Mauritius, currently, holds an equivalent of Rs 1 000 billion in foreign currency. At the end of 2014, the country's official reserves stood at Rs 124.3 billion (USD 3.9 billion), representing 6.5 months of imports of goods and services, while by April 2020, the reserves rose to Rs 280.6 billion (USD 7 billion).
The figures were givenby the Minister of Finance, Economic Planning, and Development, Dr Renganaden Padayachy, today, in the National Assembly, in reply to the Private Notice Question on the negative impacts on external capital flows and the decline in tourism and export earnings.
According to him, the increase in the official reserves is the result of an anticipation strategy aimed at building the economic resilience of the country to guard against exogenous shocks. With regard to the official reserves of Rs 1 000 billion, he stressed that they have never peaked to this level before.
The Finance Minister believes that in the context of this unprecedented crisis, this increase in official reserves will enable the country to deal with the economic shock of Covid-19 with more serenity. He also indicated that at the end of March 2020, the local commercial banks held foreign currency assets of some Rs 780 billion. As for net foreign currency assets of commercial banks, for that same period, they stood at Rs 400 billion, or 10 billion USD, he stated.
Tourism receipts, for the first quarter of 2020, was estimated atRs 14.1 billion, compared to Rs 16.5 billion for the same period last year, DrPadayachy recalled. Furthermore, as far as the export of goods,for the first quarter,is concerned, the estimates wereRs 12.1 billion.
Speaking about the Mauritius Stock Exchange, he stated that Covid-19 has spared no financial centres around the world, but since the beginning of the year 2020 and until 14 May 2020, the Mauritius Stock Exchange has nevertheless recorded foreign portfolio investments of about Rs 713 million. With regard to Foreign Direct Investment, in a particularly difficult context, inflows are estimated at over Rs 3 billion for the first quarter of 2020, he added.
Commenting the inclusion of Mauritius in the list of High Risk Third Countries issued by the European Commission, the Finance Minister reiterated Government's view that the list is not yet final and needs to be submitted to the European Parliament and the European Union (EU) Council of Ministers for approval,
As for the balance of payments estimates, he indicated that according to preliminary forecasts by the Bank of Mauritius, the current account deficit will be between 11% and 15% of GDP. From this perspective, it implies that a coverage equivalent to 11 months of imports of goods and services will be preserved. "It is therefore a more than comfortable coverage that we will manage to maintain, which is well above international standards", he added.
Dr Padayachy stressed that in the current context, the COVID-19 (Miscellaneous Provisions) Billwill introduce the possibility for the Board of Directors of the Bank of Mauritius to invest, at its discretion and in full independence, in the Mauritian economy. The Bank of Mauritius has submitted a request for the extension of these powers in order to invest in the local economy certain funds invested abroad, he added. Through this request, the central bank intends to carry out its primary mission more effectively by reconciling price stability and the sustainability of economic development.