Mauritius’s Central Bank Governor Rundheersing Bheenick said the Indian Ocean island nation must move forward with changes to modernize its economy or risk being caught by global economic turmoil.
The country’s sovereign credit rating was increased one level by Moody’s Investors Service to Baa1 yesterday, the third-lowest investment grade. The credit rating company cited stronger government institutions, increased diversification of the economy and a lower debt burden.
“It is no time to relax our efforts and the reform drive must continue or we may find ourselves being swept downstream by the ongoing global economic crisis,” Bheenick said today in an e-mailed response to questions.
Mauritius, with a population of about 1.3 million people, is reducing dependency on Europe by targeting Brazil, Russia, India, China and South Africa, the largest emerging markets, and the rest of Africa. The European debt crisis cut 1.5 percentage points from the country’s growth rate this year, which Bheenick forecast at 3.8 percent.
Mauritius is “actively transitioning the economy from a comparatively low-skilled exporter to that of a highly skilled service-based economy,” Aurelien Mali, a London-based analyst at Moody’s, wrote in a statement yesterday. “Progress in this area will mitigate the economy’s external vulnerabilities.”
The rupee appreciated as much as 1.1 percent and traded 0.8 percent stronger at 30.65 a dollar by 11:30 a.m., in Port Louis, the capital.
“It’s further proof that our economic, monetary and financial management is very much on top of the situation, which allows us to swim against the tide” at a time when many others are having their ratings cut, Bheenick said.
The central bank’s monetary policy committee left its benchmark interest rate at 4.9 percent on June 11, after two quarters of easing. At the end of May, government securities debt reached 139.6 billion rupees ($4.5 billion), 23 percent of which was short-term bills, data from the Bank of Mauritius shows. The country plans to issue 15.4 billion rupees of long-term bonds this year, the Finance Ministry said on February 22.
Moody’s said the country’s upgrade resulted from “the government’s significant progress in reducing it’s debt-servicing burden and improving its debt structure by lengthening maturities.”