase BOM transparency and accountability.\n- Financial sector and governance:\n  - Directors viewed favorably authorities' initiatives to strengthen and modernize the financial sector, with IMF technical assistance prioritized.\n  - The proposed Financial Services Development Bill would rationalize the legal framework and strengthen supervision of the nonbank sector.\n  - Banking sector remained essentially sound.\n  - Passage of the Economic Crime and Anti-Money Laundering Act noted as demonstration of commitment to strengthen institutions and align with international standards.\n- Structural and labor market policies:\n  - With remedial fiscal actions, prospects for sustaining long-run growth at historic levels were encouraging.\n  - Risks to growth: demographic developments likely to reduce labor supply; changes in external trade environment could threaten privileged market access.\n  - Recommended actions to raise productivity growth:\n    - Increase markedly the compulsory education cycle.\n    - Reinforce the information technology base of the economy.\n    - Bolster domestic institutions, particularly in the financial sector.\n    - Strengthen the regulatory framework in the services sector and allow greater competition, including privatization of state utilities.\n  - Trade liberalization urged to accelerate productivity growth:\n    - Need for a preannounced medium-term liberalization of the import regime, including elimination of state trading, to ensure neutrality between import-competing and exporting sectors.\n  - Labor market recommendations:\n    - Address mismatch between workplace demands and workforce skills; create social safety nets for the unemployed.\n    - Intensify efforts to inject greater flexibility into the current centralized tripartite wage-negotiating system.\n- Data and technical assistance:\n  - Directors noted that the quality and timeliness of Mauritius reporting to the IMF of core minimum and other economic and financial statistics were, in general, satisfactory for surveillance purposes.\n  - Supported the authorities' request for IMF technical assistance to improve the quality and coverage of the overall public accounts."
    },
    {
      "heading": "Selected economic indicators (as reported)",
      "content": "- Domestic economy (annual percentage change)\n  - Real GDP: 1996/97: 5.8; 1997/98: 6.0; 1998/99: 5.9; 1999/00: 3.6; Prov. 2000/01: 7.8.\n  - Consumer prices (period averages): 1996/97: 7.9; 1997/98: 5.4; 1998/99: 5.3; 1999/00: 4.5.\n  - Unemployment: 1996/97: 5.7; 1997/98: 6.2; 1998/99: 7.2; 1999/00: 8.0.\n- External economy (in millions of U.S. dollars, unless otherwise indicated)\n  - Exports, f.o.b.: 1996/97: 1,734.8; 1997/98: 1,605.5; 1998/99: 1,608.2; 1999/00: 1,525.4; Prov. 2000/01: 1,613.0.\n  - Imports, f.o.b.: 1996/97: -2,018.5; 1997/98: -2,016.0; 1998/99: -2,045.7; 1999/00: -1,977.4; Prov. 2000/01: -2,091.0.\n  - Current account balance (excluding acquisition of aircraft and ships): 1996/97: 18.3; 1997/98: -115.8; 1998/99: -65.3; 1999/00: 22.8; Prov. 2000/01: -54.4.\n  - Current account balance (in percent of GDP): 1996/97: 0.4; 1997/98: -2.9; 1998/99: -1.6; 1999/00: 0.5; Prov. 2000/01: -1.2.\n  - Capital and financial account balance: 1996/97: -44.5; 1997/98: 73.8; 1998/99: 23.5; 1999/00: -175.7; Prov. 2000/01: 54.4.\n  - Net international reserves of the banking system (end of period): 1996/97: 1,026.2; 1997/98: 879.6; 1998/99: 893.7; 1999/00: 966.0; Prov. 2000/01: 1,052.4.\n  - Net international reserves (in months of prospective imports, c.i.f.): 1996/97: 5.1; 1997/98: 5.0; 1998/99: 5.2; 1999/00: 5.2; Prov. 2000/01: 5.0.\n  - Debt service (in percent of exports of goods and nonfactor services): 1996/97: 6.8; 1997/98: 7.0; 1998/99: 7.6; 1999/00: 7.7; Prov. 2000/01: 9.4.\n  - Change in real effective exchange rate (in percent, trade-weighted period averages; negative sign signifies a depreciation): 1996/97: 2.1; 1997/98: 1.4; 1998/99: -2.4; 1999/00: 5.6; Prov. 2000/01 (July 2000 to January 2001): 3.9.\n- Financial variables (in percent of GDP unless otherwise indicated)\n  - Total revenues and grants: 1996/97: 20.2; 1997/98: 20.6; 1998/99: 21.4; 1999/00: 18.4.\n  - Total expenditures and net lending: 1996/97: 27.7; 1997/98: 24.2; 1998/99: 24.0; 1999/00: 25.3; 2000/01: 24.3.\n  - Central government fiscal balance: 1996/97: -7.5; 1997/98: -4.0; 1998/99: -3.4; 1999/00: -3.8; 2000/01: -5.9.\n  - Balance of selected state-owned enterprises (change in cash flows of the Central Electricity Board, the Central Water Authority, and the State Trading Corporation): 1997/98: -0.8; 1998/99: -0.6; 1999/00: -1.7.\n  - Consolidated fiscal balance (including selected state-owned enterprises): 1997/98: -4.7; 1998/99: -5.5; 1999/00: -7.6.\n  - Change in broad money (in percent): 1996/97: 8.8; 1997/98: 17.4; 1998/99: 13.2; 1999/00: 10.9; 2000/01: 12.5.\n  - Interest rate (maximum interest rate on fixed-time deposits with maturities between six and twelve months, end of period; the figure for 2000/01 is for January 2001): 1996/97: 10.0; 1997/98: 12.0; 1998/99: 10.8; 1999/00: 11.8.\n- Sources: Mauritian authorities; and IMF staff estimates and projections.\n\nPublic Information Notice summarizing the Executive Board discussion concluded on May 14, 2001.\n\n---\n\n\n References\n\n- Mauritius and the IMF\n- Public Information Notices\n- Article IV\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2015/09/28/04/53/pn0152"
    }
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    "Published: May 22, 2001",
    "On May 14, 2001, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Mauritius.",
    "Growth and output:",
    "Inflation and labor market:",
    "External sector:",
    "Fiscal developments:",
    "Monetary and exchange rate policy:",
    "General assessment:",
    "Fiscal policy recommendations:",
    "Monetary and institutional recommendations:",
    "Financial sector and governance:",
    "Structural and labor market policies:",
    "Data and technical assistance:",
    "Domestic economy (annual percentage change)",
    "External economy (in millions of U.S. dollars, unless otherwise indicated)",
    "Financial variables (in percent of GDP unless otherwise indicated)",
    "Sources: Mauritian authorities; and IMF staff estimates and projections.",
    "[Mauritius and the IMF](http://www.imf.org/external/country/MUS/index.htm)",
    "[Public Information Notices](https://www.imf.org/en/news/searchnews)",
    "[Article IV](https://www.imf.org/external/pubs/ft/aa/aa04.htm)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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