With 50 years of independence behind it, Mauritius is
poised to regain its significance as the Star and Key of the
Indian Ocean. Surfing the crest of a positive macroeconomic
climate created by accommodative monetary conditions and upbeat
business and consumer confidence, the island nation has
initiated a series of bold socio-economic reforms.
A number of major public and private investment projects as
well as the appreciable performance of key sectors are spurring
sustained domestic growth momentum. Economic and financial
policies continue to attract capital inflows and real GDP
growth at market prices is forecast at 4.0% in 2018 and 2019.
Headline inflation is projected to be around 4.2% for 2018.
The Mauritian finance and banking landscape is more dynamic
than ever. Banks are well-capitalised and possess adequate
liquidity buffers. Testimony to the high quality of capital
within the banking sector is the fact that approximately 90% of
the capital base is in the form of Common Equity Tier 1
capital. The jurisdiction migrated to Basel III in July 2014
and the average capital adequacy ratio of the banking sector
has consistently hovered around 17%. Mauritius has also
implemented the Liquidity Coverage Ratio and as from January
2018, IFRS 9 has become effective with local banks being fully
The exchange rate of the rupee is broadly in line with
macroeconomic fundamentals and the broad money supply growth
remains expansionary, highlighting the accommodative policy
stance. 2018 has seen the Bank adopting a very aggressive open
market operations approach in order to optimise the
effectiveness of its monetary policy transmission mechanism and
to counter the low market interest rates stemming from excess
liquidity in the domestic banking across the last few years.
This has resulted in a drop in excess liquidity and higher
market interest rates.
The Bank has also upgraded its regulatory and supervisory
stance. Whilst migrating to a risk-based supervisory framework,
the central bank also boasts exacting licensing criteria.
Conditions are now more exacting, whereby prospective
applicants for a banking licence must demonstrate that they
have a full-fledged AML/CFT (anti-money laundering and
terrorist financing measures) software for the identification,
assessment and monitoring of ML/FT risks. The CAMEL rating has
also been revised to be more risk-sensitive and to capture
concerns pertaining to ML/CFT.
As a key socio-economic development driver, the Bank is
sparing no effort to strengthen and modernise the banking
industry. With fintech being the word of the day, the Guideline
on Outsourcing by Financial Institutions has been revised to
incorporate a specific section on cloud-based services. With a
view to being able to proactively formulate the best policies,
the Bank is currently working on the elaboration of a strategy
that factors all potential risks and challenges, as well as
possible regulatory impediments.
Testimony to the will of the Bank of Mauritius to position
Mauritius as a forward-looking international financial services
centre is the revamping of banking legislation, as well as the
current implementation of a series of technology-driven
solutions spearheaded by the Bank. Amongst these key
game-changing projects are the National Payment Switch and the
E-KYC, a national electronic customer data repository that will
be hosted and managed by the Bank of Mauritius.