In this challenging era, where risks and vulnerabilities
are very much present, Mauritius is pursuing the implementation
of a suite of policy measures to tackle economic bottlenecks
and unlock new opportunities for domestic and foreign investors
in order to propel the economy to a higher growth path.
Business facilitation measures and major investments in public
infrastructure over the coming years are expected to bolster
economic activity. Real economic growth is expected to rise to
3.7% in 2017.
The financial sector continues to expand steadily. The
banking sector remains well capitalised and enjoys a
comfortable liquidity position. However, the Mauritian
financial sector faces numerous challenges. Two overriding ones
are how best to address risks associated with the offshore
business sector and how best to maintain the competitive
advantage of the financial sector as a whole. Further
challenges emerged in 2016 from the potential fallouts of
Brexit and the revision to the Double Taxation Avoidance
Agreement (DTAA) with India. While the impact of Brexit on the
economy is yet to be fully gauged, there has been no capital
flight consequent to the DTAA revision, due to business
diversification and new opportunities tapped by banks.
To address some of these challenges, the Bank of Mauritius
launched several key projects since 2015 to strengthen the
supervision and fundamentals of the banking industry, modernise
the financial markets infrastructure and improve the efficacy
of monetary policy. Moreover, the authorities have taken steps
to enhance the position of Mauritius as a transparent,
collaborative international financial centre. The jurisdiction
has signed an agreement with the United States to implement the
Foreign Accounts Tax Compliance Act, is committed to the early
execution of the Common Reporting Standard introduced by the
OECD and is ready to adopt the Base Erosion Profit
Banking sector reforms have reached an advanced stage. The
upgrading of existing prudential guidelines is completed.
Integrating the crisis management and resolution framework into
the banking legislation, which is under review, is on-going.
The first phase of the stress testing framework has been rolled
out and the results are helping to address weaknesses. Another
milestone in strengthening off-site surveillance of financial
institutions is the introduction of a risk-based supervisory
framework. The Deposit Insurance Scheme and National Payments
System legislation are awaiting enactment.
The modernisation of the financial markets infrastructure is
well on track. The on-going implementation of the National
Payment Switch will provide an impetus to digital banking. The
switch will make mobile payments interoperable, boost
competition in the retail payment area, and enable the
government to offer better services via the e-government
platform. Mindful of technology-driven innovation in the
finance world, the Bank of Mauritius has established a joint
forum with banks to deliberate on potential uses and
implications of disruptive technologies and how to adapt the
Monetary policy has remained broadly accommodative and
supportive of the economy. A new monetary policy framework will
be rolled out to enhance the transmission of mechanism. The
exchange rate of the rupee is broadly in line with
macroeconomic fundamentals. Inflation remains low at 1.9% in
May 2017. The economic and financial policies continue to
attract capital inflows, raising the level of the foreign
exchange reserves to $5.2 billion in May 2017.
With these measures, the Bank of Mauritius is on course to
sustain macroeconomic and financial stability and ensure the
soundness and attractiveness of the banking sector.