NATIONAL

BUDGET 2021/22

A QUICK FIX?

11-JUN-2021
CONTENTS

KEY TAKEAWAYS 3–6 ECONOMIC INDICATORS 37 – 49

GOVT FINANCES 7 – 11 TRADE & INVESTMENT 38 – 42

BUDGET MEASURES 12 – 26 MONETARY 43 – 49

THEMATIC 13 – 18 APPENDIX 50 – 53
SECTORIAL 19 – 26 END NOTES 51 – 53

STATE OF ECONOMY 27 – 36
GDP 28 – 31

LEADING INDICATORS 32 – 36
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KEY TAKEAWAYS

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 “Budget 2021-22 is about
meeting the challenges of economic recovery and
social resilience […] supporting the population and
businesses […] promoting inclusiveness [and] leaving a
green legacy to our future generation. ”

Mr R. Padayachy
Minister of Finance
KEY TAKEAWAYS

650k Rs23.5bn
TOURISTS OVER 12-MTHS WAS & SEAS

95% 60%
PUBLIC DEBT RENEWABLES BY 2030

Rs65bn Rs3.3k/t
INFRASTRUCTURE SPEND NEW BAGASSE PRICE

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SOME INITIAL THOUGHTS
Last year’s National Budget told us the pandemic firefighting
would be handled by the Mauritius Investment Corporation
under the aegis of the Bank of Mauritius. By contrast, this year’s
budget offered some quick fixes to the sugarcane industry by
paying more for bagasse; and to the hospitality sector from the
phased opening-up of our borders to tourists come July.
Enacting the fundamental and structural changes recently
highlighted by the World Bank will take time. Nonetheless,
incentivizing more intellectually demanding industries such as
BioTech, Pharma & Education is a step in the right direction.
To a rather large extent measures announced – especially when
it comes to infrastructure projects, schemes, and subsidies –
weren’t novel. They were extensions or tweaks to existing ones.
Nonetheless, recent floods have caused havoc, and so
government plans to tackle the land drainage problem head on.
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It was bold to announce the phasing out of coal by 2030 and
decide to make use of the coffers of para-statal bodies rather
than taxing locals further – the usual hikes on cigarettes, alcohol,
and levies on petrol don’t count – in these rough times when
consumption has slowed.
The budget deficit’s surged as has the Debt-to-GDP Ratio, then
again, where has it not done so? Afterall, Rs23.5bn were spent in
wage and self-employed assistance schemes with about a third
geared towards tourism operators. Should they not have?
Bhavik Desai
Head of Research
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GOVERNMENT FINANCES
INCOME & EXPENDITURE

INCOME [Rs bn] EXPENDITURE [Rs bn]

FY-22 Est. 138 FY-22 Est. 163

FY-21 Act. 156 FY-21 Act. 181

FY-21 Est. 163 FY-21 Est. 163

Actual Actual
Social Nets

FY-2021 EXPENSE DISTRIBUTION

Housing
FY-2021 SOURCES OF INCOME

Transfer 27%

39%
Econ. Affairs 1%
Est. 6% Est.

Law & Order 29%

37% 7% 7%
8%
8%
7% 34%
56% Health 10%
2%
Grant 2%
53% 9%
Other 4%
40%
Taxes
Contributions Education
Public Services

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BUDGET DEFICIT

o Covid ‘oblige’, Government’s Deficit [Rs bn] Deficit [% of GDP]

assistance schemes budgeted at
FY-16 FY-17 FY-18 FY-19 FY-20 FY-21 FY-22 FY-23
Rs29.5bn a year ago ended up
costing Rs47bn (+60%). In fairness, had
this expenditure not been made, our
unemployment rate would have been -14 -13
-15 -15
significantly higher and the economy -20
probably in a worse state -22
-2.9
-3.2 -26
-3.5 -3.5
-4.0
o It seems as if ~5 years will be required to
-5.0
bring the deficit back to ~3% of GDP -5.6

-13.6

-67

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INDEBTEDNESS

o As a consequence of the deficit caused by Pandemic

External [Rs bn] Domestic [Rs bn] 457
the pandemic, Government
indebtedness has sky-rocketed from External [% GDP] Total [% GDP] 419 346
the mid-60s to a highly 382 388
310
369 362
uncomfortable 95% 281
317
321 325 326 330 279 271
o The silver lining surely stems from the 313 318
298 305 95
292 273 270 276 91 91
fact that the cost of debt has fallen to 259 265 268
250 83 83 84
235 241
2.8% (below the 3.5% target) and that it
is largely domestic 65 65 66 66 66
63 63 64 65
o External debt has nonetheless risen from
Rs1 out of every Rs6 borrowed to its
25 25
21 22
present Rs1 out of Rs5. 20
12 12 14
12 11 11 11 10 11 11
107 109 111
90 91

57 65
56 55 54 53 53 52 56 53

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GLOBAL INDEBTEDNESS

o Had Mauritius been among a handful of

countries whose post pandemic
indebtedness increased, the situation
would be highly concerning

o While our status remains concerning,

against a backdrop of the devasting
impact Covid-19 has had worldwide,
close to 9 in 10 countries have seen their
Debt-to-GDP levels rise

o The chart on the right depicts the change

in Debt-to-GDP ratio when comparing
pre-pandemic levels to the IMF’s 2021
expectations. Mauritius sits in the worst
quartile, yet fares less worse than
developed and/or larger economies

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DEAR COLLEAGUE AND POWERPOINT AFFICIONADO

BUDGET MEASURES
THEMATIC
STIMULUS

Boosting Investment
Government has shown its commitment to support Covid-19 affected
companies through various measures which include:

o A further 1%-pts reduction in interest rate under the existing

Leasing Equipment Modernisation Scheme (LEMs) MOVE THE PHOTO BACK
o Extension of the Wage Assistance and Self Employed Assistance to
tourism related companies until the end of September 2021 to TO ITS PLACE DEAR
safeguard employment

o Deferring the payment of state lease for hospitality sector until June COLLEAGUE AND
2022

o Sugar planters – both large and small – will be remunerated for

POWERPOINT
bagasse at Rs3.50 per kWh of electricity generated which translates
to Rs3,300 per ton of sugar AFFICIONADO
o Non-sugar farmers and breeders are poised to benefit from a
plethora of subsidy extensions

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TAXES

Corporate
o Biotech/Pharmaceutical companies as well as private universities
set-up will be subjected to a concessional 3% corporate tax rate

o Also Pharma will obtain full tax credit on the costs of acquisition of
patents, whereas universities will be exempt from land transfer tax MOVE THE PHOTO BACK
and registration duty for the construction campuses

Levies TO ITS PLACE DEAR

o Government has imposed an additional levy of Rs2/L of petrol and
diesel as from 1 July 2021 to finance the purchase of COVID-19
COLLEAGUE AND
vaccines

o Alcoholic drinks and Cigarettes will face a 10% increase in excise

POWERPOINT
duty

Personal
AFFICIONADO
o Threshold for health insurance and pension fund tax deductibles
have been increased to Rs20k and Rs30k respectively

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BENEFITS

Transfers
o Basic Retirement Pension maintained at Rs9k for those aged 60
years and above.

o The Self-Employed will only be able to benefit from any government

assistance, provided they are registered with the MRA and MOVE THE PHOTO BACK
contributing to CSG. They will also be eligible for benefits in case of
injury at work TO ITS PLACE DEAR
Other Benefits/Social
o As part of its commitment to build in 12k social housing units, the
COLLEAGUE AND
construction of around 3,000 units expected to start in 2021-2022
across 13 strategic locations, and completed by 2024 POWERPOINT
o Rs220M million will be invested for the revamping of Social Welfare
Centres into Family and Community Centres. AFFICIONADO

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PUBLIC SECTOR

Health
o Government has spent around Rs550M on the acquisition of
vaccines

o To increase the resilience of the healthcare sector, the public health

budget has been increased to Rs 14.5bn which will cater for the MOVE THE PHOTO BACK
construction of new hospitals and acquisition of equipment

Education TO ITS PLACE DEAR

o A budget of Rs 17bn has been allocated to increase the quality of
education. Along with the construction and expansion of schools,
COLLEAGUE AND
government will also provide more support to students with
Special Education needs POWERPOINT
Law and Order
AFFICIONADO
o To maintain its fight against drug trafficking and crime, the police
force will be expanded and more amenities for the police
constructed. Consequently, its budget allocation has been increased
by Rs1.9bn from the previous budget

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SUSTAINABILITY

Energy
o Renewable energy from biomass will be encouraged with the
remuneration of Bagasse at Rs3.50 per kWh 60%
o CEB will invest Rs5.3bn to increase renewables absorption battery ENERGY FROM RENEWABLES
capacity and to set up gas insulated switchgear, solar farms and
wind farms

o Although coal represented 39% of the country’s source of energy in 5% 6% 7% 8% 11%

SOURCE OF ENERGY (GWh)

2020, government plans to phase out the use of coal by 2030 16% 15% 14% 14% 13%

Circular economy
37% 38% 39% 42% 37%
o Incentives will be provided to promote electric cars, vans and buses

o Rs1.2bn will be invested for the rehabilitation and protection of the

coastlines 42% 42% 40% 39%
36%
o 6 composting plants for a total capacity of 12,000 tons of green
wastes will be set up
2016 2017 2018 2019 2020

Coal Petroleum Bagasse Other renewables

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SECTORIAL
INNOVATION

Tech
o Public service will be enhanced with the introduction of automated
Registration Integrated System for new companies, a new e- Rs 1bn
Registry System, e-Judiciary System and e-Export directory
SEED CAPITAL
o FSC will set up fintech innovation hubs and Finnovation and digital
labs for the non-banking financial services sector

Pharma BROADBAND TELEPHONE

1,246
o The government increased the public health budget to Rs14.5bn for 2,352 2,325
1,102

SUBSCRIPTIONS
the construction of new modern centres, hospitals and mediclinics 992 307 2,204 2,253
2,141 434
274 459
and the acquisitions of high-tech medical equipment 863 413
246 390
939 380
662 213
o Incentives will be provided to biotechnology and pharmaceutical 827
1,918
746 1,840 1,867
companies in a bid to enhance manufacturing of vaccine, 197 651 1,814
1,761
pharmaceutical products and medical device 464

2015 2016 2017 2018 2019 2015 2016 2017 2018 2019

Mobile [k] Fixed [k]

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FINANCIAL SERVICES

Capital Markets
o To enhance the development of the capital markets, the legal THE DIGITAL
framework will be reviewed to cater for virtual assets, and
securitisation RUPEE
o The Stock Exchange of Mauritius is planning to introduce rules for
the setting up Special Purpose Acquisition Companies (SPACs). The

GROSS DIRECT INVESTMENT (GDI)

Harvard Business Review recently suggested that the SPAC bubble
is about to burst
22.3
21.3
o Family Offices as well as Fund & Asset Manager will see tax holidays 20.0
extended from 5 to 10 years. 18.2

Financial Services
o New frameworks will be put in place for the regulation and 9.1
supervision of financial institutions and start-ups operating in the 5.2
4.4 4.5 3.8
FinTech space. 1.5

o BoM will roll out Central Bank Digital Currency i.e “The Digital 20162016
2016 2017
2017 2017 20182018
2018 2019
2019 9M20
2019 9M2020
9M2020

Rupee” on a pilot basis

GDI flows in Mauritius [Rs bn] GDI flows Abroad [Rs bn]

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GLOBAL BUSINESS

Addressing FATF
o Government's priority is to complete the implementation of the
Financial Action Task Force Action plan and ensure a prompt exit 21.7k
of the Financial Action Task Force list of jurisdictions under
increased monitoring. LIVE GBCs AS AT JAN-21
o The Financial Intelligence and Anti-Money Laundering Act and the
Companies Act will be amended to enhance the fight against money
laundering and terrorism financing.
11.8 11.9 12.1

GBL LICENSEES [#k]

o A Financial Crime Commission and a Financial Crimes Divisions will 11.5
11.1 9.6 9.5
be established to efficiently deal with financial crime 10.3 10.1 0.7 0.7 8.6
o An Interagency Coordination Committee will be 8.9 8.9
1.4
established to enhance cooperation of members regarding
international standards on AML/CFT 7.3

2016
20162016 2017 2017
2017 2018
20182018 2019 2019
2019 2020 2020
2020

GBL1 GBL2 Authorised Company

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HOSPITALITY

Destination
o Perhaps one of the most impactful decisions of this budget, the re-
opening of the Mauritian frontiers, will finally happen for 650k
vaccinated tourists as from July 15th within a controlled
environment for the first 14 days of their stay, and unconditionally TOURISTS OVER NEXT 12MTHS
for negative PCR tested vaccinated tourists as from October 21st

o The Mauritius Tourism Promotion Authority (MTPA) and the

Economic Development Board (EDB) will embark on a fresh 1,399 1,383

ARRIVALS & RECEIPTS

1,342
branding strategy with an outlay of Rs420M earmarked 1,275
1,151 64 63
60
Operators 56
50
o The Wage Assistance Scheme will be extended for another 3Mths
period while hoteliers will be able to convert up to 80% of their 309
rooms into serviceable apartments whilst allowing occupants to
18
stay up to 180 days.

o Another key takeaway is the reduction in the minimum selling price 2015 2016 2017 2018 2019 2020
of standalone villas under the Invest Hotel Scheme by 25% to $375k
Arr [#k] Earnings [Rs bn]

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AGRICULTURE

Sugar
o Like last year’s measures, Government has extended the waiver on
insurance premium and guaranteed a price of Rs 25k/t for the first Rs
Rs3.3k
60t of sugar for crop 2021. Key highlights are the introduction of a
framework to remunerate bagasse at Rs 3.50/kWh and the setting- PER TON OF SUGAR
up of a new sugar storage facility of 150kt at Riche Terre

Non-Sugar
o The budgeting process for non-sugar adhered to measures 386 10.3
10.3
366 10.2

SUGAR INDUSTRY
announced in previous budgets such as multiple financial facilities 355
(interest-free loans, leasing facilities and subsidies). While these 331
323
measures will certainly continue to address the otherwise rising 9.7
costs of inputs and incentivise agri-production, essential measures 9.6
271
to kick-start the required agro-ecological transitions remain unseen

o We welcome the amendments to the Mauritius Agricultural 9.1

Marketing Act as this might be the key to change crop management

2015 2016 2017 2018 2019 2020
in Mauritius and to provide private growers 1,000 arpents of land
Sugar produced [kt] Extraction rate [%]

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INDUSTRY

The devaluation of the Mauritian Rupee and increasing freight costs have

+Rs2/L
had a significant impact on the manufacturing sector which is in need of
innovation and enhancement in the value chain.

Domestic
ON PETROL AND DIESEL
o Government will introduce measures to protect local
manufacturers. This includes to favour an increase in minimum shelf
space from 10% to 40% for locally manufactured products and a 192 199
181
rebate of up to 30% on the annual rental of industrial space to SMEs 165 166

IMPORTS & EXPORTS

engaged in the manufacturing sector over the next 3 years. 78
72
67 66
Export Oriented 22 61
19 17 14
o To ensure competitiveness, Government will extend the 50% 13

reduction in freight charges for 2 more years

56 53 51 52 48
o To facilitate movement of goods and increase visibility of Mauritian
products, the EDB will launch an E-Export Directory
2016
2016 2017
2016 2017 2018
2017 2018 2018 20192019 2020
2019 2020 2020
Imports [Rs bn] Domestic exports [Rs bn] Re-exports [Rs bn]

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PROPERTY

Development
o The Government will support economic recovery, job and wealth
creation through a massive Rs 65bn project pipeline. Rs11.7bn to Rs500k
be invested in flood management following growing concerns in the
REFUND
south, and taking Metro Express to Reduit will cost an initial
additional Rs4.5bn to tax payers

o Esplanades and Promenades are among the various projects

undertaken as a mechanism to enhance livelihood and the practice
16,148
of individual sports during COVID days
9,976 87%
84%

REAL ESTATE
o Incentives for Mauritians to own houses with a 5% rebate (capped 81% 80%
at Rs 500k) on the cost of residential land or property acquired 9,631 77%
8,498 8,800
6,620
66%

2015 2016 2017 2018 2019 9M2020

Gross Direct Investment - Real estate [Rs M]

of which property schemes [%]

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STATE OF ECONOMY

|
GDP
GDP SHORTFALL

o Mauritius has inevitably experienced its

1st recession in four decades in the wake
Nominal GDP [Rs bn] 556
of the Covid-19 pandemic which forced
534
our borders shut Pre-Pandemic GDP Estimates [Rs bn]

o Following the steep contractions 512

recorded during FY-2020 and FY-2021,

500
the Minster of Finance forecast the 491
Mauritian economy to rebound by
470
9% to Rs500bn at the end of FY-2020. A 458
figure which we believe to be overly 446
441
optimistic
422

400

FY-15 FY-16 FY-17 FY-18 FY-19 FY-20 FY-21 FY-22

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GDP DIVERSIFICATION

o This historic economic contraction 2020

▼ -2%, Others
significantly altered the structure of
Agriculture
our economy given the large swathes ▲ +5%, 28%
that were forced to shut. We expect our Tech 4%

diversified economy to start resembling 5% 5Yr Ave*

its pre-pandemic structure starting FY- ▼ -15%,
Professional Svcs
2023 5%
5%
3% 26%

5%
▼ -25%, 5%
Construction 4%
6%
14%
12% ▼ -20%,
6% Manufacturing
▼ -2%, 7%
6%
12%
Property 12%

6%

▼ -29%, 3% 13%
Logistics
▼ -67%, 13% ▼ -12%,
Hospitality Trade
▲ +1%,
Financial Services
*5 Year pre-pandemic average spanning 2015 to 2019

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QUARTERLY GDP

o Although we expect to see GDP growing Q1 Q2

again in 2021, it remains at 2017 levels.
Consequently, the economic operators 124
117 117 120
will continue to feel the depressed levels 112 113
107 106 109
of activity throughout the remainder of 102 103
2021
84
o The re-opening of our borders to
vaccinated tourists in July, followed by an 2016 2017 2018 2019 2020 2021 2016 2017 2018 2019 2020 2021
easing of restrictions as from October
should bring fresh impetus to the
hospitality industry, and in turn to the
Q3 Q4
139
Mauritian economy at large 131 134
127 125
123 121
o That said, the Ministry of Finance’s 118 119
113
forecasts for FY-2021 exhibit much 108 108
optimism. We believe the realised figures
will slot in somewhere in between 2018
and 2019 levels
2016 2017 2018 2019 2020 2021 2016 2017 2018 2019 2020 2021

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LEADING INDICATORS
VALUE ADDED TAX
IN DOLLAR TERMS
o Looking at the data on collection of taxes Q1 Q2
on goods and services, presumed to be 487
-10% 469
mostly comprised of Value Added Tax 450
430
(VAT), in millions of US Dollars, we are 404 415
378 373
able to observe just how steep the drop
342 -40%
in level of economic activity has been.
Although activity levels improved in Q4- 280
2020, they remain below 2016 levels
2016 2017 2018 2019 2020 2021 2016 2017 2018 2019 2020 2021

Q3 Q4
504
482
453
-20%
399 392
377
358 -24% 361
320
303

2016 2017 2018 2019 2020 2021 2016 2017 2018 2019 2020 2021

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CARD TRANSACTIONS

o After the steep drop in Q2-2020, credit Q1 Q2

transactions [in Rs billion] – bearing in
mind of the absence of tourists – swiftly -6%

bounced back to pre-pandemic levels. 49 48

45 46
43 43 -24%
o Given the drop in VAT, we believe 39 39
36 36 36
Covid-19 has pushed more Mauritian to
use cards so as to reduce physical
contact with cash. 2016 2017 2018 2019 2020 2021 2016 2017 2018 2019 2020 2021

o Albeit an interesting leading indicator, the

fact that Q1-2021 transactions shrank by Q3 Q4
6% suggests consumption has not quite 59 59
returned to pre-covid levels
52
49 50 49
47
45
40
38

2016 2017 2018 2019 2020 2021 2016 2017 2018 2019 2020 2021

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RUPEES IN CIRCULATION

o Oddly enough the amount of rupees in Q1 +14% Q2

+21%
circulation [in billions] has risen +13% 39
36
appreciably in recent quarters 34
30 30 30
28 28 29
26 26

2016 2017 2018 2019 2020 2021 2016 2017 2018 2019 2020 2021

Q3 Q4 +15%
+19%
38
36
33
30 30 30
29 29 28
27

2016 2017 2018 2019 2020 2021 2016 2017 2018 2019 2020 2021

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SALES

o The sales figures of the consumer Q1 Q2

company AXYS tracks, suggests “revenge
spending” helped boost Q3 sales. Q4 and 627 628
-1%
Q1 figures indicate the drag in our -41%
487 481
economy. Having said that, Q2-2021 411 392 395 423 402
358 373
figures up to the 1st week of June offers -76%
an encouraging data point for the months
152
ahead
2016 2017 2018 2019 2020 2021 2016 2017 2018 2019 2020 2021

Q3 Q4
785
-1% 750 -22%

591 586 613

577
517
482 469
348

0 0

2016 2017 2018 2019 2020 2021 2016 2017 2018 2019 2020 2021

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ECONOMIC INDICATORS

|
TRADE & INVESTMENT
TRADE DEFICIT

o Our growing trade deficit reflects the Deficit [Rs bn] Deficit [% of GDP]
need for a revitalisation of manufacturing
2014 2015 2016 2017 2018 2019 2020 2021
in Mauritius. While the pandemic helped
trim the deficit in 2020, it is expected to
widen in 2021. Can the incentives 18
19
announced for Pharma help reinvigorate
local manufacturing? 20

-75 22 22
-77 22
-81
23

24
-96
-100
-105

-112

-120

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CURRENT ACCOUNT DEFICIT

o Given the absence of tourism receipts, Deficit [Rs bn] Deficit [% of GDP]
and the trickling of new business within
2014 2015 2016 2017 2018 2019 2020 2021
Global Business, a surge in our current
account deficit (CAD) was to be
3.8 3.8
expected. With our borders re-opening 4.2
4.4
4.6
shortly, we can expect the CAD to start 5.1

shrinking a little -16 -16

-18
-20 -21 -21

8.6

-39

13.2

-58

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BALANCE OF PAYMENTS

o In addition to a severe deterioration of Surplus [Rs bn] Surplus [% of GDP]

the CAD, a reduction in Foreign Direct
Investment (FDI) flows resulted in the 1st
48
negative balance of payment recorded in
9.9
years.

6.2
27
4.1 4.1
3.7 3.5
19 18
16 15

-0.8

-2.7
-4
-12

2014 2015 2016 2017 2018 2019 2020 2021

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FOREIGN INVESTMENT

Others [Rs bn]

o Foreign Direct Investment (FDI) data for
Property (PDS) [Rs bn]
the entire calendar year 2020 is not
Property (Ex. PDS) [Rs bn] 22.3
available yet. It is evident that the levels
Property share [%] 21.3
will stand much lower than in 2019, such 12.3 20.0
that we expect the skew towards 18.5 76
18.2 10.2
property investments to remain elevated. 73
71
11.7 7.5 5.2

13.7 14.0

4.0 59

9.1
7.9
6.8 5.8
49
2.5
45
4.0 8.1 5.1

37
4.3
2.7 2.9 2.7 2.1
1.8 1.5

2014 2015 2016 2017 2018 2019 2020 9M

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MONETARY
RESERVES

o In the wake of covid-19 and the

disruptions to export manufacturing, and
Reserves [$ bn]
absence of tourism receipt, we feared the

7.8
7.7
worst for our reserves. Oddly enough, Import [Mths]

7.6
7.6

7.5
not only have our reserves not been

7.4

7.3
7.3

7.3
7.3

7.3
7.3
7.3
7.2
depleted, but have instead grown further.

7.2
7.2

7.2
7.2
7.2
Have some of the foreign grants and/or

7.0

7.0
7.0
7.0

13
6.9
credit facilities helped prop it up?

12
6.8

12
12
12

12
6.7

12
12
12
6.6

6.6

12
6.6

12
12
12

12

12
6.5
6.5

6.5

12
6.4

12
6.4

12
12
6.4
6.3
6.3

11
6.3
6.2

11
11
11
6.2

11
6.1

11
11

11

11
10

10

10
10
10

10
10

10
10
10
10
9
10

| 44
UNDER-DEPLOYED DEPOSITS

o Mauritius being placed onto the European Rupee [$bn] Currency [$bn] Rupee [%] Currency [%]
Union list of High Risk 3rd countries, in
16 30
the midst of a pandemic led to fear of a
steady flight of deposits from cross-
border banking

Undeployed Deposits [%]

14 24
o Once again, we have not seen any flight

Deposits [$bn]
materialise. On the contrary both MUR
and non-Rupee deposits has increased 12 18

o The levels of under-deployed funds, often

called excess liquidity, has increase 10 12
reflecting both a propensity to and
limited bank risk appetite
8 6

6 0

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DEPLOYMENTS

o The limited nature of banks’ risk appetite Pandemic

1,840
at the moment is evident from quasi- Loans [Rs bn] Markets [Rs bn]
1,732 1,712
unchanged amounts deployed into loans. Interbank [Rs bn] Others [Rs bn]
1,686
544
1,606
Banks have seemingly preferred to 1,527 469 447
1,445 447
deploy funds into government bonds or 1,382
1,415 396
1,335 1,337 1,332 1,348 394
park funds with other banks
315
301
309 317
358 344 292

463 481 519 527 558

411 435 434
345 356 383
314 316

706 709 691 692 691

633 652 646 642 663 659 663
618

| 46
YIELDS

o A growing preference for government 6.0

securities coupled with decreasing levels
of under-deployed funds, should result in
an increase in interest rates which has 5.0
been very noticeable in recent weeks. Or The entire
is it just inflation? curve had fallen
4.0
by ~2%-pts

Yield [%]
3.0
currently rising by
~80bps at the long end, and
2.0
~30bps at the short end
1.6

1.0
Dec-18 Dec-19 Dec-20
Current Fixed Deposit Corporate
Market Div Yield
0.0
0 5 10 15 20
Tenure to Maturity [Years]

| 47
INFLATION

o Inflation is headed for its highest levels 9.0

since the Great Financial Crisis of 2008. Forecast

Rising commodity prices, coupled with Actual

7.5
the Rupee being driven down to record
lows vis-à-vis the dollar, plus

Headline Inflation Rate [%]

unfavourable climatic conditions have 6.0
created a perfect storm

4.5

3.0

1.5

0.0

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RUPEE
A “MANAGED” FLOAT
o The Rupee depreciated sharply (~20%) 112 32.00
against a basket of currencies since the
middle of 2019. The dots plotted on the

Currency Index = 100 on 31-Dec-2017

106 33.50
USD/MUR mid-rate demonstrate the
“managed” nature of the currency. Will

Conversion Rate [Rs]

the upcoming digital rupee be a better 100 35.00
store of value?

94 36.50

The Rupee
has fallen by
88 38.00
MUR Index ~20%
US Dollar Index
82 Rs/$ Mid-Rate 39.50

BoM Sale
BoM Purchase
76 41.00

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 MOVE THE PHOTO BACK TO ITS PLACE
DEAR COLLEAGUE AND POWERPOINT AFFICIONADO

APPENDIX

|
END NOTES
DISCLAIMER

AXYS Research (AXYS) has issued this document without consideration of the investment objectives, financial
situation or particular needs of any individual recipient. AXYS will not be under any liability for loss or damage of
any kind whatsoever arising in connection with the contents of this document. This document is not, and should
not be construed as, an offer to sell or the solicitation of an offer to purchase or subscribe for any investment.
This document has been based on information obtained from sources believed to be reliable but which have not
been independently verified. AXYS makes no guarantee, representation or warranty and accepts no responsibility
or liability as to its accuracy or completeness. AXYS Stockbroking Ltd is a member of the Stock Exchange of
Mauritius and is licensed by the Financial Services Commission.

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REFERENCES

REFERENCES AUTHORS
Ministry of Finance, ‘Budget Speech Bhavik DESAI Alexis CORSON
2021-22’ and ‘Annex to Budget Head of Research Investment Executive
Speech 2021-22’. [2021] AXYS Research AXYS

Bank of Mauritius, ‘Monthly Statistical

Sajeda AFFEJEE
Bulletin’ [2010-2021]
Sr Manager – Corp. Finance
Statistics of Mauritius, ‘National AXYS Corporate Advisory
Accounts Estimates’. [2010-2021]
Statistics of Mauritius, ‘Quarterly Irshaad GUJADHUR
Corp. Finance Associate
National Accounts’. [2010-2021]
AXYS Corporate Advisory
Statistics of Mauritius, ‘Monthly
Statement of Government Operations’. Akash BABOOLAL
[2010-2021] Investment Analyst Trader
AXYS Stockbroking
Tamesh DOOKHEE
Compliance Assistant
SPICE Finance
Romain DUCHENNE
Investment Analyst
AXYS Investment Partners
Tanooj GOPEECHAND
Investment Analyst
AXYS Investment Partners

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