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AfDB approves US$ 420 million and EUR 186 million budget support loan for Mauritius


Tunis, 25 November 2009 – The African Development Bank (AfDB) Group has approved a second budget support loan of US$ 420 million and EUR 186 million to finance the Competitiveness and Public Sector Efficiency (CPSE) Programme in Mauritius. The programme will sustain economic growth and employment against the backdrop of the ongoing global recession, while not losing momentum on long-term reforms needed to make Mauritius more competitive.

The entire population of Mauritius will benefit from the loan, particularly users of publicly-provided social services, domestic and foreign entrepreneurs, the Mauritian workforce, including women facing layoffs in the textile industry, and the most disadvantaged members of the society.

The comprehensive reforms initiated by Mauritius in 2006, under the Bank’s first Development Budget Support Loan, enabled the country to become more resilient to external shocks and to improve its business climate. The CPSE programme will deepen these reforms to consolidate fiscal performance and strengthen public social service delivery, enhance trade competitiveness, and improve the investment climate.

According to Gabriel Negatu, AfDB Governance Director, “the fundamentals of the Mauritius economy remain strong and this budget support loan would enable the country to come out  of the current crisis with more robust momentun to stregnthen the clothing and tourism sectors affected most by the economic downturn”.

Within the framework of the loan, sector strategies that are consistent with programme-based budgeting requirements will be developed, a mid-term review of the National Information Technology Strategic Plan (NITSP) conducted, permit issuance procedures revised, and the Competition Commission will be operationalized.

Mauritius’ economic growth is forecast to decline to an annual average of 3% during 2009-2011 compared to 5.3% in 2007/08 as the global economic slowdown impacts negatively on the economy, especially on the clothing and tourism sectors. As a result, the overall budget deficit is expected to rise to 5% of GDP in 2010 compared to 3.4% in 2007/2008.

The AfDB financing will fill a budget gap of approximately US$1 billion from July 2009 to December 2011. It will help in funding critical infrastructure that will sustain growth and employment, as well as the restructuring of the public debt portfolio.

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