The government’s economic strategy has not only stabilized the economy, but has also strengthened the financial system

As the government’s mandate comes to an end, the soundness of the Mauritian financial system is emerging as one of the main achievements of economic policy, despite the challenges posed by the Covid-19 pandemic.

Faced with the two lockdowns and the closure of borders, the economy and the banking system were under pressure. The strategic decision to create the Mauritius Investment Corporation (MIC) played a crucial role in protecting large companies with systemic risk, thus avoiding a major crisis. Without this decisive intervention, the economy would have faltered, threatening financial stability and thousands of jobs.

The MIC has helped to restructure vital businesses, ensuring the country’s economic continuity. The opposition and some of the press have systematically denigrated this initiative, without proposing credible alternative solutions. Their critical posture, disconnected from economic realities, reveals a lack of vision in the face of the challenges posed by the health crisis.

Today, the macro-financial and economic fundamentals are green. Debt sustainability and debt service metrics have stabilized, thanks to steady growth in household incomes and corporate profits. The quality of banks’ assets remains strong, with no signs of distress in debt repayment. In addition, bank credit to the private sector increased by 7.6% year-on-year, with a notable increase in credit to households and businesses.

The Mauritian banking sector, with a capital ratio of 20.9% and a liquidity coverage ratio of 328.5%, continues to show enhanced resilience. The government’s strategy has therefore not only stabilized the economy, but has also consolidated a strong and sustainable financial system, despite unfounded criticism from the opposition.