Project assistance completion report : Mauritius economic policy reform program (EPRP)

The program provided support at a crucial time in the reform process, and, largely due to strong GOM commitment, all program objectives were fully met. Pragmatic economic policies were adopted that are fostering substantial increases in industrial output, personal income, and improved social services for the population. Specifically, the grant supported significant reductions (from 330% to 127% at the maximum tariff level) to reduce distortions in the manufacturing sector and improve the cost competitiveness of export manufacturing. These changes played a major role in increasing the exports of manufactured goods, and it is expected that all businesses, irrespective of size, will benefit in the long term. Additional program outcomes include a significant increase in tourism receipts and a substantial increase in private capital flows into Mauritius in the form of private transfers. Local currency generations were used for the following purposes: (1) promotion of tourism; (2) water supply projects in the north (to encourage tourism there); (3) the GOM's environmental program; (4) TA in health management and export development; and (5) a vocational training facility. No long-term dependency on the part of either the GOM or the private sector is expected to result from the CIP. The balance of payments registered an SDR 133 million surplus for 1987, and total foreign exchange reserves in the hands of the banking system rose substantially. This strongly favorable situation compels A.I.D. to formulate new strategies for future support to the GOM. This CIP, while delayed significantly during the GOM's structural adjustment negotiations with the World Bank and the African Development Bank, was the first African Economic Policy Reform Program to disburse fully, reflecting the GOM's commitment to reform.