{
  "title": "Public Information Notice: IMF Executive Board Concludes 2008 Article IV Consultation with Mauritius",
  "publication": "IMF News, July 15, 2008",
  "sourceUrl": "https://www.imf.org/en/news/articles/2015/09/28/04/53/pn0883",
  "canonical": "https://www.imf.org/en/news/articles/2015/09/28/04/53/pn0883",
  "overlayPath": "/en/news/articles/2015/09/28/04/53/pn0883/index.md",
  "summary": "Each Public Information Notice contains a background section, a table of selected economic indicators, and an Executive Board assessment.",
  "publishDate": "2008-07-15",
  "sections": [
    {
      "heading": "Background: recent performance and pressures",
      "content": "- Economic growth responding to structural reform efforts; tax reform, improvements in the business environment, and investment initiatives have spurred foreign investment to unprecedented levels.\n- Growth projected at 6½-7 percent in 2007/08 (fiscal year ending June 2008); broad based, especially strong in tourism, banking, construction, and services.\n- Rising fiscal receipts and expenditure containment have cut the deficit and public sector debt is continuing to decline.\n- External current account deficit has eased but remains high on investment-driven import growth.\n- Exchange rate appreciated 17 percent in real effective terms in the 12 months ending February 2008 from an overly depreciated level in 2005-06.\n- Inflation remains a concern despite some dampening from exchange rate appreciation; the economy faces rising labor, infrastructure, and other bottlenecks and strong head winds from international commodity price rises.\n- Bank of Mauritius (BoM) reserves projected to reach 6½ months of imports by end 2007/08.\n- Large and rising errors and omissions items in the balance of payments cloud external sector analysis."
    },
    {
      "heading": "Fiscal and monetary developments",
      "content": "- Fiscal:\n  - Overall fiscal position improved as revenues rose strongly in response to tax reforms and expenditure was contained.\n  - Tax reform made the tax regime more progressive, easier to administer, and broadened the base.\n  - Debt service declined with falling interest rates; capital expenditure is under-target owing to implementation difficulties.\n  - Authorities introduced fiscal management laws expected to contribute to better fiscal performance.\n- Monetary:\n  - Monetary policy being strengthened to improve transparency and effectiveness.\n  - Liquidity has been growing rapidly and excess liquidity persisted in the financial system since early 2007.\n  - Interest rates declined markedly as government borrowing requirement dropped.\n  - In April 2008 the BoM introduced new instruments, extended a special deposit facility, and widened the repo corridor to strengthen liquidity management.\n  - BoM conducted sterilized intervention in the foreign exchange market to limit nominal appreciation of the rupee."
    },
    {
      "heading": "Financial sector and structural reforms",
      "content": "- Banking sector and financial system remain relatively sound; vulnerability indicators have improved.\n  - Nonperforming loans ratio declined; banking system is well capitalized.\n  - Stock exchange outperformed most emerging markets in 2007, pushing the index to record levels.\n- Trade and parastatals:\n  - Authorities continued efforts to liberalize international trade and secure market access; a partnership agreement with the EU initiated, a free trade agreement with Pakistan signed, and an agreement with India under discussion.\n  - Several parastatals maintain import and distribution monopolies on basic goods; an administered price regime remains in place for many basic goods.\n- Medium-term outlook:\n  - Growth projected to remain at about 5 percent through the medium-term, reflecting continued growth in tourism, services, and investment in large projects.\n  - Fiscal consolidation expected to proceed with moderate primary surpluses and a declining overall deficit and public debt burden.\n  - External current account deficit expected to decline only moderately as large foreign investment inflows draw in imports.\n  - Key macroeconomic challenge: manage recent economic success through broadening structural reforms to spur economic efficiency and consolidate and refocus fiscal policy."
    },
    {
      "heading": "Executive Board assessment and policy recommendations",
      "content": "- Directors welcomed revived performance, noting tax and business environment reforms since 2006 contributed to reduced fiscal deficits and rising FDI.\n- Concerns:\n  - Large capital inflows have added to demand pressures.\n  - Inflation remains high, reflecting rising international commodity prices and emerging supply constraints.\n- Fiscal policy recommendations:\n  - Proceed with plans for further fiscal consolidation and deeper structural reforms to alleviate bottlenecks and ensure sustained noninflationary growth.\n  - Build on tax reform successes and extend reform effort to the expenditure side of the budget and the parastatal sector.\n  - Improve efficiency of social assistance by consolidating and targeting.\n  - Introduce program-based budgeting (noted for 2008/09 (July/June) budget) to strengthen spending efficiency.\n  - Introduce fiscal management laws on public debt management and public finance and audit.\n  - Caution: sizable public sector wage increase in the 2008/09 budget could contribute to further inflationary pressures given strong private sector demand.\n- Monetary policy recommendations:\n  - Continue efforts to strengthen the monetary framework and remain vigilant against inflation in light of increasing demand pressures.\n  - BoM communication of an inflation target range would help shape inflation expectations.\n  - Greater efforts to manage liquidity in closer coordination with fiscal authorities.\n  - Steps welcomed to strengthen BoM's capital base and governance structures.\n- Exchange rate and external sector:\n  - Managed floating exchange rate regime considered appropriate.\n  - Real effective exchange rate of the rupee appears broadly in line with fundamentals.\n  - Nominal appreciation in 2007-08 helped dampen inflation; further real appreciation may be unavoidable if capital inflows rise and should preferably occur through nominal appreciation.\n  - Any nominal appreciation should be accompanied by additional fiscal consolidation and structural reforms to improve efficiency and competitiveness.\n- Structural reform priorities:\n  - Support disengagement and divestment strategy for parastatals in importation and distribution of basic goods.\n  - Upgrade workforce skills and enhance labor market flexibility.\n  - Liberalize domestic trade, reduce import duties, and phase out administered prices.\n- Statistics:\n  - Improving coverage and reliability of national statistics is a high priority, especially for the financial account of the balance of payments and the international investment position.\n- Next consultation:\n  - Next Article IV consultation expected on the standard 12-month cycle."
    },
    {
      "heading": "Key statistics and projections (selected figures from Table 1)",
      "content": "- Real GDP (annual percent change): 2005/06: 3.6; 2006/07: 4.2; 2007/08: 6.6; 2008/09: 6.2; 2009/10: 5.1.\n- Real GDP per capita (annual percent change): 2005/06: 2.8; 2006/07: 3.4; 2007/08: 5.7; 2008/09: 5.4; 2009/10: 4.3; 2010/11: 4.4.\n- GDP deflator (annual percent change): 2005/06: 7.9; 2006/07: 8.4; 2007/08: 7.5; 2008/09: 6.8; 2009/10: 5.5; 2010/11: 5.0.\n- Consumer prices (period average): 2005/06: 10.7; 2006/07: 9.5; 2007/08: 8.5; 2008/09: 7.3; 2009/10: 6.0; 2010/11: 5.3.\n- Consumer prices (end of period): 2005/06: 7.6; 2006/07: 10.0; 2007/08: 9.0; 2008/09: 8.0; 2009/10: 6.5.\n- Unemployment rate (percent): 2005/06: 8.9; 2006/07: 8.7.\n- Exports of goods, f.o.b. (U.S. dollars): 2005/06: 12.1; 2006/07: 3.2.\n- Exports of services (U.S. dollars): 2005/06: 20.2; 2006/07: 24.2; 2007/08: 16.7; 2008/09: 14.1; 2009/10: 12.3; 2010/11: 11.4; 2011/12: 11.2.\n- Tourism receipts (U.S. dollars): 2005/06: 23.8; 2006/07: 25.0; 2007/08: 17.6; 2008/09: 15.0; 2009/10: 12.0; 2010/11: 11.5.\n- Imports of goods, f.o.b. (U.S. dollars): 2005/06: 14.5; 2006/07: 17.0; 2007/08: 15.1; 2008/09: 6.4; 2009/10: 6.1; 2010/11: 5.8.\n- Nominal effective exchange rate (period averages): 2005/06: -3.4; 2006/07: -9.9; 2007/08: 3.0.\n- Real effective exchange rate (period averages): 2005/06: 0.6; 2006/07: -2.8; 2007/08: 7.1.\n- Net international reserves, BOM (millions of U.S. dollars): 2005/06: 1,408; 2006/07: 1,617; 2007/08: 2,343; 2008/09: 2,628; 2009/10: 2.978; 2010/11: 3,168; 2011/12: 3,453; 2012/13: 3,895.\n- Net international reserves, BOM (months of imports of goods, c.i.f.): 2005/06: 5.2.\n- Central government overall balance (including grants, percent of GDP): 2005/06: -5.3; 2006/07: -4.2; 2007/08: -3.0; 2008/09: -2.3; 2009/10: -1.9; 2010/11: -1.5.\n- Revenues and grants (percent of GDP): 2005/06: 20.1; 2006/07: 19.3; 2007/08: 21.7; 2008/09: 20.8; 2009/10: 20.9; 2010/11: 21.2; 2011/12: 21.4.\n- Expenditure and net lending (percent of GDP): 2005/06: 25.5; 2006/07: 23.6; 2007/08: 24.7; 2008/09: 23.2; 2009/10: 23.1; 2010/11: 22.9.\n- Domestic debt of central government (percent of GDP): 2005/06: 51.4; 2006/07: 46.6; 2007/08: 44.7; 2008/09: 40.5; 2009/10: 37.0; 2010/11: 33.7; 2011/12: 30.3; 2012/13: 27.0.\n- External debt of central government (percent of GDP): 2005/06: 4.7; 2006/07: 4.9; 2007/08: 7.0; 2008/09: 8.1; 2009/10: 9.2.\n- Gross domestic investment (percent of GDP): 2005/06: 22.5; 2006/07: 26.4; 2007/08: 29.1; 2008/09: 30.8; 2009/10: 32.4; 2010/11: 33.8; 2011/12: 35.0; 2012/13: 35.3.\n- Gross national savings (percent of GDP): 2005/06: 17.2; 2006/07: 18.4; 2007/08: 24.6; 2008/09: 29.4; 2009/10: 30.9; 2010/11: 31.9.\n- Trade balance (percent of GDP): 2005/06: -13.2; 2006/07: -17.4; 2007/08: -19.3; 2008/09: -21.2; 2009/10: -20.0; 2010/11: -18.9; 2011/12: -18.0; 2012/13: -17.0.\n- Current account balance (percent of GDP): 2005/06: -8.0; 2006/07: -4.3; 2007/08: -6.2; 2008/09: -4.5; 2009/10: -4.0.\n- Overall external balance (percent of GDP): 2005/06: -1.6; 2006/07: 2.9; 2007/08: 3.1; 2008/09: 1.5; 2009/10: 2.0; 2010/11: 2.7.\n- Total external debt (percent of GDP): 2005/06: 11.7; 2006/07: 11.0; 2007/08: 9.9; 2008/09: 11.3.\n- GDP at current market prices (millions of Mauritian rupees): 2005/06: 194,572; 2006/07: 218,784; 2007/08: 252,870; 2008/09: 288,702; 2009/10: 324,056; 2010/11: 359,426; 2011/12: 396,775; 2012/13: 438,006.\n- GDP per capita (U.S. dollars): 2005/06: 5,357; 2006/07: 5,649; 2007/08: 6,325; 2008/09: 7,326; 2009/10: 8,703; 2010/11: 9,778; 2011/12: 10,937; 2012/13: 12,236.\n- Foreign currency long-term debt rating (Moody's): 2005/06: Baa2; 2006/07: Baa1.\n\nPublic Information Notice (PIN) No. 08/83; July 15, 2008.\n\n---\n\n\n References\n\n- Mauritius and the IMF\n- Public Information Notices\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2015/09/28/04/53/pn0883"
    }
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    "Published: July 15, 2008",
    "Economic growth responding to structural reform efforts; tax reform, improvements in the business environment, and investment initiatives have spurred foreign investment to unprecedented levels.",
    "Growth projected at 6½-7 percent in 2007/08 (fiscal year ending June 2008); broad based, especially strong in tourism, banking, construction, and services.",
    "Rising fiscal receipts and expenditure containment have cut the deficit and public sector debt is continuing to decline.",
    "External current account deficit has eased but remains high on investment-driven import growth.",
    "Exchange rate appreciated 17 percent in real effective terms in the 12 months ending February 2008 from an overly depreciated level in 2005-06.",
    "Inflation remains a concern despite some dampening from exchange rate appreciation; the economy faces rising labor, infrastructure, and other bottlenecks and strong head winds from international commodity price rises.",
    "Bank of Mauritius (BoM) reserves projected to reach 6½ months of imports by end 2007/08.",
    "Large and rising errors and omissions items in the balance of payments cloud external sector analysis.",
    "Fiscal:",
    "Monetary:",
    "Banking sector and financial system remain relatively sound; vulnerability indicators have improved.",
    "Trade and parastatals:",
    "Medium-term outlook:",
    "Directors welcomed revived performance, noting tax and business environment reforms since 2006 contributed to reduced fiscal deficits and rising FDI.",
    "Concerns:",
    "Fiscal policy recommendations:",
    "Monetary policy recommendations:",
    "Exchange rate and external sector:",
    "Structural reform priorities:",
    "Statistics:",
    "Next consultation:",
    "Real GDP (annual percent change): 2005/06: 3.6; 2006/07: 4.2; 2007/08: 6.6; 2008/09: 6.2; 2009/10: 5.1.",
    "Real GDP per capita (annual percent change): 2005/06: 2.8; 2006/07: 3.4; 2007/08: 5.7; 2008/09: 5.4; 2009/10: 4.3; 2010/11: 4.4.",
    "GDP deflator (annual percent change): 2005/06: 7.9; 2006/07: 8.4; 2007/08: 7.5; 2008/09: 6.8; 2009/10: 5.5; 2010/11: 5.0.",
    "Consumer prices (period average): 2005/06: 10.7; 2006/07: 9.5; 2007/08: 8.5; 2008/09: 7.3; 2009/10: 6.0; 2010/11: 5.3.",
    "Consumer prices (end of period): 2005/06: 7.6; 2006/07: 10.0; 2007/08: 9.0; 2008/09: 8.0; 2009/10: 6.5.",
    "Unemployment rate (percent): 2005/06: 8.9; 2006/07: 8.7.",
    "Exports of goods, f.o.b. (U.S. dollars): 2005/06: 12.1; 2006/07: 3.2.",
    "Exports of services (U.S. dollars): 2005/06: 20.2; 2006/07: 24.2; 2007/08: 16.7; 2008/09: 14.1; 2009/10: 12.3; 2010/11: 11.4; 2011/12: 11.2.",
    "Tourism receipts (U.S. dollars): 2005/06: 23.8; 2006/07: 25.0; 2007/08: 17.6; 2008/09: 15.0; 2009/10: 12.0; 2010/11: 11.5.",
    "Imports of goods, f.o.b. (U.S. dollars): 2005/06: 14.5; 2006/07: 17.0; 2007/08: 15.1; 2008/09: 6.4; 2009/10: 6.1; 2010/11: 5.8.",
    "Nominal effective exchange rate (period averages): 2005/06: -3.4; 2006/07: -9.9; 2007/08: 3.0.",
    "Real effective exchange rate (period averages): 2005/06: 0.6; 2006/07: -2.8; 2007/08: 7.1.",
    "Net international reserves, BOM (millions of U.S. dollars): 2005/06: 1,408; 2006/07: 1,617; 2007/08: 2,343; 2008/09: 2,628; 2009/10: 2.978; 2010/11: 3,168; 2011/12: 3,453; 2012/13: 3,895.",
    "Net international reserves, BOM (months of imports of goods, c.i.f.): 2005/06: 5.2.",
    "Central government overall balance (including grants, percent of GDP): 2005/06: -5.3; 2006/07: -4.2; 2007/08: -3.0; 2008/09: -2.3; 2009/10: -1.9; 2010/11: -1.5.",
    "Revenues and grants (percent of GDP): 2005/06: 20.1; 2006/07: 19.3; 2007/08: 21.7; 2008/09: 20.8; 2009/10: 20.9; 2010/11: 21.2; 2011/12: 21.4.",
    "Expenditure and net lending (percent of GDP): 2005/06: 25.5; 2006/07: 23.6; 2007/08: 24.7; 2008/09: 23.2; 2009/10: 23.1; 2010/11: 22.9.",
    "Domestic debt of central government (percent of GDP): 2005/06: 51.4; 2006/07: 46.6; 2007/08: 44.7; 2008/09: 40.5; 2009/10: 37.0; 2010/11: 33.7; 2011/12: 30.3; 2012/13: 27.0.",
    "External debt of central government (percent of GDP): 2005/06: 4.7; 2006/07: 4.9; 2007/08: 7.0; 2008/09: 8.1; 2009/10: 9.2.",
    "Gross domestic investment (percent of GDP): 2005/06: 22.5; 2006/07: 26.4; 2007/08: 29.1; 2008/09: 30.8; 2009/10: 32.4; 2010/11: 33.8; 2011/12: 35.0; 2012/13: 35.3.",
    "Gross national savings (percent of GDP): 2005/06: 17.2; 2006/07: 18.4; 2007/08: 24.6; 2008/09: 29.4; 2009/10: 30.9; 2010/11: 31.9.",
    "Trade balance (percent of GDP): 2005/06: -13.2; 2006/07: -17.4; 2007/08: -19.3; 2008/09: -21.2; 2009/10: -20.0; 2010/11: -18.9; 2011/12: -18.0; 2012/13: -17.0.",
    "Current account balance (percent of GDP): 2005/06: -8.0; 2006/07: -4.3; 2007/08: -6.2; 2008/09: -4.5; 2009/10: -4.0.",
    "Overall external balance (percent of GDP): 2005/06: -1.6; 2006/07: 2.9; 2007/08: 3.1; 2008/09: 1.5; 2009/10: 2.0; 2010/11: 2.7.",
    "Total external debt (percent of GDP): 2005/06: 11.7; 2006/07: 11.0; 2007/08: 9.9; 2008/09: 11.3.",
    "GDP at current market prices (millions of Mauritian rupees): 2005/06: 194,572; 2006/07: 218,784; 2007/08: 252,870; 2008/09: 288,702; 2009/10: 324,056; 2010/11: 359,426; 2011/12: 396,775; 2012/13: 438,006.",
    "GDP per capita (U.S. dollars): 2005/06: 5,357; 2006/07: 5,649; 2007/08: 6,325; 2008/09: 7,326; 2009/10: 8,703; 2010/11: 9,778; 2011/12: 10,937; 2012/13: 12,236.",
    "Foreign currency long-term debt rating (Moody's): 2005/06: Baa2; 2006/07: Baa1.",
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    "[Public Information Notices](https://www.imf.org/en/news/searchnews)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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