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Mauritius: Selected Issues and Statistical Appendix

Author(s):
International Monetary Fund
Published Date:
August 2005
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Mauritius: Social and Demographic Indicators 1
PopulationEducation
Population (thousands; 2002)1,200Adult illiteracy rate (percent; 1995)15
Annual rate of growth (percent; annual)1.02Female19
Population under age 15 (percent; 1999)26Male12
Density (per square km.; 1999)591Gross primary school enrollment (percent; 2001) 2/93.2
Land area (square km.)2,030Gross secondary school enrollment (percent; 2000) 2/77
Population characteristicsIncome
Life expectancy at birth (years; 2002)72.5GDP per capita (U.S. dollars; 2002/2002) 3/4,352
Male68Poverty
Female76Population below $1 a day
Infant mortality (per thousand; 2001)17
Crude birth rate (per thousand; 1999)17
Crude death rate (per thousand; 1999)7
Fertility rate (births per woman; 2001)2.01
Health
Labor forceHealth care access (percent of population; 1991)99
Total (thousands, including foreigners; 2003)549Immunization for measles (percent of population
Of which: female (percent; 2003)34.6less than 12 months; 1995)79
Annual growth rate (percent; average 1998-2003)1.5Population per physician (1999)1,107
Sugar workers (percent of total employment; 2003)5.2Population per hospital bed (1999)294
Export processing zone workers (percent of total employment; 2003)27.6Safe water access (percent of population; 1993)

Sanitation access (percent of population; 1993)
100

100
Sources: Central Statistical Office; IMF, International Financial Statistics; World Bank, World Development Indicators database; and World Bank, Country Assistance Strategy of the World Bank Group for the Republic of Mauritius, 1997.

The Republic of Mauritius consists of the islands of Mauritius and Rodrigues, and two very small “outer” islands. Population density varies greatly among these.

Gross enrollment ratio is the ratio of total enrollment, regardless of age, to the population of the age group that officially corresponds to the level of education shown.

Fiscal year July to June constant 1995 US$.

Sources: Central Statistical Office; IMF, International Financial Statistics; World Bank, World Development Indicators database; and World Bank, Country Assistance Strategy of the World Bank Group for the Republic of Mauritius, 1997.

The Republic of Mauritius consists of the islands of Mauritius and Rodrigues, and two very small “outer” islands. Population density varies greatly among these.

Gross enrollment ratio is the ratio of total enrollment, regardless of age, to the population of the age group that officially corresponds to the level of education shown.

Fiscal year July to June constant 1995 US$.

I. Introduction

1. This collection of selected issues papers provides background information and analytical support for key policy issues discussed in the 2004 Article IV consultation discussions with Mauritius. The Article IV consultation report identifies three immediate and medium-term challenges facing Mauritius, namely, the need to adapt the economy to the impending loss of trade preferences in sugar and textiles, the urgency of carrying out structural reforms to lessen labor market rigidities and the requirement to reduce fiscal deficits over the medium term to ensure fiscal sustainability and macroeconomic stability. Regarding the latter, the staff report for the consultation discussions contains a detailed appendix on the medium-term path toward public debt sustainability. The consultations also assessed the monetary policy framework in Mauritius and identified further structural reforms that should be pursued in order to strengthen the financial system.

2. In the first of the four papers, the impact of the erosion of trade preferences on exports, growth, and employment is assessed under two scenarios—a moderate and an extreme scenario. To quantify the adverse impact of trade liberalization, the paper estimates various elasticities of GDP growth to exports, and unemployment to growth. The analysis finds that in the worst case scenario, medium-term growth could be up to 50 percent below the staff’s baseline projections of 4 percent annual growth.

3. The paper on labor market institutions and low-skilled employment uses a simple stylized model of the job creation and destruction process to assess the potential benefits of labor market reform. The conclusion is that even relatively minor wage compression and restrictions on the redeployment of workers can have a dramatic impact on the fragility of jobs and the extent of unemployment and labor-market churning.

4. Mauritius has achieved success in its informal inflation targeting framework. By combining a standard macro-finance model with an open economy model, an empirical assessment is made of the critical channels through which the central bank has been able to implement credible monetary policies. The empirical results indicate that the informal inflation targeting framework (by targeting inflationary expectations) has been able to provide a strong nominal anchor even in the context of a managed float exchange rate system.

5. Finally, the last paper discusses the institutional requirements for developing a corporate bond market in Mauritius. Credit concentration in the banking sector is a major concern in Mauritius. Development of an efficient bond market would not only provide alternative investment opportunities for institutional investors, but would also spread credit risk in the economy. Successful development of an active bond market will require a deepening of the market for government debt, a strengthening of the legal and credit risk infrastructure and a broadening of the investor and issuer base.

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