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Discours de Sunil Bholah sur le Budget 2024-2025

Le ministre des Services et de la Bonne Gouvernance s’est exprimé sur les dotations de son ministère et pour la population mauricienne, présentées le 7 juin 2024.

Introduction and Budget Philosophy
Thank you, Mr Speaker Sir.
Allow me to open up on this note – this Budget showcases yet again that this government has delivered on its commitment to improve the quality of life of our population, with a special attention given to the most vulnerable groups. At the same time, from what I can see, it has also delivered blows to my friends on the other side of the House!

Global economic outlook

Mr Speaker Sir,
Let me first draw on the path of the world economy over the past 4-5 years. In 2019, the global real GDP growth stood at 2.6 percent with a global inflation rate of 2.2 percent. In 2020, amidst COVID-19 induced lockdowns and the slowing-down to complete halt of economic activities throughout various economies, the global GDP growth rate decelerated to 3.1 percent, before rebounding to a growth of 6.2 percent albeit mostly on technical corrections. As per the ‘Global Economic Prospects’ and the ‘World Economic Outlook’ publications by international organizations, the 2020 real GDP growth rate is estimated to have reached an average of 2.9 percent, 10 basis points below the 3 percent mark, but just above pre-pandemic levels, hence auguring well for the global economic prospects.
On the other hand, disruptions linked to COVID-19, compounded by global geopolitical tensions, impacted heavily on supply and value chains, curbing trade and adversely reflecting on the price level of primary and secondary inputs. As such, the global inflation rate bottomed at 1.9 percent in 2020 before sharply rising to 8 percent in 2022 but receding to 5.8 percent in 2023 amidst the interest rate hike cycle by Central Banks around the world.
Mr Speaker Sir,
A decomposition of the growth outlook over the 2025 horizon shows a story of two tales: Although pick up in the growth rate is seen across board, the proportion of growth contributions will come from low to middle income countries. In particular, Emerging Markets and Developing Economies (EMDEs), excluding China, are expected to see a real GDP growth rate of 3.8 percent in 2025 while commodity importing EMDEs are likely to witness growth of 4.5 percent, despite headwinds such as tighter global financial conditions, weaker trade recovery and efforts on the monetary policy side to rein in inflation. In the same breath, with normalizing primary and secondary input prices, stabilizing oil prices and better crop outputs, inflation in EMDEs is expected to soften to 5 percent in 2025.
It is imperative, therefore, for governments to have measures in place to continue to preserve consumption levels, stabilize purchasing powers and alleviate the burden of high-yet-decelerating inflationary pressures.

Domestic economic outlook
Mr Speaker Sir,
The Mauritian economy was not spared of the impact of the COVID-19 pandemic either – our GDP growth rate, on a calendar basis, troughed at a negative growth of 14.5 percent in 2020, before pulling up successive growth rates of 3.4 percent, 8.9 percent and 7 percent in 2021, 2022 and 2023 respectively.
Such has been the recovery of the domestic economy, on the back of appropriate and timely measures taken by this government to re-steer the country towards growth. As substantially outlined in the latest Article IV report of the IMF on Mauritius, this government has facilitated strong recovery of the economy through supportive policies. In its sound yet conservative projections, the medium-term economic outlook per the IMF shows an average annual growth rate of around 3.6 percent for the period 2024-29, again putting Mauritius amongst the highest-performing economies amongst the Emerging Markets and Developing Economies.
Mr Speaker Sir,
We cannot turn a blind eye to the fact that this credible, longstanding global institution is also projecting that the GDP per capita for Mauritius is expected to rise to US$ 18,157 in 2029, that is around MUR 830,000 per head of population based on today’s exchange rate! This would mean that Mauritius would have reached a new pinnacle of MUR1 trillion-economy over the next 5 to 6 years, despite having faced one of the worst Black-Swans in the course of economic history 4 years ago!
I am however appalled by Honourable Berenger’s remarks questioning the credibility of the IMF in his press conferences on May 25th and June 1st, as if Mauritius, a country which only holds 227 million in Special Drawing Rights (SDRs) out of the total SDRs of 661 billion held by the Fund, that is, only representing 0.03 percent, is capable of lobbying an economic report from the mighty IMF in its favour! Yet, the same Honourable Berenger found the same IMF reports on Mauritius in 2017 and 2019 good enough when they presented words of caution for the government authorities and in its economic projections. Quelle démagogie!
Let me inform him that the Economic Intelligence Unit of ‘The Economist’ publication is also forecasting a GDP growth rate averaging 3.4 percent up and until 2028, which will, again, put us on the same economic trajectory as that foreseen by the IMF!
Political rebuttal
Monsieur le Président, nous ne vendons pas des rêves comme ceux qui avaient promis de changer notre vie en 100 jours!

Nous avons pris des actions concrètes pour transformer le pays depuis le premier des 3,470 jours qu’on le gouverne!

Over the past 9 years, we have worked tirelessly to reverse the damage of the past and chart a new course for our nation.

We have revitalized our economy, stimulated growth, and attracted investment to create jobs and improve living standards.
We have fought tirelessly for social justice, championing the rights of the vulnerable in our society.
We have implemented policies to promote sustainable development.
We have restored integrity and accountability.
We have strengthened institutions.
We have created a conducive environment for individuals to prosper and pursue their dreams.
We have established a governance system where fairness and integrity are the guiding principles.
We have empowered the youth to be the drivers of change.
We have empowered women to be equal contributors to the prosperity of their homes and by extension that of the nation.
We have enhanced the quality of life of our senior citizens.
We have worked hand in hand with all levels of economic operators to address complex challenges, drive the economy and promote innovation.

Mr Speaker, Sir,
When we explained to the population in 2020 and 2021 that the going was tough and the economic patch was tough, this government wielded its available resources to the utmost necessities while making the health and lives of the population as its foremost priorities. “Patience is bitter, but its fruit is sweet,” as goes the saying! With this, I fully welcome the Budget Speech 2024/25 presented by my colleague the Dr Honourable Padayachy, in a context of economic recovery, fiscal consolidation, supportive policy measures for the most vulnerable and opening up to a higher performing economy for the impending future.

Rebuttal on Inflation
Mr Speaker Sir,
The unemployment rate in 2023 stood at 6.3 percent, below the non-accelerating inflation rate of unemployment (NAIRU) estimated by experts at 6.8 percent based on data between 1983 to 2023. With a stable inflation outlook and the average economic growth rate around its long-term trend, it can be safely said that the economy is currently at full employment.

Amidst rising international prices of primary and secondary inputs, the authorities, coupled with the Bank of Mauritius’ monetary policy stance, have managed to curb the inflation rate from 7 percent in 2023 to a projected level of 5 percent in 2024-25.

Mr Speaker Sir,
Let me address the repetitive arguments of the opposition regarding inflation.

It suffices to analyse inflationary trends in other developed and developing economies to get a better picture of where we stand in terms of inflation! In the UK, in April 2024, core annual inflation stood at 4.4 percent; as of same date, the US, whose 10-year inflation rate stands at around 2.2 percent, registered an annual inflation rate of 3.4 percent. On the other hand, the sub-Saharan African inflation rate is expected to hover around 5.1 percent. Nigeria, which is a commodity exporter, mainly of oil and gas, witnessed an inflation rate of nearly 34 percent in April 2024 for a projected economic growth rate lower than in Mauritius!

Monsieur le Président, il faut cesser avec ses mêmes rhétoriques !
Though the headline inflation is projected to decline, it does remain a matter of great scrutiny for this government. We have again given a special consideration to the most vulnerable groups of our society, with a host of measures which will consolidate and improve their purchasing power.

Rebuttal on Public Debt
Mr Speaker Sir, moving on to public debt, which has become the obsession of many members on the other side of the House.

The gross public sector debt is estimated at 74.5 percent as of June 2024 and is expected to follow a declining trend to 64.1 percent until June 2027. However, rather than these figures, we should be more interested in the public sector debt mix as well as the maturity profile of our debt coupled with the debt service ratio.

Mr Speaker Sir,
78 percent of our public sector debt is from domestic sources, that is in Mauritian rupees. Only 22 percent of the public sector debt is from external sources to be repaid in foreign currency. FX risks are therefore more than contained!

In terms of maturity profile, more than 70 percent of the domestic debt is on medium to long term horizons, thus mitigating any refinancing risk as well.

The Debt Service Ratio stands at sub-3 percent of GDP, hence pointing out to an efficient and judiciously-managed debt. We should also not forget that this government has used debt at difficult times in order to help prevent unemployment, spur growth and protect the elderly and most vulnerable ones.

Ministry Achievements and Budget Measures

Mr Speaker Sir,
I will now move on to my Ministry.

The Financial Services sector kicked off in 1992 with the creation of the global business sector. At that time, our primary focus was to be used as a jurisdiction to channel investment into India. Over the years, the portfolio of activities and products has substantially increased to match the global demand of the investors and operators in the sector.

Mauritius is today recognized as an International Financial Centre of substance and repute with a vibrant ecosystem consisting of international banks, audit firms and law firms. Several economic partnership agreements are in place with key countries like India, China and Africa for increased collaboration.

30 years ago, when Mauritius started its journey as an IFC, we had few IFCs which we considered as competitors such as Singapore or London. With time, we are observing a mushrooming of regional IFCs such as Rwanda, Kigali and even GIFT City.

What is clear, Mr Speaker Sir, is we cannot afford to sleep on our laurels. We have to sustain the effort.

Mr Speaker Sir, I wish to recall just a few years ago in 2019 when Mauritius was in the list of OECD non cooperative jurisdictions or in 2020 when Mauritius was on the grey list of FATF. My Ministry has left no stone unturned to ensure that we become compliant to international norms.

Hence, Mr Speaker Sir, I will today focus on two areas:
(i) How to increase competitiveness of our IFC and
(ii) How to sustain compliance of our norms.
Mr Speaker Sir, the Financial Services sector contributed to 14.1% to GDP as at June 2023. And as highlighted in the Budget Speech, the financial services sector is the first contributor to our GDP with a growth of 4.4 percent in 2023.
It provides employment to 17,000 people.

Mr Speaker Sir, Mauritius improved its rank in the latest Global Financial Centre Index in September 2023.

We have moved from the 92nd spot to the 68th now.

This underscores that we are reinforcing the position of Mauritius as a competitive and reputable International Financial Centre.

This Budget provides us with the necessary tools to build on our “acquis” and reinforce our competitiveness as an IFC.

Implementation of the Blueprint Recommendations
The Blueprint report mandated in 2018 is geared towards doubling the contribution of the financial services sector to reach at least USD 2.0Bn by 2030.

As at now, 71% of the recommendations have been implemented. And the rest is still in progress.

Whilst for the upcoming year, I have requested the Expert Groups under the Council to reassess our strategy, we now have the possibility to review the Blueprint in light of new opportunities, challenges and threats. This will enable us to come up with a new road map for the growth of the financial services sector over the next 5 years.

Increasing visibility of the Mauritius IFC
An Economic Impact Assessment report of the Financial Services sector is also expected to be finalised by end of August this year.

Mr Speaker Sir, our policies are targeted to ensure the stability and integrity of our financial system, while also fostering innovation and growth.
While doing so, we need to ensure that the Mauritius IFC is adequately promoted to encourage new entrants.

Last year, MUR 100million was dedicated as budget for the promotion of the financial services sector.

A Promotion Operation Committee chaired by the CEO of EDB and comprising representatives from my Ministry, Mauritius Finance, Mauritius Bankers’ Association, as well as Insurers’ Association works on the promotional calendar.

I can inform the House that in 2023 my Ministry along with EDB conducted several promotional missions to South Africa, India, UK, Europe, China, Egypt and USA.

I led a delegation in March this year in 4 Indian cities namely New Delhi, Chennai, Hyderabad and Mumbai to reconnect with our investor community.
It is important for me to highlight that since the visit in India by my colleague Mahen Kumar Seeruttun in 2023 until my visit in March 2024, a marked growth of 18% in the number of India centric funds and structures has been noted. This reinforced the need for our operators to be present in India.

During our visit in Chennai and Hyderabad, there was a keen interest from operators to use Mauritius for investment into the African market. My Ministry and EDB are closely monitoring the development of the leads which we have received so far.

DTAA India
Mr Speaker Sir,
As I mentioned earlier, the Mauritius IFC had to work very hard to be removed from the OECD list of non-cooperative jurisdictions in 2019 and from the FATF grey list in 2021.
We need to ascertain that henceforth we do not run the risk for getting into any adverse list.

In the same vein, Mauritius signed the Multilateral Convention (MLI) on 05 July 2017 and was ratified on 18 October 2019. The only treaty that was excluded by Mauritius is the treaty with India whereby bilateral negotiation was privileged so as to safeguard the grandfathering clause. However, on its side, India had already included Mauritius as a covered agreement under its MLI.

However, Mr Speaker Sir, we cannot afford to delay compliance. And this is the reason for which we agreed to sign the Protocol amending the Double Taxation and Avoidance Agreement between Mauritius and India in March 2024 with a view to align with the Base Erosion and Profit Shifting (BEPS) standards of the OECD.

I must put on record, Mr Speaker Sir, we are attentive to the representations made by industry players in Mauritius and India that the Protocol requires more clarity and certainty. I personally engaged with the main stakeholders during a panel discussion which was organised by Mauritius Finance last month to better understand the concerns of the industry.

The Hon. Minister of Finance also gave the comfort that, as a responsible Government we will ensure that the Global Business sector is not impacted adversely in any way whatsoever.

As highlighted during the Budget Speech, we will further engage into discussions with the Indian authorities for the development of our financial sector.

I can inform the House that the FSC has signed an M.o.U with the International Financial Services Centre Authority (IFSCA) of GIFT City for collaboration on Fintech.

Other Promotional Campaigns
Mr Speaker Sir, for the present financial year, we endeavour to promote the jurisdiction through Strategic Partnership Agreements with India and African countries.

At the same time, we will leverage on the conferences and workshops by the Economic Development Board to increase our visibility in Africa.

New legislation and financial products
Mr Speaker Sir,
For our IFC to be relevant and competitive, there is a need to develop new legislation and financial products and also re-assess the attractiveness of our existing products.
Very conscious of this fact, several initiatives are already in place.
The FSC launched the Artificial Intelligence (AI) Powered Due Diligence Platform in collaboration with the Mauritius Research and Innovation Council (MRIC).
The Regulations under the Captive Insurance Act have been amended to include Third Party Captive.

We also secured a funding of $200,000 from the African Development Bank (AFDB) to develop the ESG Framework. This will facilitate investment in the setting up of new structures in Mauritius and will allow existing Funds and investment businesses to relocate from other jurisdictions.
My Ministry is also working with the FSC to issue relevant rules on financial products like the extension of the Variable Capital Company to family office and a new wealth management and family officer license.
Mr Speaker Sir, we also expect to increase the competitiveness of our IFC through the review of the Funds Regime.
Furthermore, the tax holiday currently in place for the Fund and Asset Manager Certificate is being reviewed to extend same to at least two qualified officers.
Moreover, a new framework for the secondary trading of government bonds will be established on the Stock Exchange of Mauritius.
Improving Ease of Doing Business
Mr Speaker Sir, it is crucial to enhance ease of doing business to stimulate growth and attract investment.
Last year, the FSC has streamlined the processing of applications of Collective Investment Schemes (CIS) and Closed-End Funds (CEF). And this year same has been extended to all licenses and permits.
The FSC will now issue licenses and permits within a period of 10 working days subject to all requirements being met.
Operators can also expect a fast-track Sub Committee dedicated to the renewal of licences.
Mr Speaker Sir, the National Insurance Claims Database (NICD) has been put in place to enhance process through digitalisation of records, automation and electronic communication.
The FSC launched the guidelines for Digital Signature in October last year. This is facilitating submissions of document and minimising delays in processing.

I am delighted to note that this Budget will further improve investor experience through Portability of Bank Accounts and the removal of fees associated with the use of the MAUCAS platform.
We also rejoice that the Centralised e-KYC is being extended to the Global Business sector.
Reducing the Cost of Doing Business
Mr Speaker Sir, while we increase Ease of Doing Business, it is also important that we reduce the Cost of Doing Business.
With a view to provide certainty to investors, the effective rate of corporate tax has decreased from 3% to 0.75%.
Addressing Skills Gap
Mr Speaker Sir,
Investing in talent development and retention is critical for the prosperity and sustainability of the financial services sector.
In June last year, the Ministry organised a Career Fair in collaboration with Mauritius Finance to increase awareness of the opportunities available in the sector.

The Young Professional Occupational Permit Scheme by EDB has been reviewed to attract more people in the financial services sector. An international professional qualification in any field of study is now accepted.
The Financial Services Institute (FSI) operating under the aegis of the Ministry conducted a Financial Education Programme on Family Office & Wealth Management last year.
The FSI also conducted free awareness programmes on VAITOS, Fintech, data protection and taxation amongst others.
Mr Speaker Sir, I believe that easing the requirements for Occupation Permits, as detailed in the Budget, will enable the financial services sector to attract foreign talent.
I wish to highlight that for the first time, a 10-year expert Occupation Permit is being introduced to attract foreign talents in wealth management, family office, virtual assets and virtual tokens.
Develop and Sustain Mauritius as a Fintech Hub
Mr Speaker Sir,
The takeover by fintech represents a fundamental shift in the financial services industry.
To support the transition towards a sustainable economy, the FSC joined the Network for Greening the Financial System (NGFS).
Amongst other initiatives taken by the FSC to further boost the fintech sector are as follows:
• Publication of Guidelines on Cloud Computing Services;
• Launching of a new Fintech and Innovation Webpage;
• Publication of Regulatory Sandbox Guidelines; and
• Forthcoming regulatory framework for Spot Commodity Market and Intermediaries;
Amendments that will be brought to the National Payment Systems Act will also maintain our competitiveness as a Fintech Hub.

MOU with UNECA for a Blueprint for Fintech
Mr Speaker Sir,
My Ministry has sought the technical assistance from the UN Economic Commission for Africa (UNECA) to devise a national strategy for fintech for Mauritius. In this context, a Consultative Workshop regrouping all stakeholders was held last week.
Sustain AML-CFT-CPF Reforms

Mr Speaker Sir,
AML (Anti-Money Laundering) and CFT (Counter Financing of Terrorism) reforms are critical for maintaining the integrity of financial systems and combating illicit activities.
Significant achievements have been made in this arena.
Several officers from Mauritius assumed roles as ESAAMLG Assessors, Reviewers, FATF Reviewers, and also became active members of different ESAAMLG Projects.
Furthermore, study tours were organized for the Democratic Republic of Congo, Kenya, Angola, and Mozambique which enabled Mauritius to share its experiences and contribute to the global efforts in the battle against financial crimes.

Mr Speaker Sir,
In September 2023, Mauritius participated in the ESAAMLG Task Force of Senior Officials meeting. And we were commended by the ESAAMLG Task Force for the progress made in implementing AML/CFT measures, showcasing our dedication as evidenced in our Sixth Enhanced Follow-Up Report.
Despite the significant achievements in Mauritius’ AML/CFT framework, the Ministry remains committed to uphold the jurisdiction’s status as a destination of substance.
Risk Assessment Exercises
The Ministry will undertake a review of the following risk assessments during the forthcoming financial year, namely:
• the ML/TF Risk Assessment of Virtual Assets/Virtual Asset Service Providers; and
• TF risk assessment associated with Non-Profit Organisations.
The Ministry will also coordinate the conduct of the first PF Risk Assessment of Mauritius which relates to strictly and only to the potential breach, non-implementation or evasion of the targeted financial sanction obligations.
Furthermore, the Ministry will be coordinating the ML/TF risks associated with motor vehicle sector.
AML/CFT/CPF (Miscellaneous Provisions) Bill

Mr Speaker Sir,
An AML/CFT/CPF Bill is being drafted to amend various enactments. The objective is to meet international standards of the Financial Action Task Force (FATF) on anti-money laundering and combatting the financing of terrorism and proliferation, and addressing any legislative gaps identified during risk assessment exercises.
Mid-term Review by Independent Expert

Mr Speaker Sir,
A mid-term independent assessment is being undertaken to assess the technical compliance and effectiveness of the AML/CFT/CPF Framework in line with the FATF Standards. This review will enable Mauritius to proactively identify any deficiencies and implement corrective measures ahead of the next Mutual Evaluation exercise.

Mr Speaker Sir,
A Centralised Information Management System (CIMS) for AML/CFT will be set up. This system will serve as a repository of comprehensive statistics on our AML/CFT/CPF regime, accessible to all competent authorities. This system will deepen our comprehension of financial offense patterns, optimize resource allocation, and streamline reporting processes, fortifying our commitments in the field.
FATF Assessors’ Training

Mr Speaker Sir,
To beef up the expertise and capacities of AML/CFT institutions, Mauritius in collaboration with the ESAAMLG Secretariat, organized a Regional FATF Assessors training in May this year. The training was attended by both local AML/CFT officers and participants from the member countries of the ESAAMLG region. This initiative provided the opportunity for AML/CFT Officers of competent authorities to be conversant with FATF assessment process and to be better prepared for future mutual evaluations.
Promote Good Governance Practices

Mr Speaker Sir,
Without trust and confidence in our institutions, our economy cannot thrive.
It is a moral imperative to uphold the highest standards of good governance, transparency, accountability and integrity throughout the service.
Office of Public Sector Governance (OPSG)
The Office of Public Sector Governance has completed 10 out of the 13 reviews which were planned in the 2024 Budget. This has contributed to substantial improvement in the public service delivery through streamlined procedures.
To further strengthen the Financial Management system in the Public Sector, the funding programmes of Ministries and Departments, whose under-performance have constantly been highlighted by the Director of Audit in his reports, will be reviewed.
The Internal Control Cadre and the OPSG will continuously monitor the implementation of recommendations made in the Report of the Director of Audit. And they will report to the Standing Committee that will be set up at the Ministry of Finance.
The Finance and Audit Act will be amended to fully empower the Internal Control Cadre to exercise its internal audit functions.
National Committee on Corporate Governance

Mr Speaker Sir,
Following a survey last year, the National Committee of Corporate Governance (NCCG) has elaborated a Diversity and Inclusion Charter to encourage a more balanced and gender inclusive business community. To date some 20 corporates of the public and private sectors have already signed the Charter.
Moreover, according to NCCG’s findings, improvement in Corporate Governance practices was observed in 2022. A new assessment exercise will soon be undertaken.
The NCCG is also working on the review of the National Code of Corporate Governance for Mauritius to align it with sustainability practices as well as the G20 principles and OECD principles of Good Governance. The code will lay the foundation for positioning Mauritius as a sustainable investment hub.

Reporting Council
Mr Speaker Sir, amendments will be brought to the Financial Reporting Act to –
(i) exclude authorised companies, licensed under the Financial Services Act, from the definition of public interest entities;
(ii) provide for renewal of membership for registered professional accountants; and
Furthermore, Public Interest Entities will pay an annual subscription fee to the National Committee on Corporate Governance for services being rendered by the Committee.

Mr Speaker Sir,
We have to appreciate and rightly concede that this Budget is a fitting response to many of the circumstances that are under our control, while ensuring that we mitigate the impact of factors beyond our control.

Throughout our mandate, we have strived to create an economy that works for everyone, where opportunity is not a privilege but a right, accessible to all.

At the core of our governance and overriding philosophy is a rooted commitment to economic growth, innovation, sustainability, prosperity, equity, compassion, and solidarity.

Au gouvernement, on reste fidèle à nos principes…à nos promesses.

On reste déterminé à améliorer le quotidien de tous nos citoyens… et à faire briller notre pays.

Avec nous, c’est un soleil qui brille….et pour tout le monde.

I take heart from the nation-building journey we have had so far, and to which I have had the honour of contributing since 2014.
Thank you, Mr Speaker Sir.

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