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IMF Advises Mauritius to Adopt Tighter Monetary Policy

IMF Advises Mauritius to Adopt Tighter Monetary Policy

April 28, Mauritius’ Monetary Policy Committee will meet to go over new strategies which will strengthen the island’s monetary policy. According to a Reuters report, the International Monetary Fund (IMF) is advising the committee to tighten policy as inflation has slightly heightened over the past few months. If it continues to rise, the IMF says the island will need to implement a different economic plan.

Above all, the report noted, the committee needs to focus on implementing a framework which targets inflation. Last month, the inflation rate reached 4 percent and now Mauritius’ main repo rate must come up 50 basis points to maintain or influence an inflation rate dip.

“[IMF Directors] also suggested strengthening the institutional and operational arrangements that would support the eventual adoption of a formal inflation targeting framework,” an IMF statement outlined in the article said.

“To address this issue, (the IMF directors) encouraged the authorities to consider an approach to liquidity management involving additional issuance of government paper for monetary policy purposes and – more broadly – closer collaboration between the government and the central bank.”

In an ION News report, Rundheersing Bheenick, Mauritius Central bank governor said that the island will reach high-income economy status when investment and exports — as opposed to consumption — are put at the forefront of the rebuilding process.

Addressing Monetary Policy Committee stakeholders in a letter, Bheenick also urged them to consider cross-sector partnerships:

“Through an appropriate level of the Key Repo Rate (KRR) could contribute to a more balanced economy, it should be accompanied by appropriate fiscal policies and supported by bold structural policies to raise productivity across public and private sectors.”