The board of directors of the African Development Bank (AfDB) approved Mauritius’ Country Strategy Paper (CSP) for 2014 to 2018 in Tunis earlier this month.

The CSP provides the AfDB with a strategic business plan for Mauritius for the five-year period. It is designed to help Mauritius build its competitiveness and resilience to exogenous shocks to enhance the quality of growth and accelerate the country’s transition to a high-income country.

It is aligned with the Mauritius government’s draft ten-year Economic and Social Transformation Plan and its three-year rolling- programme-based budget results framework, both of which are designed in line with the country’s Vision 2020 and anchored in the AfDB’s strategy of 2013 to 2022, focusing on inclusive and green growth.

Taking into account the strategic importance of Mauritius to the region, the CSP acknowledges the country’s outstanding performance in strong economic fundamentals and positive spillover effects through peer learning with countries on the main- land, with the bank playing a crucial catalytic role.

The strategy draws on the AfDB’s comparative advantage to support interventions in Mauritius under two complementary pillars-building infrastructure and public–private partnerships (PPPs) and deepening skills and technology development.

PPPs target policy reform activities aimed at dealing with bottlenecks in energy and transport, as well as in water and sanitation infrastructure. This will enable Mauritius to improve the quality and capacity of infrastructure to attract higher-value-added investments, enhance the domestic private sector’s capacity to penetrate the regional market and improve public service delivery.

They will also promote gradual transition to green growth by supporting government and enhancing resource-use efficiency in the utilities sector, as well as by contributing towards the achievement of policy clarity with regard to renewable energy in the national production mix and the reduction of underground water pollution.

The deepening of skills and technology development pillar focuses on actions and policy reforms that will help improve the quality and relevance of education, particularly higher education and technical and vocational education and training; it will also strengthen human capital.

This will enable Mauritius to address the skills gap and enhance the country’s productivity and innovation capacity.

In line with the AfDB’s 2013 to 2022 strategy, the CSP will deepen the AfDB’s technical and knowledge advisory role in Mauritius.

Meanwhile, an International Monetary Fund (IMF) mission, led by IMF deputy division chief Martin Petri, visited Port Louis, in Mauritius, during January to conduct the discussions for the 2014 consultation with Mauritius.

The mission met with Prime Minister Dr Navin Ramgoolam,Economic Development Minister Xavier-Luc Duval, governor of the Bank of Mauritius Rundheersing Bheenick and other senior government officials, as well as representatives of the National Assembly, the private sector and civil society.

“The authorities maintained a stable macroeconomic environment in 2013, despite difficult external developments,” said Petri, adding that the fiscal deficit rose in part because of spending in response to the March flash floods and larger-than-expected capital spending.

“The challenges in 2014 are to start reducing public debt through a smooth medium-term fiscal consolidation path, improve the monetary policy transmission mechanism by removing excess reserves and pursue public- sector reforms while protecting the poor, as well as address productivity and competitiveness challenges needed to raise medium-term economic growth prospects,” Petri explained.

He noted that projected real economic growth would increase to 3.7% in 2014, fuelled by strong activity in sectors such as seafood, information and communications technology and in financial services, supported by improving external demand.

“There is some upside to the growth projections if public investment is executed at a faster rate than projected or private investment accelerates,” he said.

Petri added that, at less than 4%, inflation remained subdued and inflationary expectations appeared to be well anchored.

Meanwhile, the mission projects that headline consumer price index inflation will, on average, rise marginally to 3.8% in 2014. The current monetary policy stance is broadly appropriate, but needs to be made more effective by removing excess reserves from the banking system.