MAURITIUS: Government to unveil its budget against a backdrop of unprecedented economic gloom and uncertainty

Record ID: 1532572

  • Title: MAURITIUS: Government to unveil its budget against a backdrop of unprecedented economic gloom and uncertainty
  • Date: 23rd May 2009
  • Summary: FORESTSIDE, MAURITIUS (FILE) (REUTERS) TAYLOR WORKING ON GARMENT IN TEXTILES FACTORY FEMALE SEAMSTRESS AT WORK
  • Embargoed: 7th June 2009 10:23
  • Keywords:
  • Location: Mauritius
  • Country: Mauritius
  • Topics: Economic News,Domestic Politics
  • Reuters ID: LVABL4SV12UK2T829E5O5TT6AS9U
  • Aspect Ratio: 4:3
  • Story Text: Mauritius will unveil a six-month budget on Friday (May 22) that the finance minister says is needed to balance stimulating growth with controlling spending to prevent the budget deficit hitting unsustainable levels.
    For decades the Indian Ocean island of Mauritius has been best known as a tropical paradise.
    Last year, its white sand beaches, lush mountains and world famous resorts enticed more than 930,000 visitors.
    Tourism has been the hardest hit sector. It typically generates about 10 percent of gross domestic product and European tourists account for some two-thirds of arrivals.
    But this year arrivals are down 10 percent. Revenues are down further as hotels slash their prices.
    The slump in tourism is leading a significant slowdown in the economy. Business is down across the board for hotels, restaurants, taxis and cruise boat hire companies.
    "Ya, business it's very low now at the moment. For this month, I have been working for a very long time - 16 years in my life. This is the first time in my life I have seen tourists is very low, compared to other seasons like before. Like last year wasn't like this," said Jessen Murdamoothoo, a skipper who takes tourists on boat trips.
    Textiles too have been hit hard as European orders fall. Last December, the government unveiled a 310 million US dollar stimulus package. The textiles sector has so far been the primary recipient but thousands of jobs remain at risk.
    A tough 2009 was predicted for Mauritius' textile sector as the world economy slumped because local factories supply leading European high street chains including Marks & Spencer and Zara, as well as luxury outlets like Britain's Saville Row.
    Indications are that the 15 percent drop in demand according to some predictions was too high. However, orders are being placed at short notice and more jobs are being lost in the sector than elsewhere.
    The government forecasts growth of 2.5 percent this year, compared to more than 5 percent last year.
    The government says the priority is to bolster the economy and save jobs.
    Finance Minister Ramakrishna Sithanen has said the mini budget will balance fiscal stimulus with controlled spending to keep the budget deficit in check.
    Sithanen has said the deficit could hit 7 percent by the end of 2009 if measures are not taken. Anything above 5.5 percent would be unsustainable, he said.
    Small business owners like Veerapen Ghetty are already feeling the squeeze as consumers tighten the purse strings. He hopes the budget will take care of people's basic needs.
    "If the people don't receive any help, our business will fail. If there is no compensation that runs in parallel with the increase in prices, demand will fall and that will hurt business," said Ghetty.
    Mauritius' strength is in its diversity. Shoring up the economy are the financial services sector and telecommunications industry.
    But an uncertain economic outlook worldwide means dark clouds hang low over this year's budget.
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