Mauritius Will Spend $401 Million to Shield Tourism, Economy From Euro

Mauritian Finance Minister Pravind Jugnauth announced a 12 billion-rupee ($401 million) program to help the economy recover from the impact of a euro zone economic crisis, targeting tourism, sugar and textiles and small business.

The plan will include a 500 million-rupee loan for hotel renovations, a bid to lure Chinese investment in hotels and almost double the number of visitors from India to an annual 115,000 by 2015, Jugnauth told reporters in the capital, Port Louis, today. The program will be financed by the country’s government, central bank and private companies.

A debt crisis in Europe has undermined growth in Mauritius’s main markets and a weaker euro has affected tourism to the country. Two-thirds of visitors to the Indian Ocean island nation are from Europe, figures from the statistics office show. Mauritius earns most of its foreign currency from tourism and exports of sugar, clothing and textiles.

“The euro crisis has made us understand that we must diversify our economy and our markets,” Jugnauth said.

The Economic Restructuring and Competitiveness Program, or ERCP, will also offer support to sugar and textile industries and other small businesses.

Jugnauth said the Bank of Mauritius would advance small sugar growers 80 percent of their receipts for sugar exports after the first consignment and the government would increase the guarantee for commercial bank financing for small and medium sized companies to 75 percent from 50 percent.

Small Business

The debts of about 1,140 small companies would be written- off while for others facing financial difficulties it will be rescheduled.

“The underlying objective of the ERCP is to ensure they become more efficient, productive and competitive so as to build long-term resilience to external shocks,” the finance ministry said.

Jugnauth said the impact of the plan on economic growth for this year was unclear and he ruled out a devaluation of the rupee to grow export revenue as this would hurt the wider population.

The rupee has gained 12 percent against the euro this year, as some European economies have been beset by a debt crisis. The currency erased earlier declines versus the euro, trading 1.6 percent stronger at 38.2352 as of 7:59 p.m. in Port Louis highest level since July 2008.

Jugnauth on June 22 forecast growth for this year at between 3.5 percent and 4 percent compared to a Central Statistics Office forecast of 4.6 percent, citing the euro-zone crisis. The statistics office on June 30 cut its prediction to 4.2 percent.