Mauritius measures to mitigate COVID-19 impact

Hopes are pinned on the Mauritius measures to mitigate COVID-19 impact on the island and its people.

Spearheaded by the Bank of Mauritius, these measures are to ensure business continuity, safeguard jobs, and alleviate cashflow problems. As a result, the central bank’s Monetary Policy Committee has reduced the key repo rate by 50 basis points to 2.85 percent per year. This is expected to bolster the country’s key economic sectors.

Bank loan moratorium

Real estate development projects are a major conduit of foreign direct investment and stand to benefit from these programmes. Commercial banks will provide a six-month moratorium on capital repayment on existing home loans.

The Bank of Mauritius has also eased banking rules and deferred its Guideline on Credit Impairment Measurement and Income Recognition that took effect in January 2020. This allows commercial banks to continue supporting enterprises with working capital difficulties and cashflow problems caused by COVID-19.

The Mauritian central bank has likewise reduced the cash-reserve ratio of commercial banks from 9 percent to 8 percent to further assist businesses adversely affected by COVID-19.

Other fiscal support measures helping to cultivate the mindset to invest in Mauritius despite recent challenges include:

• MUR4 billion (0.8 percent GDP) in government spending/financing
• MUR7 billion (0.5 percent of GDP) equity investments from the State Investment Corporation for troubled firms
• MUR200 million (0.04 percent of GDP) credit from the Development Bank of Mauritius for firms short on cash
• Extra tax deductions for firms affected by COVID-19
• USD300 million special foreign currency line of credit for operators generating foreign currency earnings

For wage earners and investors

The government will also launch a Wage Support Scheme to provide financial support to employees temporarily affected by the pandemic. This measure will also cover those self-employed or working in informal sectors.

Meanwhile, looking to investors, the central bank launched a two-year, 2.5 percent savings bond amounting to MUR5 billion in March 2020. The bond is applicable in multiples of MUR25,000 up to MUR1 million per investor application.

These measures not only help position the country to shake off the economic ills of the pandemic, but manifests confidence in the island’s future.

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