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GDP growth in Mauritius averaged 4.7% during the past three years. The economy grew by 2. 1 999 and it is forecast that the output for 2000 will be
higher at around 8%. GNP per capita market prices has risen by 7.7% in 1 999 to reach Rs 90,1 68. Aggregate consumption experienced increased by 11 .6% in 1 999 to reach Rs. 82 billion, but after accounting for
price effects increase worked out to be 4.6%. Household expenditure amounted to 85% of total consumption
Gross Domestic Savings (GDS) reached Rs. 24.3 billion in 1999, probably due to the implementation of the recommendations of the Pay Research Bureau
(salary review for the public sector). The savings rate (GDS/GDP) declined in 1 999 to reach 22.8%.
In 1999, Gross Domestic Fixed Capital Formation (GDFCF) decreased in real terms by 1 2%. The investment rate (GDFCF/GDP) in 1 999 worked out to be 28.3%.
The public sector’s share in total GDFCF stood at 26% and the private sector’s share at 74%.
Labour Force and Employment
The total labour force (including 1 2,900 foreigners) was estimated at 530,200 in 1999 as compared to 51 7,000 in 1 998. Total employment increased to
496,900 in 1 999. A breakdown of male and female employment stood at 332,500 and 164,400 respectively. The unemployment rate in 1999 worked out to be 6.4% with an unemployment rate of 4% for male and 11 .3% for
female. In spite of rising unemployment, it was still necessary to bring in foreign workers on a temporary basis due to the shortage of workers in certain sectors. The majority of foreign workers are employed within
EPZ and construction firms.
Prices and Inflation
Consumer price inflation, as measured by the percentage change in the yearly average of the Consumer Price Index, increased by 6.2 points during the
calendar year 1 999. The rate of inflation in 1999 stood at 6.9% compared to 6.8% in 1 998.
Up to November 1991, direct control of the money supply prevailed in Mauritius. Through the interplay of Treasury Bills issued on tap and high reserve
requirements the central bank directed monetary policy by controlling the ability of commercial banks to extend credit. Such measures supplemented by a matrix of interest rate and credit rate ceilings and the
concomitant creation of priority and non priority sectors enabled successive Governments to use the banking system to finance the industrialisation of the economy in line with the export-led growth strategy of the
The early 90’s marked a turning point in the monetary management of the economy which responded to the need for monetary policy conducive to a
competitive and efficient financial sector capable of fulfilling the macro-economic objective of growth with stability while simultaneoulsy paving the way for a smooth integration with the world economy in the wake
of ongoing global Iiberalisation. Hence the inauguration in November of open market operations marked the beginning of a system of indirect monetary control which culminated in the current Reserve Monetary
Programme (RMP) of the Bank of Mauritius.
The primary objective of the Bank of Mauritius is the maintenance of the internal and external value of the domestic currency through a stable price
level and exchange rate management, this objective being enshrined in the Reserve Monetary Programme. The central bank acts on the demand and supply of bank reserves in order to make the demand and supply reserve
money match a level consistent with money supply M2, which is the intermediate target.
The basic thrust of monetary policy in 1998-99 continued to focus on the containment of inflationary pressures due to higher levels of aggregate demand.
While pursuing its anti-inflationary monetary policy, however the Bank of Mauritius maintained its policy of financial Iiberalisation.
Within the framework of the Iiberalised foreign exchange market, the Bank of Mauritius pursued policy to ensure that the value of the rupee vis-à-vis
major currencies reflected the macroeconomic fundamentals of the country. The interbank foreign exchange market was boosted by the trading of foreign currencies by offshore banks and the trading of foreign currency
receipts from sugar exports by the Mauritius Sugar Syndicate — an activity which was initiated since July 1997. The OT( sale of Government Treasury Bills aimed to quell inflationary pressure while stabilising the
exchange rate of the rupee and imparting greater confidence to the interbank foreign exchange market.
The gradual taxation reform of Mauritius is meant to achieve a fine balance between enabling the country to smoothly integrate the world economy on the
one hand while not being detrimental tothe budget situation of the country on the other. The indirect taxation system in Mauritius plays the dominant role of raising Government revenue with domestic taxes on goods
and services constituting the main source and representing 48.6% of total tax revenue in 1 998-99. Mauritius has been committed to trade liberalisation at the regional level since July 1 994 when a major reform
programme concerning taxes on international trade was implemented. Past efforts at liberalising the tariff regime have resulted in a notable fall in taxes on international trade and transaction which as a percentage
of tax revenue continued to decline in 1 998-99 to 28.8% reflecting th lowering of tariffs in line with world trade liberalisation. The introduction of VAT in September 1 998 has had a predominant contribution in
improving tax buoyancy both at the level of direct and indirect taxes. The continuous move towards tariff reductions in line with Mauritius’ commitment to various regional blocs and as signatory to the WTO will
contribute to a smoother integration o Mauritius into the increasingly competitive global economy.
As regards reform in the direct tax system, we are witnessing further institutional reinforcement of tax administration with the emphasis being put on
curbing fiscal evasion. These undertakings am to equip the country with a resilient tax system while enhancing the effectiveness of fiscal policy in macroeconomic management.
Government finances in 1 998-99 were characterised by a drop in the budget deficit to 3.6% of GDI a higher growth of 1 3.3% in total derived expenditure,
and a higher growth of 14.5% in tote derived revenue and growth. As regards the debt position, both the Government outstanding internal and external debt remained stable in 1 999, standing at slightly below 40.4%
and 1 0% c GDP respectively.
The international environment has a direct impact on Mauritius due to the openness of the economy. Indeed, Mauritius has one of the highest ratios of
trade of goods and services to GDP in the world exceeding 1 33% in 1 998. Indeed, Singapore, Hong Kong, Malaysia, the United Arab Emirates an Panama are more “open” than Mauritius referring to this index. If
non-factor services were to b excluded, the ratio of trade of goods to GDP would have been 95% of GDR
Total international trade, excluding trading activities of the Freeport zone, amounted to nearly Rs 97 billion in 1 999. Total exports in 1 999 which
comprise domestic exports, re-exports and ships’ stores and bunkers reached Rs 40 billion while total imports in 1999 which include transaction involving ships and aircraft reached Rs 57 billion. Consequently the
balance of visible trade showed a record deficit of Rs l7.5 billion compared to Rs 9.7 billion the preceding year. The terms of trade, for 1 999, fell by 7 percentage points. Between 1 998 and 1 999, exports prices
fell by 1 0% on average while import prices went up by 6%.
Exports remained highly concentrated on the markets to which we have preferential access, namely the EU and the USA, which account for nearly 88.5% of
exports. On a countrywise basis, the three main buyers were the UK (main importer of our sugar exports), France and the USA which respectively accounted for 3 3.4%, 18.4% and 1 7.8% of the total. The major import
items were machinery and transport equipment, textile yarn and fabrics for industrial use and food and beverages. The EU accounted for nearly 33% of our imports with France’s and the UK’s shares representing 1
5% and 4.5% respectively. The other main suppliers were the Republic of South Africa and India with 10.7% and 8.3% respectively.