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Mauritius: Staff Report for the 2008 Article IV Consultation Informational Annex

Author(s):
International Monetary Fund
Published Date:
July 2008
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Appendix I. Relations with the Fund (As of April 30, 2008)

I. Membership Status

Joined on September 23, 1968; Article VIII.

II. General Resources Account

SDR MillionPercent of Quota
Quota101.60
Fund holdings of currency95.4593.94
Reserve position in Fund6.156.06

III. SDR Department

SDR MillionPercent of Allocation
Net cumulative allocation15.74
Holdings18.73118.99

IV. Outstanding Purchases and Loans

None.

V. Latest Financial Arrangements

TypeApproval DateExpiration DateAmount

Approved

(SDR million)
Amount Drawn

(SDR million)
Stand-By3/1/858/31/8649.0049.00
Stand-By5/18/838/17/8449.5049.50
Stand-By12/21/8112/20/8230.0030.00

VI. Projected Obligations to Fund

None.

VII. Implementation of HIPC Initiative

Not applicable.

VIII. Implementation of Multilateral Debt Relief Initiative (MDRI)

Not applicable.

IX. Safeguards Assessments

Not applicable.

X. Exchange Rate Arrangement

The currency of Mauritius is the Mauritian rupee, and the exchange rate regime is a managed float with no pre-announced path for the exchange rate. The exchange rate is currently determined in the interbank foreign exchange market. The exchange arrangement is free of multiple currency practices and restrictions on the making of payments and transfers for current international transactions. Mauritius accepted the obligations of Article VIII, Section 2(a), 3, and 4 on September 29, 1993. Mauritius also maintains a liberal capital account. On April 29, 2008, the US$1 was equivalent to MUR 25.45.

XI. Article IV Consultation

Mauritius is on the standard 12-month cycle. The last Article IV consultation discussions were held during February 19-28, 2007. The staff report (Country Report No. 07/192, 3/30/07) was considered by the Executive Board on May 7, 2007. A Financial System Stability Assessment was completed by a joint IMF–World Bank team on June 5, 2003.

XII. Technical Assistance (2004–2008)

FAD mission on revenue administration and tax policy, February 2004.

MFD mission on banking supervision and legislation, October 2004.

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.

Resident Representative: None.

Appendix II. Relations with the World Bank Group

(As of January 29, 2008)

The Bank Group strategy and lending operations

A member of the World Bank since its independence in 1968, Mauritius is a development success story. In 1968, the country was poor, with a nominal per capita income of about US$260. Today, nominal income per capita is US$5,250. The country graduated from the International Development Association (IDA), the World Bank’s soft-lending arm for the poorest countries), in FY1975, and the last IDA credit was made in July 1974. In the 1980s, the World Bank supported macroeconomic and sectoral policy reforms through quick-disbursing loans. After the success of the structural adjustment effort, the country turned to more traditional project lending.

The World Bank’s role in Mauritius is evolving, reflecting the country’s past success in gaining access to capital markets and Middle Income Country status. Because of its relatively high income, Mauritius is one of only a few African countries eligible for International Bank for Reconstruction and Development loans (most African countries borrow from the IDA). The World Bank currently has one active operation – the Development Policy Lending (DPL) series. The second DPL totaling $30 million will be considered by the Bank’s Board in February and will support measures in the country’s economic restructuring and reform efforts. It has been agreed with the Government that in total the DPL series will comprise six annual loans, the focus of each being agreed annual the DPL series will total six annual loans the focus of each being agreed annual to reflect the country’s evolving development priorities.

The World Bank is also preparing two other project loans – one for the transport sector and the other to support parastatal sector and investment climate reforms. The Government has been explicit in its request for a careful balance between general budget support, which does not provide technical assistance, and investment lending which provides technical assistance to help maintain the momentum for reform and build capacity to implement reforms in key areas.

The Bank also supports the government of Mauritius through analytical and advisory assistance. The Bank carried out an Investment Climate Assessment in 2005/2006 which the country put to good use by incorporating most of the recommendations in a new Business Facilitation Act. Currently the Bank is engaged in a policy dialogue on Doing Business reforms and is providing technical assistance in the preparation of several sector strategies for the program based budget.

The World Bank’s current Country Partnership Strategy (CPS) runs from FY07–13. The CPS is based on three guiding principles: (i) alignment with the Government Program; (ii) flexibility; and (iii) harmonization. It has been developed in close collaboration with the Government of Mauritius and the European Union to ensure that it responds to the country’s emerging needs, and reflects a coherent approach by Mauritius’ major development partners. The CPS builds on lessons learned from previous Bank experience in Mauritius and on the flexible approaches developed elsewhere in the Bank for Middle-Income Countries. It is grounded in the Bank’s recognition that it needs to adapt its business model to Mauritius’ development agenda, and the Government’s recognition that the Bank brings much more than financial resources to the table.

The International Finance Corporation’s (IFC) main focus for future activity in Mauritius is support for advisory work and investments in private infrastructure. IFC is also actively seeking projects with Mauritian sponsors investing elsewhere in Africa. In 2007, IFC negotiated an advisory mandate for structuring private participation in the ports sector. IFC has committed no new investments since 1996; the portfolio has steadily decreased as investments have been repaid and/or exited and now consists of two equity positions for a total of US$1 million.

The Multilateral Investment Guarantee Agency (MIGA) has been actively supporting Mauritian investors venturing abroad, particularly into sub-Saharan Africa. The agency is working to further strengthen relations with the local business community, creating synergies that will continue to support development into the Southern African Development Community region and other regions of Africa. For the second year running, the Board of Investment (BoI) office has supported and facilitated MIGA’s missions to Mauritius. These missions have firmly put MIGA as a value adding institution to cross-border investors to and from Mauritius. The BoI continues to identify investors with the potential to use MIGA services. Mauritian investors have benefited substantially in recent years from MIGA guarantees for their investments in continental Africa and elsewhere, with total gross exposure currently greater than US$53.1 million for projects in Africa and South Asia.

Mauritius is not an active participant in World Bank Institute programs, but discussions are under way to help position the country as a global knowledge hub.

IMF-World Bank collaboration in specific areas

IMF and World Bank staffs have traditionally collaborated closely and this has been reinforced by the Government’s request that all Development Partners harmonize and coordinate their support. Since 2001 the Bank had been involved with budget modernization and implementation of a Medium Term Expenditure Framework and Program Based Budgeting (METF/PBB), but more recently the IMF’s Fiscal Affairs Department has taken the lead. However, MTEF/PBB implementation remains a focus area of the DPL. In addition, the World Bank and IMF jointly prepared a Financial Sector Assessment Program (FSAP) update in 2007 and are now collaborating on a follow-on Financial Sector Action Plan.

Areas in which the World Bank leads

World Bank support is demand driven. Areas where it has taken the lead are related to specific sector advice, such as the tourism, lands and housing, infrastructure, and investment climate and parastatal sector reforms and through a number of analytical studies as described above, including an ongoing investment climate assessment.

Areas in which the IMF leads

Areas where the IMF takes the lead role relate to policy advice and reforms with respect to (i) overall economic policy advice and targets for macroeconomic targets; (ii) tax policy and administration; (iii) budgetary procedures (MTEF/PBB); (iv) treasury procedures; (v) public sector wage policy; and (vi) monetary management and exchange rate policy. The Bank team actively participates in discussions between the IMF and the government in these areas, however, especially with respect to the setting of overall macroeconomic targets.

Questions may be referred to Constantine Chikosi (email: cchikosi@worldbank.org).

Appendix III. Relations with the African Development Bank Group (As of January 1, 2008)

Assistance from the African Development Bank (ADB) to Mauritius combines lending and non-lending activities. Lending has focused on infrastructure development in agriculture and transportation and non-lending on economic and sector work (ESW) in health, poverty reduction, and debt management. Under the NEPAD Program, ADB has collaborated with the UNDP, AU, and ECA on the African Peer Review Mechanism (APRM), for which Mauritius is one of the four pilot cases. An ADB study on poverty, gender, and social exclusion is also under preparation and is being coordinated with the EU and the UNDP. Past collaboration with the World Bank (and other partners) includes water, sewerage, and sanitation (the Plaines Wilhems Sewerage Project) and transport (Southeastern Highway). A close working relationship has developed between the two institutions during the preparation and appraisal of the first and second Development Policy Loans.

Table 1.Operations Summary as of January 1, 2008Operations since: 1975Total Number of operations 32:---24 Projects,2 Policy based operations; 1 Study; 5 Lines of Credit.
Source of financingCommitments net *Percentage shareDisbursed

amount

(UA million)
Percentage

disbursed
ADB161.0595.7597.1333.4
ADF/TAF4.262.534.2690.44
NTF2.891.722.8827.7
Total168.2100104.2834.1

out of cancellations amounting UA 168.2 million

out of cancellations amounting UA 168.2 million

Questions may be referred to Septime Martin (email:smartin@afdb.org)

Appendix IV. Statistical Issues

Data provided to the Fund are, in general, adequate for surveillance. Efforts are under way to improve the frequency and quality of fiscal data, particularly their consistency with monetary data. The authorities publish economic data including in a monthly bulletin published by the Bank of Mauritius (BOM) and a number of reports published by the Central Statistics Office (CSO), which are accessible on the Internet. The country started participating in the IMF’s General Data Dissemination System (GDDS) in September 2000. As one of 22 countries participating in the Fund’s General Data Dissemination System (GDDS) Project for Anglophone African Countries, it has undertaken to use the GDDS as a framework for the development of its national statistical system. The country is participating in the SDDS and the external sector modules of the Anglophone Africa project (funded by the U.K. Department for International Development (DFID)). This project aims to assist participating countries to implement plans for improvement identified in the metadata. In December 2007, a Report on the Observance of Standards and Codes (ROSC) was prepared, to assess the quality of macroeconomic statistics based on the Data Quality Assessment Framework (DQAF). The report found that the quality of the macroeconomic statistics in Mauritius has improved significantly since the previous assessment, conducted in 2001. It is expected that Mauritius will be in a position to subscribe to the SDDS towards the end of 2008.

Real sector

National accounts are based on the concepts and definitions recommended by the System of National Accounts 1993. Data are prepared by the CSO on a calendar-year basis and cover all transactions categories except financial transactions. Estimates of GDP on the basis of production use the ratios from the Census of Economic Activities (CEA). Following the 2002 CEA, a major revision of the national accounts was undertaken and completed in September 2005. Some government operations and transactions with the rest of the world are recorded on a cash basis rather than on an accrual basis. Different accounting years of units and insufficient data on changes in inventories hamper accuracy. Other deviations from international standards include outdated coefficients in agriculture, single deflation of value added in some activities, no volume measures for changes in inventories, a base year for QNA more than five years old and direct deflation of VAT and import duties. Expenditure GDP aggregates are compiled independently, except for changes in inventories.

The consumer price index is regularly rebased (every five years) as consumption patterns and relative prices change. A new series of the consumer price index with July 2006-June 2007 as base period, and weights derived from the 2006/07 household budget survey was released in October 2007. The index broadly follows international practices. Producer price indices (PPI) of agriculture and manufacturing, input costs of construction, the wage rate, and employment have been developed, but are not reported to the IMF for publication in its International Financial Statistics (IFS). The PPIs are monthly indices but are disseminated on a quarterly basis following a quarterly price collection. The current PPIs have 2003 as the base year, which is planned for update on a five-year basis.

Government finance

The definition, scope, and classification/sectorization of general government agencies and their transactions are in line with international standards. Source data for the compilation of statistics for the general government are not timely enough to meet SDDS timelines requirements. Although the authorities produce quarterly GFS data for budgetary central government, they do not report these for publication in IFS. However, they report data on the consolidated general government and its sub-sectors for publication in the Government Finance Statistics (GFS) Yearbook. The authorities will soon finalize a revised chart of account that is based on the classifications used in the GFSM 2001 framework. This improvement will significantly enhance the availability of detailed fiscal data.

Monetary accounts

The authorities report money and banking statistics on a timely and regular basis. The analytical framework used for compiling monetary and financial statistics is based on the 2000 Monetary and Financial Statistics Manual. The Depository Corporations Survey (DCS) is a consolidation of the accounts of the BOM and other depository corporations, which comprise banks and nonbank deposit taking institutions. In addition to the monthly depository corporations survey, its two component surveys, the Central Bank Survey and the Other Depository Corporations Survey are also disseminated, along with the underlying sectoral balance sheets for the central bank and for the other depository corporations. The M1 and M2 monetary aggregates are derived from the Depository Corporations Survey, adjusted for the deposits of Global Business Licence Holders, but some nonbank depository corporations are excluded. The November 2007 data ROSC mission recommended that the authorities conduct a survey of the mutual funds to ascertain whether they issue close substitutes for deposits and, therefore, qualify for the inclusion in monetary statistics as depository corporations. Also, the mission noted that the National Pension Fund is incorrectly sectorized as financial corporation rather than as part of the central government.

Balance of payments

The country provides quarterly balance of payments (BOP) and international investment position (IIP) data to the IMF’s Statistics Department on the basis of the classification system of the fifth edition of the Balance of Payments Manual. The quality of balance of payments statistics has deteriorated somewhat as a consequence of the liberalization of the economy, and the growth of global business license holders (GBLs). Notably, there has been a sharp increase in net errors and omissions in the BOP, and the IIP has a major undercount of liabilities, giving an unreliable indication of a net asset position. Transactions of offshore financial institutions with the rest of the world are only partially covered. Recent technical assistance and data ROSC missions have recommended that more emphasis be placed on surveys, rather than the relying on the bank report forms of transactions between residents and nonresidents. The authorities launched an enterprise survey at the end of 2007, the results of which are not yet available. This survey does not cover GBLs, and the authorities have yet to make a decision on how to collect data on GBLs’ assets and liabilities. The IIP and external debt data are not fully consistent with the balance of payments statistics.

Mauritius: Table of Common Indicators Required for Surveillance(AS OF JUNE 1, 2008)
Date of latest observationDate receivedFrequency of Data 6Frequency of Reporting

6
Frequency of Publication

6
Exchange RatesApr. 20085/15/2008DDD
International Reserve Assets and Reserve

Liabilities of the Monetary Authorities1
11/200701/2008MMM
Reserve/Base MoneyMar. 20085/15/2008MMM
Broad MoneyMar. 20085/15/2008MMM
Central Bank Balance SheetMar. 20085/15/2008MMM
Consolidated Balance Sheet of the Banking SystemMar. 20085/15/2008MMM
Interest Rates 2Mar. 20085/15/2008MMM
Consumer Price IndexMar 20085/5/2008MMM
Revenue, Expenditure, Balance and

Composition of Financing3—General

Government4
2006/0710/2007QQQ
Revenue, Expenditure, Balance and Composition of Financing 3—Central Government2006/0710/2007QQQ
Stocks of Central Government and Central Government-Guaranteed Debt 52006/0710/2007QQQ
External Current Account Balance06/20079/19/07QQQ
Exports and Imports of Goods and Services06/200712/17/07QQQ
GDP/GNPQ4 20074/25/2008QAA
Gross External DebtQ3/2007Q4/2008QQQ
International Investment Position 7Q4/2008Apr. 2008QQQ

Includes reserve assets pledged or otherwise encumbered as well as net derivative positions.

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.

Daily (D), weekly (W), monthly (M), quarterly (Q), annually (A), irregular (I); and not available (NA).

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

Includes reserve assets pledged or otherwise encumbered as well as net derivative positions.

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.

Daily (D), weekly (W), monthly (M), quarterly (Q), annually (A), irregular (I); and not available (NA).

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

Appendix V. Millennium Development Goals

19901995200020052015 Target
General Social Indicators
Population (millions)1.11.11.21.2
Adult literacy rate (% of people ages 15 and over)84
Life expectancy at birth (years)69707273
Fertility rate, total (births per woman)2.32.12.02.0
Goal 1: Eradicate extreme poverty and hunger
Target: Halve between 1990 and 2015 the proportion of people whose income is less than $ 1/day and who suffer from hunger
Malnutrition prevalence, weight for age (% of children under 5)14.9
Poverty gap at $1 a day (PPP) (%)
Prevalence of undernourishment (% of population)6653
Goal 2: Achieve universal primary education
Target: Ensure that by 2015, children everywhere will be able to complete a full course of primary schooling
Literacy rate, youth total (% of people ages 15-24)9195100
Persistence to grade 5, total (% of cohort)979997100
Primary completion rate, total (% of relevant age group)649810597100
School enrollment, primary (% net)919395100
Goal 3: Promote ciender equality and empower women
Target: Eliminate gender disparity in primary and secondary education no later than 2015
Proportion of seats held by women in national parliament (%)7886
Ratio of girls to boys in primary and secondary education (%)1019698100
Ratio of young literate females to males (% ages 15-24)100102
Share of women employed in the nonagricultural sector (% of total nonagric. employment)36.736.438.637.5
Goal 4: Reduce child mortality
Target: Reduce by two thids, between 1990 and 2015, the under-five mortality rate
Immunization, measles (% of children ages 12-23 months)76898498
Mortality rate, infant (per 1,000 live births)20201613
Mortality rate, under-5 (per 1,000)23.021.018.015.08.3
Goal 5: Improve maternal health
Target: Reduce by three fourths, between 1990 and 2015, the maternal mortality rate
Births attended by skilled health staff (% of total)919810099100
Maternal mortality ratio (modeled estimate, per 100,000 live births)24
Goal 6: Combat HIV/AIDS, malaria, and other diseases
Target: Have halted by 2015, and begun to reverse, the spread of HIH/AIDS. Have halted by 2015, and begun to reverse, the incdence of malaria and other major diseases
Contraceptive prevalence (% of women ages 15-49)7576
Incidence of tuberculosis (per 100,000 people) Prevalence of HIV, total (% of population ages 15-49)69676462

0.6
Tuberculosis cases detected under DOTS (%)343332
Goal 7: Ensure environmental sustainability
Target: Integrate the principle of sustainable development into country policies and program and reverse the loss of environmental resources. Halve by
2015 the proportion of people without sustainable access to safe drinking water
CO2 emissions (metric tons per capita)1.41.62.32.6
Forest area (% of land area)191918
Improved sanitation facilities (% of population with access)94
Improved water source (% of population with access)100100
Nationally protected areas (% of total land area)3.3
Goal 8: Develop a cilobal partnership for development
Target: Develop further an open rule based, predictable, non-discriminatory trading and financial system. Address the special needs of the least
developed countries, landlocked, and small-island developing states. Deal comprehensively with the debt problems of developing countries through
national and international measures, in order to make debt sustainable in the long-term. In cooperation with developing countries, develop and
implement strategies for decent and productive work for youth. In cooperation with the private sector, make available the benefits of new technologies,
especially information and communications.
Aid per capita (current US$)84211726
Debt service (PPG and IMF only, % of exports of G&S, excl. workers’ remittances)7.36.016.45.4
Fixed line and mobile phone subscribers (per 1,000 people)55142388862
Internet users (per 1,000 people)0273146
Personal computers (per 1,000 people)432101162
Total debt service (% of exports of goods, services and income)8.89.418.27.2
Unemployment, youth female (% of female labor force ages 15-24)28.134.3
Unemployment, youth male (% of male labor force ages 15-24)21.420.5
Unemployment, youth total (% of total labor force ages 15-24)23.825.9
Source: World Development Indicators database, February 2008.

Figures in italics refer to periods other than those specified.

Source: World Development Indicators database, February 2008.

Figures in italics refer to periods other than those specified.

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