Mauritius economic recovery drive back on track

Mauritius Minister of Finance, Economic Planning and DevelopmentDr Renganaden Padayachy

from HANSLEY NABAB in Port Louis, Mauritius
PORT LOUIS, (CAJ News) – THE amendment of some 70 pieces of legal instruments is anticipated to revive Mauritius’ economy, accelerate job creation and inclusion as well as preserve livelihoods in the serene Southern African country.

The amendments are under the aegis of the Finance (Miscellaneous Provisions) Bill 2020, which comes at a time the gross domestic product (GDP) is projected to decline by 6,8 percent this year, according to the International Monetary Fund (IMF).

An outbreak of the coronavirus (COVID-19), although the country has been among the most successful in curbing its spread, has not spared Mauritius. It has confirmed ten deaths from 344 cases.

The implementation of the 2020-2021 Budget is poised to enable the country of 1,3 million people achieve a growth rate of at least 7 percent in 2021.

“This will be made possible only if certain conditions are respected, including the vote of the Bill,” Dr Renganaden Padayachy, the Minister of Finance, Economic Planning and Development, said.

He said the bill would create conducive conditions for economic recovery that would be inclusive, sustainable and digital.

“It will help preserve the jobs and livelihoods of the vulnerable,” Padayachy said.

“The social and environmental transition of Mauritius will also be accelerated while restarting the economic machinery,” the minister told the legislative house.

Central to the bill’s objectives is the provision of a framework for the implementation of the administration’s fiscal policies as announced in the 2020-2021 Budget.

“This will make our tax system fairer and more efficient,” Padayachy stated.

Tax revenues account for slightly less than 2 percent of Mauritius’ gross domestic product (GDP) of US$14,8 billion.

The economy is largely service-based (76 percent of GDP in 2019), followed by industry (21 percent) and agriculture (3 percent).

Before the projected decline for this year, real GDP growth was moderate yet steady, averaging 3,8 percent during 2015–19.

Another objective is to create the requisite conditions to preserve the social gains Mauritians have secured over the years.

“The Contribution Sociale Généralisée (CSG) is a major step to ensure the sustainability of our social system,” Padayachy said.

By definition, CSG is tax created to fund the social protection system, namely health insurance and family benefits.

It aims to diversify the financing of social protection, based mainly on social contributions.

CSG will come into effect on September 1.

Nationals earning below Rs50 000 (US$1 260) monthly will contribute 1,5 percent for employees and 3 percent for their employers.

For those earning more than Rs 50 000 per month, the contribution will be 3 percent for employees and double for their employers.

Prior to the COVID-19, the African Development Bank (AfDB) had maintained confidence in Mauritius’ growth prospects.

Real GDP growth was projected to be 3,9 percent in 2020 and 4 percent in 2021, due to increased tourism, steady investment growth, and external demand from regional and global growth.

The economy was projected to diversify further into agro-processing, medical tourism, higher education services and development of the ocean economy in the Indian Ocean island.

– CAJ News

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