Mauritius Second Development Policy Loan (FY08)

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This Second Trade and Competitiveness Development Policy Loan Project for Mauritius will support a bold and comprehensive structural reform program which the Government is implementing in response 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. The objective of this program: (a) consolidating fiscal performance and improving public sector efficiency; (b) improving trade competitiveness; (c) improving the investment climate; and (d) democratizing the economy through participation, social inclusion and sustainability. The loan will help to finance the current year's budget deficit and will further diversify Mauritius debt portfolio, which is heavily weighted toward domestic and short term borrowing. The report measures to strengthen competitiveness; move resources out of declining and into dynamically growing sectors; improve the quality and cost of input services such as telecommunications, air transport, and cargo handling; and strengthen transitional support for displaced workers. In the policy domain, while key players in the government are strongly committed, it is important to broaden ownership so that all stakeholders in the Cabinet, National Assembly and line ministries understand and buy into the process.