afrol News, 19 November - Presenting the 2011 budget, Mauritius' Finance Minister Pravind Jugnauth today announced the downgrading of ties with Europe and the set-up of a US$ 500 million Sovereign Wealth Fund.
Minister Jugnauth in his budget speech to parliament today announced an offensive economic policy, with an aim of reaching a GDP of one trillion rupees (euro 24 billion, US$ 33 billion) by the 2020s and to an income per capita of US$ 20,000 and higher. "This is the Mauritian dream," the Minister concluded.
Reaching this aim would secure Mauritius' position as Africa's most wealthy nation, keeping living standards on level with most of Western Europe.
Mauritius currently is experiencing higher economic growth rates than most industrialised nations, thus closing in on European wealth levels. GPD growth this year was estimated at 4.1 percent, according to Minister Jugnauth, who also quoted the International Monetary Fund's 4.2 percent growth rate prediction for 2011.
But Mr Jugnauth said his ministry with concern had observed the weakness of the European economy during the financial crisis. "The euro-zone crisis revealed the need to reduce our economy's heavy dependence on Europe," the Minister emphasised.
"The Great Recession and the euro-zone crisis have made us realise that upheavals on a global scale can open cracks in our own growth model and put our economy on a slippery slope," he added. "They have made us realise that our development policies must be anchored to new realities."
A new Mauritian "economic restructuring and competitiveness programme" was addressing the world's "new multi-polarity of growth." The new global economic architecture was offering Mauritius "good opportunities" for Mauritius outside Europe, Minister Jugnauth said, especially mentioning Brazil, Russia, India and China.
The Minister announced a renewed focus on "economic diplomacy" to open markets outside the euro-zone, to facilitate joint ventures and to forge new strategic alliances. "The Ministries of Foreign Affairs and Finance will work together to build capacity in economic diplomacy in our embassies," he explained.
Also regarding the key tourism sector, Mauritius was to seek markets outside the euro-zone. "The objective is to get a higher share of the more than 60 million outbound tourists from India, China, and Russia," Mr Jugnauth said. The target was that more than 50 percent of tourists would come from non-euro-zone countries by 2015, in contrast to less than 40 percent currently.
In another move to secure Mauritian wealth accumulation, the ministry had decided to create "a Sovereign Wealth Fund that will be invested in a range of asset classes abroad." The new fund was to start with a portfolio of US$ 500 million (euro 366 million).
To raise the funds, Mauritius' current Treasury Foreign Currency Management Fund would be closed down and its US$ 150 million investments were to be transferred to the Sovereign Wealth Fund. The remaining US$ 350 million were come from the country's foreign currency reserves.
The new fund was to "seek higher returns on the country's excess foreign currency reserves and other public sector foreign currency holdings whilst minimising the risks," Minister Jugnauth announced.
Minister Jugnauth went on to announce larger infrastructure investments in 2011, including improvements to the container terminal and an extension of the airport to allow for up to 4 million visitors to the island annually. Investments to the airport were to total rupees 11 billion (euro 268 million).
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