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Mauritius: Staff Report for the 2014 Article IV Consultation —Informational Annex

Author(s):
International Monetary Fund. African Dept.
Published Date:
May 2014
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Relations with the Fund

(As of February 28, 2014)

Membership Status: Joined: September 23, 1968; Article VIII

General Resources Account:

SDR Million%Quota
Quota101.60100.00
Fund holdings of currency (Exchange Rate)63.8162.81
Reserve Tranche Position37.8237.23

SDR Department:

SDR Million%Allocation
Net cumulative allocation96.81100.00
Holdings99.98103.28

Outstanding Purchases and Loans: None

Latest Financial Arrangements:

Date ofExpirationAmount ApprovedAmount Drawn
TypeArrangementDate(SDR Million)(SDR Million)
Stand-ByMar 01, 1985Aug 31, 198649.0049.00
Stand-ByMay 18, 1983Aug 17, 198449.5049.50
Projected Payments to Fund 1/(SDR Million; based on existing use of resources and present holdings of SDRs):
Forthcoming
20142015201620172018
Principal
Charges/Interest0.000.000.000.000.00
Total0.000.000.000.000.00

When a member has overdue financial obligations outstanding for more than three months, the amount of such arrears will be shown in this section.

When a member has overdue financial obligations outstanding for more than three months, the amount of such arrears will be shown in this section.

Implementation of HIPC Initiative: Not Applicable

Implementation of Multilateral Debt Relief Initiative (MDRI): Not Applicable

Implementation of Post-Catastrophe Debt Relief (PCDR): Not Applicable

Exchange Rate Arrangement

Starting in July 1, 2010, Mauritius intervened occasionally in the foreign exchange market to smooth excess volatility and the de facto exchange rate arrangement was reclassified from free floating to floating. Mauritius has accepted the obligations of Article VIII, Section 2, 3, and 4. It maintains an exchange system free of multiple currency practices and of restrictions on the making of payments and transfers for current international transactions. Mauritius also maintains a liberal capital account. On March 19, 2014, US$1 was equivalent to MUR 30.10.

Article IV Consultation

Mauritius is on the standard 12-month cycle. The last Article IV consultation staff report (Country Report No. 13/97, March, 2013) was completed by the Executive Board on April 3, 2013. A Financial System Stability Assessment update was completed by a joint IMF–World Bank team on April 20, 2007.

Technical Assistance (2005–2014)

MFD mission on banking supervision during 2005: the first mission in January 2005, and the second in March-April 2005.

FAD mission on revenue administration and tax policy, January 2005.

MFD mission on financial sector policy and strategy, January 2006.

FAD mission on fiscal adjustment strategy and Poverty and Social Impact Analysis (PSIA), February-March 2006.

MFD mission on financial sector policy and strategy, July 2006.

MFD mission on banking supervision/monetary operations/monetary policy, October 2006.

STA mission on multisector statistics, November 2006.

MCM mission on financial sector policy and strategy, January 2007.

MCM primary mission on Financial Sector Assessment Program (FSAP), February 2007.

FAD mission on Public Financial Management (PFM) and Medium-Term Expenditure Framework (MTEF), March 2007.

MCM mission on financial sector policy and strategy, March-April 2007.

STA mission on balance of payments statistics, March 2007.

MCM mission on foreign exchange markets, August 2007.

STA balance of payments module mission, October 2007.

STA mission on Phase II SDSS balance of payments statistics, October-November 2007.

STA Report on the Observance of Standards and Codes (ROSC) mission, November-December 2007.

FAD mission on Public Financial Management (PFM): Implementing Program-Based Budgeting: Next Steps, February 2008.

STA mission on national accounts statistics, February 2008.

STA mission on Phase II SDSS Government Finance Statistics, March 2008.

MCM mission on Central Bank-FSAP follow-up, March 2008 (2 missions).

STA mission on Phase II SDSS Multisector Statistics, March-April 2008.

STA mission on monetary and financial statistics, April 2008.

STA mission on balance of payments statistics, May 2009.

FAD mission on refining program budgeting and performance management, September 2009

STA mission on national accounts statistics, November 2009

STA mission on national accounts statistics, April 2010

STA mission on balance of payments statistics, July 2010

MCM mission on anti-money laundering (AML), August 2010

MCM mission on macroeconomic modeling, August/September 2010

FAD mission on refining program budgeting and performance management, September 2010

STA mission on international investment position, October 2010

FAD mission on PEFA, November 2010

STA mission on government finance statistics, January 2011

FAD mission on revenue administration, June 2011

LEG mission on AML/CFT, July 2011

STA mission on balance of payment statistics, September 2011

STA/DFID mission on external sector statistics, October 2011

MCM mission on macroeconomic modeling and forecasting, October 2011

MCM mission on technical assistance needs assessment, October 2011

LEG mission on AML/CFT, February 2012 LEG mission on central banking legislation, February 2012

AFRITAC South mission on updating the Finance & Audit Act (2008) and drafting revised underlying financial regulations, February 2012.

MCM multi-topic mission on financial sector reform, April/May 2012

AFRITAC South multi-topic mission on PFM Legal framework and developing a new PFM Act, May/June 2012

AFRITAC South mission on Implementation of Basel III, September 2012

AFRITAC South mission on Fiscal Legal Framework, September 2012

STA mission on Balance of Payments Statistics and International Investment Position, November 2012

MCM mission on Liquidity and Debt management and Secondary Market Development, December 2012

STA multi-sector statistics mission, January/February 2013

AFRITAC South multi-topic mission on revenue mobilization and on the finalization of the Tax Administration Act, February/March 2013

MCM mission on Monetary Policy Implementation, May/June 2013

LEG mission on Monetary Policy Framework and Central Bank Act, June 2013

AFRITAC South mission for the Development of Public Finance Management Act, August 2013

AFRITAC South mission on Fiscal Law VAT/Tax Law Reform, August/September 2013

AFRITAC South mission on Fiscal Risks Related to Operation of SOEs, September 2013

STA External Statistics mission, September 2013

AFRITAC South mission on Grant in Aid Formula for Local Authorities, September/October 2013

MCM mission on Public Debt Management, December 2013

MCM mission on Inflation Forecasting and Modeling, January 2014

AFRITAC South mission on Customs Law, January/February 2014

MCM mission on Review of the Functioning of Supervisory College, February 2014

STA External Statistics mission, March 2014

MCM mission on Compliance with Basel II Capital Adequacy Framework, March 2014

STA Monetary and Financial Statistics mission, March/April 2014

Resident Representative: None.

The JMAP Bank-Fund Matrix (2014)

(As of March 20, 2014)

The IMF and World Bank Mauritius teams met on January 22 to discuss a Joint Managerial Action Plan (JMAP). The team from the World Bank comprised of Mr. Muñoz (Country Representative), and Mr. Revilla (lead Economist and sector leader), and from the IMF of Messrs. Petri, Inui, Thakoor, Touna Mama and Xiao (all AFR).

The IMF’s work program entails continued engagement through the Article IV consultation process as well as technical assistance in: public financial management, tax administration, and economic forecasting provided through AFRITAC South (AFS); financial sector stability, monetary policy frameworks, and central bank legislation through the Monetary and Capital Markets Department (MCM) and Legal (LEG) Departments, and enhancements to macroeconomic statistics with the support of the Statistics Department (STA).

The World Bank Group’s work program entails continuing work on infrastructure, competitiveness, public sector reform and social sectors. The World Bank Country Partnership Strategy for Mauritius up to 2015 aims at helping the Government to deal with (i) short-term trade shocks and (ii) the transition to a more competitive and diversified economy, while minimizing negative social impacts along the transition. On-going and planned Bank assistance to Mauritius is:

  • Infrastructure. The Mauritius Infrastructure Project signed in December 2009 seeks to support the government investment program in transport, water and electricity.
  • Preparation of a Grid Code, Feed-in-Tariffs & Model Energy Supply Purchase Agreements for Renewable Energy Systems Greater than 50kW through a SIDS DOCK Grant will seek to promote investment in renewable energy infrastructure, contribute to energy security, reduce GHG emissions, and encourage household-private sector investment in renewable energy technologies.
  • Policy Reforms. The Bank is expected to approve in 2014 a new DPL series. Building on the reforms supported by the previous programmatic DPL series, the proposed operation advances the competitiveness agenda through reforms to (i) improve the efficiency and impact of public services aimed at private sector business development, (ii) underpin the access, stability, and integrity of the financial system, and (iii) support transition to a knowledge-based, entrepreneurial economy.
  • Analytical support. The Bank is preparing a report on poverty and income disparity to analyze the impact that recent economic growth has had in income distribution in the country. Technical assistance provided as part of the preparation of the DPL series will aim to improve competitiveness and economic diversification in areas of higher value added such as ICT and financial services.
  • Strengthening Public Sector Performance. The Strengthening Governance and Anti-Corruption in Mauritius technical assistance will aim at strengthening governance and anti-corruption in Mauritius through support to performance management, M&E and institutional strengthening across the public sector, with a focus on strengthening M&E at the MoFED.
  • Preparation of a Systematic Country Diagnostic (SCD). As part of the preparation of the upcoming strategy of the Bank with Mauritius, the new Country Partnership Framework foresees the preparation of a SCD. This diagnosis exercise will be prepared by WBG staff in close consultation with national authorities and other stakeholders.
  • International Finance Corporation (IFC). The IFC has focused its intervention in Mauritius in the financial services sector along three axes: (i) supporting the banking sector with access to long term funding to offset local banks’ difficulty in accessing long term foreign exchange to support trade finance, cross-border south–south initiatives and long term investments in key infrastructure; (2) investing in regional private equity funds to increase regional integration with investments mainly along the Madagascar-Mauritius axis; and, (3) supporting IFC clients to improve internal capacity by providing specialist training to bank’s SME loan officers and SME-Owner managers to improve financial and managerial literacy.
The JMAP Bank-Fund Matrix (2014)
TitleProductsProvisional timing of missionExpected delivery date
A. Mutual Information on Relevant Work Programs
The World Bank work program in the next 12 monthsCompetitiveness for Diversified Growth DPLNot foreseenJuly 2014
Mauritius Poverty AssessmentApril 2014FY14
Mauritius Infrastructure ProjectMay 2014FY14
Strengthening Governance and Anti-CorruptionMarch 2014FY14
Systematic Country DiagnosticsNot foreseenFY15
Preparation of a Grid Code, Feed-in-Tariffs & Model Energy Supply Purchase Agreements for Renewable Energy Systems Greater than 50ksApril 2014FY14
A. Mutual Information on Relevant Work Programs
The IMF work program in the next 12 months2014 Article IV consultationJanuary/February 2014Board meeting in April 2014
AFRITAC South project on building economic forecasting capacity at Bank of Mauritius2014-15
External statistics mission (STA), Monetary and Financial Statistics mission (STA)March 2014
B. Requests for Work Program inputs
Bank request to FundMacroeconomic frameworkApril 2014
Fund request to BankBackground sector information to complement Article IV report.January 2014

Relations with the African Development Bank Group

(As of March 24, 2014)

The African Development Bank (AfDB)’s 2014–2018 Country Strategy Paper (CSP) for Mauritius will provide the framework for its partnership with the country in the given period. The objective of this CSP is to help Mauritius build its competitiveness and resilience to exogenous shocks so as to enhance the quality of growth and accelerate the country’s transition to a High Income Country. In line with the Bank Group’s Strategy for 2013-22, this CSP focuses on interventions that promote ‘green’ and ‘inclusive’ growth. It is designed to explore new ways of doing business in Mauritius by focusing Bank support on deepening technical and knowledge advisory services and catalyzing private investments to drive growth and create jobs. The CSP seeks to support interventions in Mauritius under two complementary pillars - Pillar I: Building Infrastructure and Public Private Partnerships (PPPs) and Pillar II: Deepening Skills and Technology Development. Within the first pillar, the lending program focuses on infrastructure development particularly energy, transport, and water and sanitation. Within the framework of a customized presence, the Bank’s Infrastructure Investment Specialist will be resident in Mauritius to provide technical advisory services and strengthen the Government of Mauritius’ capacity to structure PPPs. The interventions are designed to inform policy dialogue and provide green and inclusive infrastructure investment options to the government. The lending program within the second pillar will support actions and policy reforms that will contribute to improving the quality and relevance of education particularly higher education and Technical, Vocational, Education and Training (TVET) and strengthen human capital. The Bank will also use this pillar as a platform to facilitate skills and technology transfer to mainland Africa in areas where the country enjoys competitive advantage such as financial services and governance. To further support policy reforms, capacity building and studies in specific areas within the framework of the two strategic pillars, the Bank will be providing grants from its Middle Income Countries Technical Assistance Fund (MIC TAF). The grants will be used to fund the following activities: (i) study to inform multi-modal climate resilient transport solutions; (ii) study on land-use planning and environmental threats; and (iii) baseline study on e-education and adaptive learning. The Bank will continue to collaborate very closely with other development partners including the World Bank, EU, AFD and UNDP in supporting structural reforms through its policy based lending. The Government of Mauritius acknowledges the important role the Bank is playing in Mauritius. In particular the Bank’s approval to extend the Competitiveness and Public Sector Efficiency loan and providing the Infrastructure Investment Specialist to play an advisory role on PPPs is a timely support to the Government’s US$10 billion infrastructure program. A mid-term review of the CSP is programmed for 2016 to review progress and assess continued relevance of the Bank’s strategic orientation.

Statistical Issues

Statistical Issues Appendix As of March 12, 2014
I. Assessment of Data Adequacy for Surveillance
General: Data provision is adequate for surveillance. However, balance of payments (BOP) and international investment position (IIP) statistics could be further improved. The authorities are aware of this situation and are continuing work in this regard.
Balance of Payments and International Investment Position Statistics: The authorities are in the process of reinforcing the statistical framework. Already, there were significant improvements in reducing the errors and omissions category in the BOP statistics.
II. Data Standards and Quality
Participant in the GDDS since September 2000, Mauritius subscribed to Special Data Dissemination Standard (SDDS) on February 28, 2012. Mauritius is the second Sub-Saharan African country to subscribe to the SDDS.A data ROSC report was published in August 2008.
Mauritius: Table of Common Indicators Required for Surveillance March 12, 2014
Date of latest observationDate receivedFrequency of data7Frequency of reporting7Frequency of publication7Memo Items:
Data Quality-Methodological soundness 8Data Quality-Accuracy and reliability9
Exchange RatesMarch 201403/2014DDD
International Reserve Assets and Reserve Liabilities of the Monetary Authorities1January 201403/2014MMM
Reserve/Base MoneyJanuary 201403/2014MMM
Broad MoneyJanuary 201403/2014MMMO, LO, LO, LOO, O, O, O, LO
Central Bank Balance SheetJanuary 201403/2014MMM
Consolidated Balance Sheet of the Banking SystemJanuary 201403/2014MMM
Interest Rates2January 201403/2014MMM
Consumer Price IndexJanuary 201402/2014MMMO, LO, O, OO, O, O, O, O
Revenue, Expenditure, Balance and Composition of Financing3–General Government4Q4/201302/2014QQQLO, O, O, OLO, O, O, O, NO
Revenue, Expenditure, Balance and Composition of Financing3–Central GovernmentQ4/201302/2014QQQ
Stocks of Central Government and Central Government-Guaranteed Debt5Q4/201302/2014QQQ
Exports and Imports of Goods and ServicesQ3/201301/2014QQQ
External Current Account BalanceQ3/201301/2014QQQO, LO, LO, LOLNO, LNO, LO, LO, NO
GDP/GNPQ3/201302/2014QQQO, LO, O, LOLO, O, LNO, LO, O
Gross External DebtQ4/201302/2014QQQ
International Investment Position6Q3/201302/2014QQQ

Any reserve assets that are pledged of otherwise encumbered should be specified separately. Also, data should comprise short-term liabilities linked to a foreign currency but settled by other means as well as the notional values of financial derivatives to pay and to receive foreign currency, including those linked to a foreign currency but settled by other means.

Both market-based and officially determined, including discount rates, money market rates, rates on treasury bills, notes, and bonds.

Foreign, domestic bank, and domestic nonbank financing.

The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments.

Including currency and maturity composition.

Includes external gross financial asset and liability positions vis-à-vis nonresidents.

Daily (D); Weekly (W); Monthly (M); Quarterly (Q); Annually (A); Irregular (I); Not Available (NA).

Reflects the assessment provided in the data ROSC published in August, 2008, and based on the findings of the mission that took place during November 29–December 7, 2007 for the dataset corresponding to the variables in each row. The assessment indicates whether international standards concerning concepts and definitions, scope, classification/sectorization, and basis for recording are fully observed (O), largely observed (LO), largely not observed (LNO), or not observed (NO).

Same as footnote 8, except referring to international standards concerning source data, assessment and validation of source data, statistical techniques, assessment and validation of intermediate data and statistical outputs, and revision studies.

Any reserve assets that are pledged of otherwise encumbered should be specified separately. Also, data should comprise short-term liabilities linked to a foreign currency but settled by other means as well as the notional values of financial derivatives to pay and to receive foreign currency, including those linked to a foreign currency but settled by other means.

Both market-based and officially determined, including discount rates, money market rates, rates on treasury bills, notes, and bonds.

Foreign, domestic bank, and domestic nonbank financing.

The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments.

Including currency and maturity composition.

Includes external gross financial asset and liability positions vis-à-vis nonresidents.

Daily (D); Weekly (W); Monthly (M); Quarterly (Q); Annually (A); Irregular (I); Not Available (NA).

Reflects the assessment provided in the data ROSC published in August, 2008, and based on the findings of the mission that took place during November 29–December 7, 2007 for the dataset corresponding to the variables in each row. The assessment indicates whether international standards concerning concepts and definitions, scope, classification/sectorization, and basis for recording are fully observed (O), largely observed (LO), largely not observed (LNO), or not observed (NO).

Same as footnote 8, except referring to international standards concerning source data, assessment and validation of source data, statistical techniques, assessment and validation of intermediate data and statistical outputs, and revision studies.

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