BenimadhuPRUF3 - Global Financial Crisis and Policy Response in Mauritius Key Lessons Presented by Sunil Benimadhu Chief Executive Stock Exchange

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Unformatted text preview: Global Financial Crisis and Policy Response in Mauritius: Key Lessons Presented by Sunil Benimadhu Chief Executive Stock Exchange of Mauritius The North-South Institute Sheraton Hotel Ottawa June 8-9, 2010 Presentation Outline n A brief introduction to Mauritius n Preemptive reforms during the 2006-2008 period: creating the necessary fiscal space to face the crisis n The threatening Global Crisis n Key short-run response to the crisis n A few lessons from the crisis n The Euro-crisis and its likely impact on Mauritius Brief Introduction to Mauritius n A small island of 1.3 million people with a 550 k labour force. n An annual GDP of about USD 9 billion n One of the fastest growing economies of Africa averaging 5% + during last forty years n Size of domestic economy requires leveraging of external markets to sustain growth n By construction, Mauritius cannot be insulated from developments in the global economy Mauritius: from a Doom scenario to a Glittering one PRE-INDEPENDENCE YEARS n mono-crop agricultural economy n no scope for a manufacturing base n per capita income less than USD 200 n rapidly growing population n high wealth and income inequality n high unemployment n susceptible to ethnic tensions AVERAGE: 1970-2010 5.4% Mauritius: from a Doom scenario to a Glittering one DEVELOPMENT EXPERIENCE GDP GROWTH % 1960 USD 200 1980 USD 1050 2000 USD 3300 2010 USD 7000 2020 USD 15000 PER CAPITA INCOME Mauritius: from a Doom scenario to a Glittering one CHALLENGES IN EARLY 2000S n Unfavourable International Situation § Increased competition with globalisation § Soaring energy prices n Sectors losing preferences § Dismantling of Multifibre Agreement § Sharp cut in sugar prices n Macroeconomic situation deteriorating Growth on declining path Low job creation resulting into rise in unemployment rate Deteriorating ToT n High burden of Incentive Framework – Welfare State becoming unaffordable – Pension system is unsustainable – Incentives favour capital intensive, low productivity sectors – Service quality is low and cost high in public utilities, particularly ICT – Bias against micro-enterprises and SMEs – Lack of skilled and semi-skilled workers to power new sectors – Insufficient and ineffective training programs for low income groups, unemployed and new entrants Mid 2000 S – Need for A New Development Paradigm Failure of Model based on Trade and Tax Preferences/ Incentives Failure of Model based on Trade and Tax Preferences/ Incentives To Return To High Growth, Government Resorted to A Four Plank Reform Programme n Fiscal Consolidation and Improved Public Sector Efficiency n Improving trade competitiveness n Improving the Investment Climate n Democratizing the Economy through participation, social inclusion and sustainability....
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This note was uploaded on 05/20/2011 for the course ECON 5128 taught by Professor Ram during the Spring '11 term at Cambridge College.

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BenimadhuPRUF3 - Global Financial Crisis and Policy Response in Mauritius Key Lessons Presented by Sunil Benimadhu Chief Executive Stock Exchange

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