Mauritius

Country Summary

Macroeconomic performance: The economy continues its steady expansion, with real GDP growth estimated at 4.1% in 2018, up from 3.8% in 2017. Growth was led mainly by construction, financial services, and information and communications technology.
The fiscal deficit widened slightly from 3.4% of GDP in 2017 to an estimated 3.5% in 2018 but is projected to fall back to 3.4% in 2019 due to fiscal consolidation and the ongoing disbursement of a grant from India. Public debt sustainability is regarded as broadly pos- itive, although fiscal consolidation would be required for the country to meet the recently adjusted statutory public debt target of 60% of GDP by December 2021.
Monetary policy was accommodative in view of the low inflation environment and the need to sup- port domestic activity. Inflation increased from 3.7% in 2017 to an estimated 5.1% in 2018, due largely to food production shortages resulting from losses caused by heavy rainfall. The current account deficit widened from 6.6% of GDP in 2017 to an estimated 8.8% in 2018. International gross reserves stood at 11 months of imports. The main exports are clothing, sugar cane, processed fish, and cut flowers. The export of services also continues to rise, driven by tourism and financial services.

Tailwinds and headwinds: The economic outlook is positive because of favor- able external conditions and rising public investment. Real GDP growth is projected to be 4.0% in 2019 and 3.9% in 2020. Growth could even accelerate if the government’s public infrastructure program gathers pace and stimulates private investment. The current account deficit is projected to remain high, at 8.2% of GDP in 2019, given increasing commodity prices and large imports for the infrastructure program. The econ- omy’s external financing should benefit from continued strengthening of service exports—mainly tourism. Key sectoral drivers of growth are expected to continue per- forming well, with financial services, food processing, retail and wholesale, and information and communi- cations technology all expected to grow by more than 5%. Furthermore, the economy is diversifying into other higher value added areas such as medical tourism and higher education.
Potential headwinds from increasing global energy and food prices are expected to bring inflationary pres- sure and constrain the island economy’s external posi- tion. An economic slowdown in key European trading partners (due to global trade tensions or Brexit) may hinder tourism as well as goods exports. Other possible impediments to growth include a narrow domestic skills base and climate change–related natural hazards.
The country is rapidly developing into a hub for trade, re-export, logistics, and distribution, establishing itself as a launching point for local and international compa- nies seeking opportunities on the continent. Mauritius is also becoming a financial platform or gateway into Africa. In 2016, banks and insurance firms based in Mauritius injected more than $50 million into the Kenyan economy through acquisitions and investments. Mauri- tian expertise is also rehabilitating and managing sugar industries in Côte d’Ivoire, Madagascar, Mozambique, Tanzania, and Uganda.

Source: African Economic Outlook 2019

Fixed Income

N/A

Guide to Buying Bonds

Procedures for market participation

Participation in Government of Mauritius securities sales can be achieved through 3 avenues: direct-bidding, Primary Dealers (PDs) or secondary market trading. Direct access to primary auctions is only open to Mauritian citizens or residents. Foreign Financial Institutions can submit their bids through Primary Dealers or licensed Stockbrokers. 
In the secondary market, individuals and corporates can purchase Treasury bills by contacting any of the twelve PDs appointed by the Central Bank. Non-residents are allowed to participate in the secondary market through a Primary Dealer.

Settlement cycle

Settlement for Government of Mauritius Treasury Bonds (GMTB) is T+0.
The settlement cycle for all government securities but GMTB is T+2 days.

Taxation

Residents and non-residents are subject to the same withholding tax rate of 15%. Residents can apply for an income threshold exemption, depending if they have and the number of their dependents. Non-residents can apply for an exemption if the interest received is from a bank or a non-bank deposit taking institutions. Only tax payments in excess of Rs.500 are deductible. 
Mauritius has concluded Double Taxation Agreements with 38 countries, among which the following 14 African countries (Botswana, Lesotho, Madagascar, Mozambique, Namibia, Rwanda, Senegal, Seychelles, South Africa, Swaziland, Tunisia, Uganda, Zambia and Zimbabwe. 

Agreements with Kenya, Congo, Nigeria and Gabon await ratification while that with Ghana awaits signing.

Market restrictions

Openness to international investors

Foreign investors are invited to participate to the Mauritian capital (debt and equity) markets. Currently, trades by foreign investors account for 40 to 50% of the daily trading volumes on the Stock Exchange of Mauritius (SEM).

Being an export and tourism driven economy, Mauritius has undertaken several initiatives to encourage foreign investment. The government offers a variety of investment incentives including:

  • A corporate tax exemption of at least 10 years
  • Free repatriation of profits, dividends, and invested capital
  • Waiver on income taxes on dividends for 10 years
  • Exemption from capital gains tax

Capital controls

There are no capital controls in Mauritius; they were abolished more than two decades ago.

Restrictions on foreign exchange and profit repatriation

Exchange controls were suspended in 1994, allowing foreign investors to freely repatriate their profits. 
The Exchange rate regime in Mauritius is a managed float; the BoM limits its interventions in the foreign exchange market largely to smoothening volatility. 

Credit rating

Last credit rating dates back in June 2013: Moody’s maintained the Mauritian sovereign debt rating of Baa1 reflecting the demonstrated resiliency of the economy to shocks and the stable and investment-friendly environment. Fitch and S&P did not rate Mauritius in 2013.

List of Primary Dealers

The list of Primary Dealers has been reduced from 12 to 11.

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