This statement provides additional information that has become available since issuance of the staff report. The information does not alter the thrust of the staff appraisal.
1. On June 9, 2003, the Deputy Prime Minister and Minister of Finance presented the budget for 2003/04. The budget assumes real economic growth of 6 percent for the fiscal year, which is somewhat higher than projected in the staff report, and inflation of 5 percent, which is in line with staff projections. The overall fiscal deficit is budgeted at 5.5 percent of GDP, compared with 4.9 percent recommended by the staff. While the budget assumes continued reforms in import taxation, little effort is envisaged to broaden the domestic tax base. On the expenditure side, the anticipated Pay Research Bureau award for civil servants is larger than expected. The authorities plan a phased implementation of the award in 2003/04 (1 percent of GDP), but this would still be significantly above that projected in the staff report (0.5 percent of GDP). The larger deficit will delay the fiscal adjustment that is necessary in the medium term to preserve macroeconomic stability and reduce the level of public debt.
2. Staff also understands that the main features of the automatic pricing mechanism for petroleum products have been formulated and will be introduced shortly after the debate on the 2003/04 budget in the National Assembly is finished.
Anti-money laundering and combating financing of terrorism (AML/CFT)
3. Subsequent to the issuance of the FSSA, the Mauritian authorities have taken a number of concrete steps to further strengthen the AML/CFT regime.
- New regulations have been issued under the Financial Intelligence and Anti-Money Laundering Act 2002 (FIAML), with effect from June 21, 2003.
- The Financial Intelligence Unit (FIU) has substantially increased its technical staff, staff training, processing of Suspicious Transaction Reports (STRs), and its information technology (IT) capacity.
- The FIU has applied for membership in the Egmont Group, with the sponsorship of the US FinCen. The FIU’s application for membership in the Egmont Group is expected to be approved at the next plenary meeting in July 2003.
- The Financial Intelligence and Anti-Money Laundering (Amendment) Bill is being prepared to incorporate recommendations of the AML/CFT and technical assistance missions, with consequential amendments to the Financial Services Development Act, the Banking Act, and the Prevention of Corruption Act. In addition, the Extradition Bill and the Mutual Legal Assistance Bill are under preparation.
- To reflect these important developments in the FSSA report and associated ROSC, the staff has issued the relevant corrections.
4. The Banking Bill and the Bank of Mauritius Bill have been revised to reflect FSAP recommendations. Reporting requirements for onshore and offshore banks and non-banks have been strengthened and synchronized to improve transparency. Guidelines have been issued for intervention in financial institutions. The Post Office Savings Bank and the New Co-operative Bank are being merged into The Mauritius Post and Co-operative Bank Ltd.
Securities and insurance
5. Following completion of consultations with the industry, the draft Securities Bill is being revised. Work is progressing on a Collective Investment Scheme Bill. Consultations with the insurance industry on the draft Long Term Insurance Bill and the Short Term Insurance Bill ended on May 5, 2003, and the bills will be introduced to parliament shortly. The Financial Services Commission is significantly increasing its staff.