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Mauritius

Sekondi Accra

Prime Minister Navin Ramgoolam's government has adopted a response to the global financial crisis that places more reliance on state intervention to ensure Mauritius's economic future. Proclaiming themselves "the alliance of the future", the Labour Party and the Militant Socialist Movement (MSM) won the May 2010 general election, reviving the grand coalition that ruled Mauritius in the 1980's before the two Hindu dominated parties went their separate ways.

The deal that brought the rivals together yielded a significant amount of power to MSM leader Pravind Jugnauth, whose appointment as finance minister put an end to the era of reforms in favor of the private sector that had been initiated by his predecessor, Rama Sithanen. The prime minister's sacrifice of Sithanen, who had indicated that he would have preferred an alliance with Paul Berenger's Mauritian Militant Movement, was a sign of serious disagreements within the Labour Party.

Immediately following the election, which gave the new coalition 41 of the 62 directly elected seats in Parliament, there was a prompt repudiation of Sithanen's policies. The government re-appointed Rundheersing Bheenick as governor of the central bank after he had been asked to resign by Sithanen a couple of months earlier. The realignments suggested that the government's approach is less likely to be less responsive to private sector interests and favor expenditure increases and enhanced welfare provision.

The government has also promised political change by means of constitutional reform, as well as a review of the electoral system and state control of the media. Election observers have criticized the current electoral system for highlighting ethnic differences through the seats that are awarded to the best performing losers from the major parties wherever ethnic or religious communities are seen to be under represented. This requires candidates to declare their ethnicity, which increasing numbers of them now refuse to do.

Despite the differences in approach and detail, especially over the ideal exchange rate for the rupee, the success of the evolving Mauritian economic formula is not being questioned. Economic growth has been maintained throughout the crisis. After receding to 3.1% in 2009, the rate is forecast to rise to 4.1% in 2010 and 4.8% in 2011, because of a strong performance in construction and a recovery in tourism. The key to continued success is to steadily maintain investment in manufacturing and services, which have kept the level of unemployment at around 7.5%. The central bank is wary of any signs of slowdown with a policy of fairly low interest rates and of ignoring calls from major exporters for a sharp devaluation of the currency.

The economy will struggle to remain competitive in some traditional activities, especially the sugar industry, but new areas of activity are materializing, such as the development of fish processing facilities. The government is also discussing changes in the taxation treaty with New Delhi, India which would make Mauritius a prefered location for the channeling of investments to India, changes which could harm the health of the country's financial sector.

Another initiative with promise is the expansion of the island's education sector. The government is already building infrastructure to receive 100,000 more foreign students by 2020, with five new campuses in rural areas. The first priority will be to make tertiary education available to Mauritians and the second will be to position the country as a new center of excellence in higher education. The new government promises to develop renewable energy, and to overhaul the international airport along with introducing a light rapid transit system in Port Louis.

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Mauritius maintains an embassy at 1709 N Street NW, Washington, DC 20036, (tel. 202-244-1491).
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