Mauritius: 2024 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Mauritius

MAURITIUS IMFCountryReportNo.24/139 May2024 2024ARTICLEIVCONSULTATION—PRESSRELEASE;STAFFREPORT;ANDSTATEMENTBYTHEEXECUTIVEDIRECTORFORMAURITIUS UnderArticleIVoftheIMF’sArticlesofAgreement,theIMFholdsbilateraldiscussionswithmembers,usuallyeveryyear.Inthecontextofthe2024ArticleIVconsultationwithMauritius,thefollowingdocumentshavebeenreleasedandareincludedinthispackage: APressReleasesummarizingtheviewsoftheExecutiveBoardasexpressedduringitsMay15,2024,considerationofthestaffreportthatconcludedtheArticleIVconsultationwithMauritius. TheStaffReportpreparedbyastaffteamoftheIMFfortheExecutiveBoard’sconsiderationonMay15,2024,followingdiscussionsthatendedonFebruary21,2024,withtheofficialsofMauritiusoneconomicdevelopmentsandpolicies.Basedoninformationavailableatthetimeofthesediscussions,thestaffreportwascompletedonApril29,2024. AnInformationalAnnexpreparedbytheIMFstaff. AStatementbytheExecutiveDirectorforMauritius. Thedocumentlistedbelowhavebeenorwillbeseparatelyreleased. SelectedIssues TheIMF’stransparencypolicyallowsforthedeletionofmarket-sensitiveinformationandprematuredisclosureoftheauthorities’policyintentionsinpublishedstaffreportsandotherdocuments. Copiesofthisreportareavailabletothepublicfrom InternationalMonetaryFundPublicationServicesPOBox92780Washington,D.C.20090Telephone:(202)623-7430Fax:(202)623-7201 E-mail:publications@imf.orgWeb:http://www.imf.org InternationalMonetaryFundWashington,D.C. ©2024InternationalMonetaryFund PR24/168 IMFExecutiveBoardConcludes2024ArticleIVConsultationwithMauritius FORIMMEDIATERELEASE Washington,DC–May16,2024:OnMay15,theExecutiveBoardoftheInternationalMonetaryFund(IMF)concludedtheArticleIVconsultation1withMauritius. Theeconomyhasreboundedstronglyfromthepandemiconthebackofbuoyanttourism,socialhousingconstruction,andfinancialservices.Supportivepoliciesalsofacilitatedthestrongrecovery,includingfiscalmeasures.RealGDPgrowthreached8.9percentin2022andanestimated7percentin2023—suchthatoutputhasnowexceededitspre-pandemiclevel.Inflationhasdeclinedsupportedbylowerinternationalcommodityprices,averaging7percentin2023.Theexternalcurrentaccountdeficitnarrowedsharplyin2023to4.5percentofGDP,reflectingastrongreboundintourismearnings.Lookingahead,securingasustainableandresilienteconomypresentschallenges:fiscalandexternalbufferswereerodedduringthepandemic,andvulnerabilitiestoclimatechangeandanageingpopulationloomoverlonger-termeconomicprospects. Theoutlookisfavorable,withrealGDPgrowthprojectedat4.9percentin2024andaround 3.5percentinthemediumterm,inlinewithpre-pandemicgrowth.Headlineinflationisprojectedtoeaseto4.9percentonaveragein2024and3.5percentthereafter,inlinewiththeBankofMauritius’medium-terminflationtarget.Theexternalcurrentaccountdeficitisexpectedtoremainat4.5percentofGDPin2024andabout4percentoverthemediumterm.Thefiscalstanceinfiscalyear2023-24isexpectedtobeexpansionaryasrevenuegrowthhasdeceleratedandextra-budgetaryspendingforsocialhousingconstructionincreased.Publicdebt,estimatedat81percentofGDPinJune2023,isprojectedtomoderateoverthemediumterm. Riskstotheoutlookareonthedownside,includingfromadeteriorationinglobalgrowth,higher-than-anticipatedfuelandfoodprices,andextremeclimateevents. 1UnderArticleIVoftheIMF'sArticlesofAgreement,theIMFholdsbilateraldiscussionswithmembers,usuallyeveryyear.Astaffteamvisitsthecountry,collectseconomicandfinancialinformation,anddiscusseswithofficialsthecountry'seconomicdevelopmentsandpolicies.Onreturntoheadquarters,thestaffpreparesareport,whichformsthebasisfordiscussionbytheExecutiveBoard. 2 ExecutiveBoardAssessment2 ExecutiveDirectorsagreedwiththethrustofthestaffappraisal.TheywelcomedMauritius’strongeconomicrecoveryfromthepandemic,whichhasbeenunderpinnedbytheauthorities’supportivepolicyresponse.Whilerecognizingthefavorablegrowthoutlook,Directorsstressedthatchallengesanddownsiderisksremain.Againstthisbackdrop,theycalledforcontinuedprudentpoliciestorebuildfiscalandexternalbuffersandforstructuralreformstotacklechallenges,particularlyfromclimatechangeandanageingpopulation. Directorsagreedthatagradualandgrowth-friendlyfiscalconsolidationoverthemediumtermisneededtorebuildfiscalbuffersandfurtherreducepublicdebt.Theyrecommendedmobilizingtaxrevenueandcontainingcurrentspending,whilesafeguardingcriticalsocialspendingtoprotectthemostvulnerable.Directorscalledforreformingthepensionsystemandforstrengtheningpublicfinancialmanagement,includingbystreamliningextra-budgetaryspecialfunds.Theywelcomedthereinstatementofthepublicdebtceilingframework,whichshouldbefurtherstrengthened. Directorscommendedthenewmonetarypolicyframework,whichhashelpedcontaininflationarypressures.TheyagreedthattheBankofMauritius(BOM)shouldstandreadytotightenthemonetarypolicystanceshouldinflationarypressuresreemerge.DirectorscalledontheBOMtoresumeuncappedauctionstobetteraligntheinterbankratewiththekeypolicyrate.Theyencouragedfurtherstrengtheningmonetarypolicytransmission,includingbyenhancingthecommunicationstrategy.TohelppreservetheBOM’sindependence,DirectorsrecommendedamendmentstotheBOMActandsuggested