Mauritius Fourth Development Policy Loan

closed

The Fourth Trade and Competitiveness Development Policy Loan Program operation for Mauritius supports reforms which respond to two major challenges: (i) the 'triple trade shock' of trade preference erosion and high oil prices, and (ii) the transition from low wage, low skill sugar and apparel exporter to innovative, knowledge and skill based services economy. In the mid-1990s a new vision began taking shape in Mauritius of a higher value added, more diversified, skill and knowledge intensive economy. To realize this, planners recognized they will need to invest massively in human capital and infrastructure, make better use of advanced technologies and reform the regulatory environment to harness the creativity of the private sector. Yet, little was achieved in these areas during the decade which followed. Instead, trend growth slowed as new sectors failed to generate hoped for levels of output and employment while traditional ones lost ground to increasing competition in their export markets. The miracle years of the 1980s receded into history. Although Fourth Development Policy Loan (DPL4) is the last operation of the series, dialogue around substantive policy issues is maintained and the Government has requested a continuation of the DPL engagement, which is currently being prepared. There are a number of specific areas for deepening the existing policy dialogue through a new DPL series, Information and Communications Technology (ICT) reforms, trade regulatory environment, public debt management, investment climate reforms, rationalization of social protection, to name a few. In this process, strengthening coordination with the African Development Bank (AfDB) and the International Monetary Fund (IMF) will be essential to improve delivery of development assistance, particularly given the availability of resources from both institutions for future lending. It must be noted; however, that future World Bank (WB) lending in Mauritius as part of a new DPL programmatic series will be subject to the WB capacity to lend in the country.