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Fighting Recessionary Trends: Mauritius Shows the Way

January 7, 2010

PORT LOUIS, January 7, 2010—In 2006, the Government of Mauritius embarked on a bold set of reforms to mitigate the adverse effects of the then unfolding “triple shock,” namely the erosion of trade preferences in sugar and textiles, and the negative effects of rising oil prices.

Fast forward to 2009, and the benefits of proactive actions are showing results, thanks to prudent macroeconomic policies and a willingness to go beyond the nettle of tough reforms.

At a signing ceremony for two loans held in Port Louis on December 3, 2009 -- the US$50 million Mauritius Infrastructure Project, and the $50 million Fourth Trade and Competitiveness Development Policy Loan -- the Honorable Dr. Ramakrishna Sithanen, GCSK, Vice-Prime Minister and Minister of Finance and Economic Empowerment, thanked the World Bank and Mauritius’ development partners for their support, noting that the resources provided were being used for “wide-ranging economic, social and institutional reforms to improve public sector efficiency and the investment climate, build global competitiveness and broaden the circle of opportunities.”

Mauritius, a small island state in the Indian Ocean, is particularly dependent on exports to industrialized nations that are hit severely by the global financial crisis. With support from the World Bank through a series of development policy loans, the Government of Mauritius has notched up some significant gains, including reducing unemployment from 9.5 percent in 2005 to 7.2 percent in 2008, and bringing the budget deficit to three percent during 2008/09, down from a high of 5.4 percent of GDP in 2005. Mauritius’ forward-looking social policy has also helped poorer and vulnerable segments of the population to adapt to a transforming economy, cushioning them from the worst impacts of the global slowdown.

Speaking at the signing ceremony, Ruth Kagia, World Bank Country Director for Mauritius said: “The World Bank is proud of its partnership with the Government of Mauritius. The Government’s achievements are real, with the positive benefits reaching the poorest segments of the population.”

The Government of Mauritius-World Bank partnership began in 2007, and while young, it is growing steadily.

“The Government wanted to restore macroeconomic balance and diversify the economy into new growth sectors, and sought technical and financial assistance from the World Bank and other development partners,” explained Constantine Chikosi, World Bank representative in Mauritius, speaking about the early days of the engagement. “Today, our robust partnership is growing from strength to strength.”

The Government of Mauritius’ is increasing its focus on improvement of infrastructures, including urban transport, clean energy development, and sustainable management of water resources, key sectors necessary for maintaining growth and resilience of the Mauritian economy.