Africa > Mauritius

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International Monetary Fund. African Dept.
This Selected Issues paper develops a Financial Conditions Index (FCI) for Mauritius—an instrument to gauge the operational state of the financial sector and predict real economy activity. The evolution of Mauritius’ financial services sector has been supported by a vibrant offshore corporate sector. Given the strong macro-financial linkages, it is imperative to closely monitor domestic financial developments. Financial developments are broader than monetary developments depicting money supply and interest rates. The FCI is a robust predictor of real GDP growth in Mauritius. The FCI can also help inform macroprudential policy decisions. Decisions on setting the countercyclical capital buffer of Basel III could be informed by analyzing developments in the FCI. As historically Mauritius has not experienced drastic swings in financial credit, testing the constructed FCIs for predicting boom-bust episodes is difficult. Nevertheless, the FCI signaled lax financial conditions in 2009 and again in 2012 that likely contributed to accelerated credit growth in 2012–2013 and a subsequent acceleration in nonperforming loans during 2014–2016.
Arnold McIntyre, Mike Xin Li, Ke Wang, and Hanlei Yun
The paper considers concepts of economic diversification with respect to exports (including service sectors) for small states. We assessed the economic performance of different groups of 34 small states over the period of 1990-2015 and found those more diversified experienced lower output volatility and higher average growth than most other small states. Our findings are consistent with conventional economic theories but we found that export diversification has a more significant impact on reducing output volatility than improving long run growth in small states. Diversification requires fundamental changes and should be contemplated in the context of a cohesive development strategy.
International Monetary Fund. African Dept.
This Selected Issues paper offers policy recommendations for Senegal to reach high and sustained growth with the goal of exiting low-income country status. For Senegal to reach Plan Sénégal Emergent (PSE) objectives, reforms under the PSE need to create space for small and medium-sized enterprises and foreign direct investment to thrive. Reform of Senegal’s business environment needs to be accelerated. Macrostructural reforms should be stepped up in the energy sector, in which Senegal still ranks 170th in the world. Progress in the electricity sector can be achieved by continuing to improve reliability of supply and reduce electricity costs. Reform of the taxation system, by simplifying procedures and optimizing the tax rates, is another macro-critical area in which Senegal needs to make significant strides.
Romina Kazandjian, Ms. Lisa L Kolovich, Ms. Kalpana Kochhar, and Ms. Monique Newiak
We show that gender inequality decreases the variety of goods countries produce and export, in particular in low-income and developing countries. We argue that this happens through at least two channels: first, gender gaps in opportunity, such as lower educational enrollment rates for girls than for boys, harm diversification by constraining the potential pool of human capital available in an economy. Second, gender gaps in the labor market impede the development of new ideas by decreasing the efficiency of the labor force. Our empirical estimates support these hypotheses, providing evidence that gender-friendly policies could help countries diversify their economies.
International Monetary Fund. African Dept.
This paper examines Côte d’Ivoire’s growth experience and argues that the development of a manufacturing export sector, lower income inequality, and prudent fiscal policy would strengthen the sustainability of growth. This paper aims to draw lessons for Côte d’Ivoire based on experience of other comparable countries that are now emerging market economies. The financial sector could trigger a shock to the economy or reinforce impact on the real sector of nonfinancial shocks. The current economic conditions in Côte d’Ivoire offer a favorable opportunity to resolve the financial status of public entities facing difficulties and for banks to raise their capital buffers to absorb a possible rise of nonperforming loans in event of a growth shock.