Supplement to the Budget 2018-2019

PURSUING OUR TRANSFORMATIVE JOURNEY SUPPLEMENT TO THE BUDGET 2018-2019 BUDGET SUPPLEMENT " 2018-2019 1 BUDGET SUPPLEMENT " 2018-2019 3 SUPPLEMENT TO THE BUDGET 2018/2019 4 BUDGET SUPPLEMENT " 2018-2019 BUDGET SUPPLEMENT " 2018-2019 5 5 Purpose To supplement the Budget 2018-2019 with a review and outlook of the economy in greater detail. Outline The supplement is structured into four parts: 1. The Global Economic Performance with respect to output, investment flows and global trade 2. Review of the Mauritian Economy: Highlights 3. Economic Review and Outlook: Macroeconomy 4. Economic Review and Outlook: Sectoral All data, unless otherwise specified, are official data from Statistics Mauritius and Bank of Mauritius. Data coverage 6 BUDGET SUPPLEMENT " 2018-2019 Contents BUDGET SUPPLEMENT " 2018-2019 7 5 REVIEW OF THE MAURITIAN ECONOMY: HIGHLIGHTS MACROECONOMIC PERFORMANCE SECTORAL PERFORMANCE REVIEW OF THE GLOBAL ECONOMY GLOBAL GDP GROWTH GLOBAL TRADE GLOBAL FOREIGN DIRECT INVESTMENT MAURITIUS AND THE GLOBAL ECONOMY MAURITIUS ECONOMIC GROWTH AND WORLD TRADE 06 ECONOMIC REVIEW AND OUTLOOK: MACROECONOMY MACROECONOMIC PERFORMANCE MAURITIUS GDP GROWTH EMPLOYMENT/UNEMPLOYMENT YOUTH UNEMPLOYMENT PRODUCTIVITY CONSUMPTION EXPENDITURE NATIONAL SAVINGS INVESTMENT FOREIGN DIRECT INVESTMENT INFLOWS FOREIGN DIRECT INVESTMENT OUTFLOWS EXTERNAL TRADE & BALANCE OF PAYMENT FOREIGN CURRENCY RESERVES INFLATION EXCHANGE RATE EXCESS LIQUIDITY GOVERNMENT REVENUE GOVERNMENT EXPENDITURE EXPENDITURE BY SECTOR FISCAL BALANCES PUBLIC SECTOR DEBT STRUCTURE OF GOVERNMENT DEBT PORTFOLIO CURRENCY COMPOSITION OF EXTERNAL DEBT DEBT AFFORDABILITY MATURITY STRUCTURE INTEREST RATE RISK EXTERNAL DEBT SERVICE RATIO 14 ECONOMIC REVIEW AND OUTLOOK: SECTORAL SECTORAL PERFORMANCE TRADITIONAL SECTORS AGRICULTURE, FORESTRY AND FISHING THE SUGAR-CANE SUB-SECTOR EMPLOYMENT NON-SUGAR AGRICULTURAL SECTOR TEA PRODUCTION FOOD CROPS FISH PRODUCTION LIVESTOCK MILK AND CHEESE EMPLOYMENT MANUFACTURING SUGAR MANUFACTURING FOOD PROCESSING TEXTILE OTHER MANUFACTURING TOURISM TOURIST ARRIVALS TOURISM EARNINGS EMPLOYMENT TOURIST ACCOMMODATION MODE OF TRANSPORT GOLF COURSES CONSTRUCTION FINANCIAL SERVICES GLOBAL BUSINESS INVESTMENT ICT EMERGING SECTORS REAL ESTATE IRS/RES/HIS/PDS KNOWLEDGE CENTRE OF EXCELLENCE MEDICAL HUB RENEWABLE ENERGY CREATIVE INDUSTRY BLUE ECONOMY SEAFOOD SEAPORT 24 09 06 07 07 10 14 15 16 17 24 14 15 16 16 17 18 18 18 19 19 20 21 21 22 22 22 23 23 23 23 25 27 27 28 28 28 29 29 30 31 32 33 33 34 34 35 36 36 37 37 38 40 41 42 43 45 45 46 47 48 49 52 53 50 53 07 07 13 26 8 BUDGET SUPPLEMENT " 2018-2019 6 Review of the Global Economy Global GDP Growth According to the World Economic Outlook published in April 2018 by the IMF, the global economic upswing that began around mid-2016 has become broader and stronger. With financial conditions still supportive and expectations of a sizeable fiscal expansion in the United States, global growth is expected to strengthen in 2018 and 2019. The downside risks are possible sharp tightening of financial conditions, waning popular support for global economic integration, geopolitical strains, growing trade tensions and risks of a shift toward protectionist policies. Global GDP growth is estimated to have picked up from 3.2 percent in 2016 to 3.8 percent in 2017, the fastest rate since 2011. It is expected to rise to 3.9 percent in both 2018 and 2019. In advanced economies, growth in 2017 is estimated to have rebounded to 2.3 percent from 1.7 percent in 2016, explained almost entirely by a significant surge in investment. In 2018, these economies are expected to grow at a higher rate of 2.5 percent. Faster growth in the US and Euro area, particularly in France, will drive this output acceleration. Growth in Emerging Market and Developing Countries is estimated to have increased from 4.4 percent in 2016 to 4.8 percent in 2017. It is expected to rise further to 4.9 percent in 2018. China's economic growth is forecast to moderate to 6.6 percent in 2018 from 6.9 percent in 2017. India's GDP is expected to pick up to a 7.4 percent growth rate in its fiscal year 2018/19. For the Sub-Saharan African region, growth is expected to rise to 3.4 percent in 2018 from 2.8 percent in 2017. In South Africa, economic growth is forecast to tick up to 1.5 percent in 2018 from 1.3 percent in 2017. WORLD 3.5 0.0 1.0 2.0 3.0 4.0 5.0 6.0 3.2 3.8 3.9 2.1 1.8 2.3 2.4 4.3 4.4 4.8 4.9 3.4 1.4 2.8 3.4 EMERGING MARKET AND DEVELOPING ECONOMIES EURO AREA CHART 1 : REAL GDP GROWTH SUB-SAHARAN AFRICA 2015 2016 2017 2018 % Source: World Economic Outlook, April 2018, IMF 6 BUDGET SUPPLEMENT " 2018-2019 9 7 7 Global Trade Global trade has picked up significantly in 2017, growing by 4.9 percent in contrast to 2.3 percent in 2016. It is expected to expand at a higher rate of 5.1 percent in 2018. Global Foreign Direct Investment In contrast with accelerated growth in GDP and trade, global FDI flows declined by 23 percent in 2017 according to the World Investment Report 2018 of UNCTAD. UNCTAD forecasts a marginal increase in global FDI flows of about 5 percent in 2018. FDI flows to developed economies fell by 37 percent in 2017 while flows to developing economies remained stable. Flows to transition economies also dropped by 27 percent after increasing by 78 percent in 2016. For 2018, UNCTAD forecasts an increase in flows to developed and transition economies while flows to developing countries will remain stable. Mauritius and The Global Economy Chart 5 shows that during the past four decades, economic growth in Mauritius has followed a similar pattern to that of global economic growth. However, on average, the economic growth rate of Mauritius has been higher than that of the global economy. The chart also shows that Mauritius has not known an economic recession in the past 37 years. Mauritius holds the record for the longest run of positive economic growth in the world. Mauritius Economic Growth and World Trade Chart 6 shows that both GDP growth and the Export of Goods & Services of Mauritius are particularly sensitive to trends in Global Trade. CHART 5: GDP GROWTH -15 -10 -5 0 5 10 15 1978 1984 1987 1990 1993 1996 1999 2002 2005 2008 2011 2014 2017 Mauritius World 1981 Source: Statistics Mauritius & IMF WEO Database CHART 4 : FDI FLOWS 2012 2013 0 200 400 600 800 1,000 1,200 USD BILLION Developed countries Developing countries Transition Economies 859 652 65 84 693 649 2015 36 744 1,141 2016 64 1,133 670 2014 57 685 597 Source: World Investment Report 2018, UNCTAD % CHART 2 : WORLD TRADE VOLUME GROWTH RATE 2015 2016 2017 2018 0 2 4 6 Source: World Economic Outlook April 2018, IMF % 1985 1990 1995 2000 2005 2010 2015 -20 -10 0 10 20 30 Mauritius GDP Growth Rate Mauritius Exports of Goods & Services World Trade Volume (IMF) 1980 Source: Statistics Mauritius & IMF WEO Database CHART 6: MAURITIUS GDP GROWTH AND WORLD TRADE GROWTH % CHART 3 : WORLD FDI FLOWS 2012 1,000 1,200 1,400 1,600 1,800 2,000 USD BILLION 2013 2014 Source: World Investment Report 2018, UNCTAD 2016 2015 2017 47 712 671 2017 10 BUDGET SUPPLEMENT " 2018-2019 Source: ontheworldmap.com Seychelles Mauritius Reunion Rodrigues Agalega Islands Cargados Carajos Islands Comores Madagascar INDIAN OCEAN INDIAN OCEAN Rodrigues INDIAN OCEAN BUDGET SUPPLEMENT " 2018-2019 11 9 Most indicators point to a firming up of macro- economic fundamentals and an economic re- newal leading to a higher growth path. Both the IMF and Moody's have expressed opti- mism on the Mauritian economy. The IMF views that the macroeconomic outlook is broadly positive: Review of the Mauritian Economy: Highlights Source: 2017 IMF Article IV Consultation Staff Report "Economic activity is expected to remain robust, driven by the government's ambitious Public Investment Program, and supported by continued dynamism in the tourism sector and financial intermediation activities. [...] Considering Mauritius' track record of reinventing its economic model, there are grounds for optimism that the country will successfully manage the reform process." Source: Moody's Investors Service Credit Opinion March 2018 In March 2018, Moody's re-affirmed the Baa1 rating for Mauritius – a rating which according to them is supported by strong growth and macroeconomic resiliency to shocks. "The Mauritian government's credit profile is supported by a diversified, upper-middle income economy that has demonstrated resilience to external shocks, despite being small and open." 12 BUDGET SUPPLEMENT " 2018-2019 Macro-Economic Performance 10 PRODUCTIVITY GROWTH REAL GDP GROWTH CONSUMPTION & SAVINGS LABOUR PRODUCTIVITY 2017: 3.8% (Estimates) FY 2017/18: 3.9% (Estimates) 2018 : 3.9% (Forecast) FY 2018/19: 4-4.2% (Forecast) 2017: 2.4% 2016: 3.4% CAPITAL PRODUCTIVITY 2017: 0.9% 2016: 1.1% MULTI FACTOR PRODUCTIVITY 2017: 1.4% 2016: 1.9% TOTAL CONSUMPTION EXPENDITURE Real terms: 2.7% Nominal terms: 6.1% GROWTH IN 2017 2017: 89.3% 2016: 89.0% AS A % OF GDP Real terms: 3.0% GROWTH IN 2017 2017: 74.2% 2016: 73.6% AS A % OF GDP HOUSEHOLD CONSUMPTION EXPENDITURE 2017: 10.7% RATIO OF GROSS DOMESTIC SAVINGS TO GDP 2016: 11.0% UNEMPLOYMENT RATE LOWEST IN 16 YEARS 2017: 7.1% 2016: 7.3% FEMALE UNEMPLOYMENT 2017: 10.7% 2016: 11.2% YOUTH UNEMPLOYMENT 2017: 24.9% 2016: 23.9% FOREIGN CURRENCY RESERVES HIGHEST IN MORE THAN FIVE DECADES 2017: Rs 220.0 BILLION Enough to cover 10.7months' imports 2016: Rs 178.9 BILLION BUDGET SUPPLEMENT " 2018-2019 13 11 INVESTMENT INFLATION TOTAL INVESTMENT 2017: 17.3% 2016: 17.2% AS A % OF GDP PRIVATE INVESTMENT 2017: 13.2% 2016: 12.8% AS A % OF GDP PUBLIC INVESTMENT 2017: 4.1% 2016: 4.4% AS A % OF GDP FOREIGN DIRECT INVESTMENT 2017: Rs 17.5 BILLION 2016: Rs 13.6 BILLION PUBLIC FINANCE RS FY 2016/17: 3.5% FY 2015/16: 3.5% BUDGET DEFICIT RECURRENT BUDGET DEFICIT FY 2016/17: 1.9% FY 2015/16: 1.5% PUBLIC SECTOR DEBT END-JUNE 2017: 64.8% END-JUNE 2016: 65.0% TOTAL REVENUE FY 2016/17: 21.0% FY 2015/16: 20.9% TOTAL EXPENDITURE FY 2016/17: 24.5% FY 2015/16: 24.4% HEADLINE INFLATION RATE 2017: 3.7% 2016: 1.0% YEAR-ON-YEAR INFLATION RATE 2017: 4.2% 2016: 2.3% CORE 1 INFLATION 2017: 2.2% 2016: 0.4% CORE 2 INFLATION 2017: 2.2% 2016: 2.2% EXTERNAL BALANCE BALANCE OF PAYMENT SURPLUS 2017: 6.2% 2016: 6.0% AS A % OF GDP CURRENT ACCOUNT DEFICIT 2017: 6.6% AS A % OF GDP Total exports of goods and services contracted by 0.6%, while total im- ports of goods and services increased by 8.2%. TOTAL EXPORTS/IMPORTS OF GOODS AND SERVICES AS A % OF GDP 14 BUDGET SUPPLEMENT " 2018-2019 12 BUDGET SUPPLEMENT " 2018-2019 15 0 2 4 6 8 10 0 2 4 6 8 10 1 0.8 0.6 0.4 0.2 0 % Growth in 2017 % Contribution to Growth in 2017 5.5 0.7 7.5 0.3 0.4 3.1 0.4 5.2 0.3 1.4 0.2 4.4 0.2 5.4 0.2 4.5 0.2 1.8 0.1 3.3 FINANCIAL AND INSURANCE ACTIVITIES CONSTRUCTION TOURISM WHOLESALE & RETAIL TRADE ICT MANUFACTURING HUMAN HEALTH & SOCIAL WORK ACTIVITIES PROFESSIONAL, SCIENTIFIC & TECHNICAL ACTIVITIES REAL ESTATE ACTIVITIES EDUCATION 1 0.8 0.6 0.4 0.2 0 % Growth in 2017 % Contribution to Growth in 2017 13 Sectoral Performance 16 BUDGET SUPPLEMENT " 2018-2019 Mauritius GDP Growth In 2017, GDP expanded by 3.8 percent, with positive growth in all sectors, except sugarcane and textile. It is expected that GDP growth would be 3.9 percent in 2018, mainly driven by financial services,constructionandtourism.Sectorssuchas agriculture, food processing, textile, construction, retail trade, ICT and global business are expected to register a higher growth rate than in 2017. In nominal terms, GDP at market prices increased by 5.8 percent in 2017 compared to 6.1 percent in 2016. It is expected to pick up to 7.0 percent in 2018. Employment/Unemployment The unemployment rate declined to 7.3 percent in 2016 and further to 7.1 percent in 2017. Youth Unemployment A high proportion of the unemployed were among the youths within the 16-24 years age group. The youth unemployment rate is estimated at 24.9 percent in 2017 compared to 23.9 percent in 2016. The employment of Mauritians increased from 538,600 in 2016 to 545,100 in 2017. Increase in female employment accounted for 58 percent of the net increase in total Mauritian employment. There were 28,400 foreign workers in Mauritius in 2017. Total activity rate was 59.6 percent in 2017, same as in 2016. Male activity rate remained unchanged at 74.3 percent while female activity rate increased from 45.5 percent to 45.7 percent. CHART 7 : MAURITIUS' GDP GROWTH 2015 3.5 3.6 3.6 3.8 3.8 3.9 3.7 3.8 3.9 4.0 2016 2017 2018F CHART 9 : YOUTH UNEMPLOYMENT RATE 2017 2016 2015 10 15 20 25 30 21.6 26.3 32.7 23.9 18.3 31.2 19.5 24.9 31.9 MALE FEMALE BOTH SEXES 35 THOUSAND CHART 10 : MAURITIAN EMPLOYMENT 2015 0 100 200 300 400 500 600 2016 2017 MALE FEMALE BOTH SEXES % % 14 Economic Review & Outlook: Macroeconomy 3.5 5.5 7.5 9.5 11.5 13.5 2015 2016 2017 5.5 4.8 4.8 7.1 7.3 7.9 11.6 11.2 10.7 Both sexes Male Female % CHART 8 : UNEMPLOYMENT RATE BUDGET SUPPLEMENT " 2018-2019 17 Productivity The gap between growth in labour productivity and average compensation continued to widen, leading to a constant rise in unit labour costs. In 2017, labour productivity increased by 2.4 percent, while average compensation went up by 4.1 percent. As a result, unit labour cost rose by 1.7 percent. Sectors with the highest increase in labour productivity during the period 2009-2017 were administrative and support service activities, ICT and financial services. Capital productivity is on a rising trend and increased by 0.9 percent in 2017. Multifactor productivity, which measures the rate ofchangeinproductiveefficiency,increasedby1.4 percent in 2017 compared to 1.9 percent in 2016. Consumption Expenditure Total consumption expenditure increased, in nominal terms, by 5.3 percent in 2016 and 6.1 percent in 2017, compared to 4.8 percent in 2015, mainly due to higher growth in household consumption. In real terms, total consumption expenditure increased by 2.7 percent in 2017 compared to 2.9 percent in 2016. In 2018, total consumption expenditure is expected to increase by a higher rate of 6.8 percent in nominal terms and by 3.1 percent in real terms. 2017 CHART 12 : LABOUR PRODUCTIVITY 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 0 50 100 150 200 INDEX UNIT LABOUR COST (MRU) AVERAGE COMPENSATION OF EMPLOYEES LABOUR PRODUCTIVITY CHART 13 : PRODUCTIVITY AND COMPETITIVENESS INDICATORS (YEAR 2007 = 100) 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 130 120 110 100 90 LABOUR PRODUCTIVITY CAPITAL PRODUCTIVITY MULTI FACTOR PRODUCTIVITY INDEX 0 2 4 6 8 10 12 CHART 14 : CONSUMPTION EXPENDITURE (NOMINAL GROWTH) 2015 2016 2017 2018F 4.8 4.7 5.3 5.3 4.4 9.7 6.1 6.7 3.2 6.8 7.3 4.2 FINAL CONSUMPTION EXPENDITURE HOUSEHOLDS GENERAL GOVERNMENT 2017 45.7 59.6 59.6 74.3 BOTH SEXES CHART 11 : ACTIVITY RATE 30 40 50 60 70 80 2016 2015 74.8 74.3 45.5 46.6 60.4 MALE FEMALE % % 15 18 BUDGET SUPPLEMENT " 2018-2019 Macroeconomy (cont'd) National Savings GrossDomesticSavings,asapercentageofGDP, was 11 percent and 10.7 percent respectively in 2016 and 2017. In 2018, it is expected to rise to 10.9 percent. Investment The investment rate, defined as the ratio of gross domestic capital formation to GDP, averaged 17.3 percent during the period 2015-2017. The ratio of private investment to GDP for the period averaged 12.9 percent. Total investment grew by 5.9 percent in nominal terms in 2017 compared to 5.4 percent in 2016. Investment in non-residential buildings, which fell by around 15 percent on average annually over 2013-2016, increased by 29.7 percent in 2017 mainly due to the renovation of a number of hotels. For 2018, the investment rate is forecast at around 17.2 percent. A decline in the ratio of private investment to GDP from 13.2 percent in 2017 to 12.6 percent in 2018 would be offset by a rise in public investment to GDP ratio from 4.1 percent to 4.6 percent. Investment in non- residential building would remain high while a pick-up is expected in residential buildings and other construction works. Foreign Direct Investment Inflows Mauritius continues to attract significant amount of foreign direct investment. [Note: For the period 2015-2017, the figures do not include reinvested earnings and shareholders' loans and therefore are not comparable with previous years' data.] In 2017, there were some Rs 17.5 billion of FDI flows in Mauritius compared to Rs 13.6 billion in 2016. These investments were mainly in real CHART 18: FOREIGN DIRECT INVESTMENT FLOWS IN MAURITIUS (EXCLUDING GLOBAL BUSINESS) CHART 16 : INVESTMENT RATE 0 5 10 15 20 2018F 2017 2016 2015 4.7 12.6 4.4 12.8 4.1 13.2 4.6 12.6 17.2 17.3 17.2 17.4 TOTAL PRIVATE PUBLIC CHART 17 : INVESTMENT (NOMINAL GROWTH) -20 -10 0 10 20 30 40 % 2018F 2017 2016 2015 1.8 -16.7 3.6 13.4 -8.0 -10.6 -0.1 29.7 5.2 4.8 25.6 15.6 RESIDENTIAL BUILDING NON- RESIDENTIAL BUILDING OTHER CONSTRUCTION WORK 2015 2016 2017 9,677 13,648 17,491 4000 9000 14,000 19,000 CHART 15 : SAVINGS 2015 2016 2017 2018F 10.0 10.2 10.4 10.6 10.8 11.0 11.2 10.4 11.0 10.7 10.9 GROSS DOMESTIC SAVINGS (GDS) AS A % OF GDP AT MARKET PRICES % % Rs Million 16 BUDGET SUPPLEMENT " 2018-2019 19 estate development and financial services, which together accounted for 87.9 percent of total inflows. The share of FDI directed towards the construction sector amounted to 6.0 percent compared with an average of 4.2 percent during the previous 4 years. France was the main source of FDI inflows, accounting for 25.1 percent of total inflows in 2017. Significant inflows were also registered from Luxembourg, South Africa, China and the UK. Foreign Direct Investment Outflows In 2017, FDI outflows increased to Rs 2.6 billion, fromRs1.8billionin2016.Mostoftheinvestment was directed towards financial services, manufacturing, and real estate development. Some 74 percent of the investment went to developing countries, particularly in Africa (Kenya, Mozambique and Madagascar) and South Asia. External Trade & Balance of Payment In 2017, Mauritius registered a visible trade deficit of 21.6 percent of GDP. The high deficit is explained by lower exports of textile and clothing products and lower re-exports of telecommunication equipment, combined with higher imports of petroleum products and road vehicles. In 2018, the visible trade deficit is expected to slightly go down to 21.5 percent of GDP. The current account of the balance of payments registered a deficit of 6.6 percent of GDP in 2017. The surplus in the overall balance of payments has been rising in recent years and reached 6.2 percent of GDP in 2017. Net inflows of investment and government loans in the capital and financial account were more than adequate to finance the current account CHART 19 : FDI INFLOWS BY SECTOR, 2017 CHART 20 : DIRECT INVESTMENT ABROAD 0 500 1,000 1,500 2,000 2,500 3,000 RS MILLION 2,410 1,842 2,553 2017 2016 2015 CHART 21: VISIBLE TRADE BALANCE AS A % OF GDP 22.8 -18.2 -18.6 -21.6 -21.5 41.0 19.4 38.0 17.7 39.3 17.1 38.6 2017 2016 2015 2018F VISIBLE TRADE BALANCE IMPORT OF GOODS EXPORT OF GOODS CHART 22 : COMPONENTS OF CURRENT ACCOUNT AS A % OF GDP CURRENT ACCOUNT SERVICES INCOME AND CURRENT TRANSFERS GOODS 0 10 -10 -20 -30 -16 -17 -20 2015 2016 2017 Others 3.4% Information & Communication 0.4% Accommodation and food service activities 2.2% Construction 6.0% Financial and Insurance activities 37.7% Real Estate activities 50.3% 17 20 BUDGET SUPPLEMENT " 2018-2019 18 Foreign Currency Reserves As at end May 2018, total reserves amounted to Rs 222.0 billion, equivalent to some 10.7 months of imports. This is an increase of 23.8 percent over the level of reserves in May 2017. Inflation Headline inflation reached a low of 1.0 percent in 2016. It rose to 3.7 percent in 2017 due to the increase in prices of petroleum products, prices of vegetables following unfavourable climatic conditions and excise taxes on tobacco and alcoholic products. It further rose to 5.0 percent for the year ending April 2018 due to a jump in the prices of vegetables. Year-on-year inflation rate in December 2017 was 4.2 percent compared to 2.3 percent in December 2016. It was at 3.7 percent in April 2018. CORE1inflation,whichexcludes"Food,Beverages and Tobacco" components and mortgage interest on housing loan from the CPI basket, increased from 0.4 percent in 2016 to 2.2 percent in 2017. It stood at 2.5 percent in March 2018. CORE2 inflation, which excludes food, beverages and tobacco, mortgage interest, energy prices and administered prices, was rather stable at 2.2 percent over the period. [Note: Headline inflation is measured by comparing the average level of prices, as measured by the CPI, during a twelve-month period with the average level during the corresponding previous twelve-month period.] Exchange Rate In 2017, the Mauritian rupee appreciated against the currencies of most of its main trading partners, except the South African rand. In nominal effective terms, as measured by the Mauritius Exchange RateIndex1(MERI1),therupeeappreciatedby2.1 percent between December 2016 and December 2017 and 1.7 percent between December 2015 and December 2016, compared to a depreciation of 9.4 percent between December 2014 and December 2015. Macroeconomy (cont'd) CHART 23 : GROSS OFFICIAL INTERNATIONAL RESERVES 50,000 2.0 4.0 6.0 8.0 10.0 12.0 0.0 100,000 150,000 200,000 250,000 RS MILLION MONTHS JAN 15 JAN 16 JAN 17 JAN 18 MAR 15 MAR 16 MAR 17 MAR 18 MAY 15 MAY 16 MAY 17 JUL 15 JUL 16 JUL 17 SEPT 15 SEPT 16 SEPT 17 NOV 15 NOV 16 NOV 17 GROSS OFFICIAL INTERNATIONAL RESERVES IMPORT COVER (RHS) % CHART 25: MERI 1 CHANGE IN MERI 1 (+VE MEANS DEPRECIATION) DEC 2014/DEC 2015 DEC 2015/DEC 2016 DEC 2016/DEC 2017 1.0 -4.0 6.0 % 9.4 -1.7 -2.1 MARS 15 MARS 16 MARS 17 JUN 15 JUN 16 JUN 17 SEPT 15 SEPT 16 SEPT 17 DEC 15 DEC 16 DEC 17 MAR 118 HEADLINE CORE1 CORE2 YEAR-ON-YEAR 0 1 2 3 4 5 CHART 24: INFLATION RATE BUDGET SUPPLEMENT " 2018-2019 21 Against individual currencies, the rupee evolved in line with international trends. AgainsttheUSdollar,therupeeappreciatedby6.1 percent between December 2016 and December 2017. It was rather stable between December 2015 and December 2016. Against the Euro, the rupee depreciated by 5.4 percent between December 2016 and December 2017, in contrast to an appreciation of 2.9 percent between December 2015 and December 2016. Against the British pound, the rupee depreciated by about 1 percent against the pound between December 2016 and December 2017. It appreciated by around 17 percent between December 2015 and December 2016. Excess Liquidity Excess liquidity in the banking sector, measured as cash balances held by banks in excess of the statutory cash reserve requirements, reached Rs 26 billion in December 2017 and remained at an elevated level of around Rs 22 billion, on average, during the first quarter of 2018. Government Revenue Government total revenue amounted to 21 percent of GDP in FY 2016/17, almost same as in FY 2015/16. Tax revenue as a percentage of GDP increased from 18.5 in FY 2015/16 to 18.8 in FY 2016/17. Non-tax revenue, which includes grants from donor countries and transfers from Special Funds, amounted to 2.2 percent of GDP, slightly lower than in FY 2015/16. CHART 26: EXCHANGE RATE 2014 2015/16 2016/17 20.3 20.9 21.0 2.2 2.4 2.0 TAX REVENUE NON-TAX REVENUE TOTAL REVENUE Source: Ministry of Finance and Economic Development CHART 28: TOTAL REVENUE AS A % OF GDP 18.4 18.5 18.8 38 33 28 RS/USD 45 40 35 30 Jan-15 Apr-15 Oct-15 Jan-16 Apr-16 Jul-16 RS/EUR Jul-15 Jan-17 Jan-16 Jan-18 Apr-17 Oct-17 Oct-17 Jan-15 Apr-15 Oct-15 Jan-16 Apr-16 Jul-16 Jul-15 Jan-17 Jan-16 Jan-18 Apr-17 Oct-17 Oct-17 Jan-15 Apr-15 Oct-15 Jan-16 Apr-16 Jul-16 Jul-15 Jan-17 Jan-16 Jan-18 Apr-17 Oct-17 Oct-17 50 30 RS/GPB 19 CHART 27: EXCESS LIQUIDITY 0 10,000 20,000 30,000 19 MARS 15 31 MARS 16 30 MARS 17 25 JUN 15 23 JUN 16 22 JUN 17 3 SEPT 15 29 SEPT 16 18 SEPT 17 24 DEC 15 22 DEC 16 21 DEC 17 29 MAR 118 RS MILLION 15,000 25,000 22 BUDGET SUPPLEMENT " 2018-2019 VAT receipt is the largest component of tax revenue, followed by personal and corporate income taxes and excise duties. As a percentage of GDP, VAT receipts were stable at 6.8, revenue from income tax increased from 4.5 to 4.9 in FY 2016/17, and excise duties increased from 3.8 to 3.9 mainly due to the increase in excise rates on tobacco and alcoholic products. External grants increased from 0.1 of GDP to 0.6 percent in FY 2016/17 mainly due to the grants provided by the Government of India for the implementation of the Metro Express project, the construction of the Supreme Court building, the ENT Hospital, acquisition of tablets for primary school students and the construction of social housing. Government Expenditure Total government expenditure as a percentage of GDP reached 24.5 in FY 2016/17. Capital expenditure as a percentage of GDP went down from 2.5 percent of GDP to 2.3 percent in FY 2016/17. The ratio of recurrent expenditure to GDP increased from 21.9 percent to 22.2 percent in FY 2016/17 due to higher staff costs and increase in pensions and other social benefits. CHART 29: SHARE OF TAX REVENUE, % FY 2016/17 RECURRENT EXPENDITURE CAPITAL EXPENDITURE TOTAL EXPENDITURE CHART 31: RECURRENT EXPENDITURE AS A % OF GDP 0.0 2.0 4.0 6.0 6.1 2.6 4.9 6.2 2.4 5.9 6.3 6.1 2.4 2014 2015/16 2016/17 COMPENSATION OF EMPLOYEES INTEREST SOCIAL BENEFITS 8.0 Macroeconomy (cont'd) Source: Ministry of Finance and Economic Development Source: Ministry of Finance and Economic Development 2016/17 2015/16 2014 23.5 24.4 24.5 2.3 2.5 2.9 CHART 30: TOTAL EXPENDITURE AS A % OF GDP Customs Duties 1.4% Personal Income Tax 10.3% Other Taxes 17.7% VAT 35.9% Corporate Income Tax 14.1% Excise Duty 20.5% Source: Ministry of Finance and Economic Development 20.6 21.9 22.2 20 BUDGET SUPPLEMENT " 2018-2019 23 Fiscal Balances For FY 2016/17, the budget deficit was 3.5 percent of GDP while the recurrent budget registered a deficit of 1.9 percent of GDP. After taking into account transactions in financial assets, namely loans and equity, Government borrowing requirements slightly increased from 3.4 percent of GDP in FY 2015/16 to 3.5 percent in FY 2016/17. Expenditure by Sector CHART 33: FISCAL BALANCES AS A % OF GDP 2014 2015/16 2016/17 OVERALL BUDGET DEFICIT RECURRENT BUDGET DEFICIT GOVERNMENT BORROWING REQUIREMENTS 0.4% 3.2% 3.4% 3.4% 3.5% 3.5% 3.5% 1.5% 1.9% CHART 32: EXPENDITURE BY SECTOR, FY 2016/17 Social sectors 55.0% Economic Sectors 8.9% Environmental Protection 1.2% Others 34.8% Education 14.3% Health 10.1% Housing 2.2% Recreation, Culture and Religion 0.8% Social Protection 27.7% Source: Ministry of Finance and Economic Development Source: Ministry of Finance and Economic Development The share of Government expenditure allocated to social sectors increased from 54.1 percent in 2015/16 to 55.0 percent in FY 2016/17. 21 24 BUDGET SUPPLEMENT " 2018-2019 Public Sector Debt Public sector debt, which includes debt of central Government, local authorities/parastatal bodies and public enterprises, amounted to 65.5 percent of GDP, as at end March 2017. This high level of debt was partly due to the issuance of Government securities for mopping up excess liquidity in the banking sector as from September 2014. As at end March 2017, some Rs 16 billion of Government securities, equivalent to 3.6 percent of GDP, were issued for the purpose. Since April 2017, Government securities are no longer being issued for mopping up excess liquidity. At end December 2017, the debt ratio fell to 63.4 percent. It declined further to 62.9 percent at end March 2018. Structure of Government Debt Portfolio Domestic v/s External Most of the Government debt stock is domestically sourced. As at end March 2018, some 83 percent of Government debt was held by domestic investors. Most of Government external debt are from bilateral (G2G) sources or multilateral institutions and are on concessionary terms. Currency composition of external debt The currency composition of Government external debt is generally aligned to that of proceeds from export of goods and services. Thus as at March 2018, 42.4 percent of external debt was denominated in Euro, 30.3 percent in US dollar, and 10.8 percent in Chinese Yuan. CHART 34 : PUBLIC SECTOR DEBT AS % OF GDP -5% 52% 54% 56% 58% 60% 62% 64% 66% 68% 5% 15% 25% 35% 45% JUN 15 SEP 15 DEC 15 MAR 16 MAR 17 MAR 18 JUN 16 JUN 17 SEP 16 SEP 17 DEC 16 DEC 17 6.3% 6.1% 5.9% 5.5% 5.4% 5.3% 5.1% 5.6% 5.5% 6.7% 6.4% 6.3% 56.6% 56.9% 57.8% 59.3% 59.9% 59.3% 59.5% 59.5% 58.6% 57.7% 57.3% 56.6% 62.9% 63.4% 63.6% 64.2% 65.0% 64.9% 64.4% 65.5% 64.8% 64.5% 63.4% 62.9% PUBLIC SECTOR DEBT BUDGETARY CENTRAL GOVERNMENT TOTAL DEBT PUBLIC ENTERPRISES DEBT (RHS) CHART 35: COMPOSITION OF GOVERNMENT DEBT DEC 14 10% 30% 50% 70% 90% JUN 15 DEC 15 JUN 16 DEC 16 JUN 17 DEC 17 MAR 18 DOMESTIC EXTERNAL 76.3% 23.7% 75.9% 24.1% 76.9% 23.1% 78.7% 21.3% 80.0% 20.0% 82.6% 17.4% 82.8% 17.2% 83.1% 16.9% Source: Ministry of Finance and Economic Development DEC 14 JUN 16 JUN 17 DEC 17 MAR 18 CHART 36 :CURRENCY COMPOSITION OF GOVERNMENT EXTERNAL DEBT 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% USD EURO CHINESE YUAN OTHERS 39.5% 10.7% 11.3% 11.2% 11.0% 10.8% 16.5% 16.1% 16.2% 14.8% 15.1% 41.8% 33.5% 32.3% 30.3% 42.4% 40.7% 39.1% 32.1% 34.7% Source: Ministry of Finance and Economic Development Source: Ministry of Finance and Economic Development Macroeconomy (cont'd) 22 BUDGET SUPPLEMENT " 2018-2019 25 CHART 38: STRUCTURE OF GOVERNMENT DOMESTIC DEBT (%) Debt affordability The debt affordability metrics have improved significantly as: - the ratio of interest payments to Government revenue has declined from 20.1 percent in FY 2007/08 to 11.6 percent in FY 2016/17; and - the ratio of interest payments to GDP has come down from 3.9 percent to 2.4 percent over the same period. Maturity structure The maturity structure of Government debt has improved as evidenced by the following indicators: Between end-December 2010 and end-March 2018: (a) The share of short-term domestic debt declined from 26 percent to 11.4 percent, and the share of long-term domestic debt increased from 39 percent to 63 percent. (b) The average time to maturity of Government domestic debt has been gradually lengthened from 2.9 to 4.7 years thereby reducing debt refinancing risks. (c) Almost all external debt is long-term, with an average time to maturity of 5.9 years. Interest Rate Risk Interest rate risk is very low as more than 95 percent of Government's domestic debt has a fixed interest rate. The average time for re-fixing total Government debt, which is also a measure of interest rate risk, has steadily increased and reached 4 years in March 2018. External debt service ratio The external debt service ratio (external debt service as a percentage of revenue from exports of goods and non-factor services) has been relatively low in recent years. From 3.7 percent during FY 2015/2016, it increased to 6.2 percent at end-June 2017 mainly due to the early repayment of external loans of some Rs 4.2 billion. For the period March 2017 to March 2018, the debt service ratio declined to 5.8 percent. -1% 4% 9% 0% 20% 40% 60% 80% 100% DEC 10 JUN 11 JUN 12 JUN 13 JUN 14 JUN 15 JUN 16 JUN 17 DEC 11 DEC 12 DEC 13 DEC 14 DEC 15 DEC 16 DEC 17 MAR 18 SHORT TERM MEDIUM TERM LONG TERM Source: Ministry of Finance and Economic Development CHART 37: DEBT AFFORDABILITY RATIOS 0% 2007/08 2008/09 2015/16 2016/17 2010 2011 2012 2013 2014 10% 20% 30% INTEREST PAYMENTS TO GOVERNMENT REVENUE INTEREST PAYMENTS TO GDP (RHS) Source: Ministry of Finance and Economic Development CHART 39: EXTERNAL DEBT SERVICE RATIO -1% 4% 9% Dec 2014 Jun 2016 Jun 2017 Dec 2017 3.8% 3.7% 6.2% 5.9% Chart 39: External Debt Service Ratio Mar 2018 3.8% 23 26 BUDGET SUPPLEMENT " 2018-2019 Traditional Sectors AGRICULTURE, FORESTRY AND FISHING The contribution of the agricultural sector to the economy declined to 3.1 percent in 2017. In 2017, its output contracted by 0.2 percent due to lower cane and sugar production and lower growth in production of food crops. It is expected to grow by 1.1 percent in 2018. In 2016, employment in the sector amounted to 41,300, accounting for 7.3 percent of total employment in the economy. CHART 40: AGRICULTURE, FORESTRY AND FISHING AS A % OF GDP 2007 3 4 % 5 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018F CHART 41: REAL GROWTH RATE - AGRICULTURE, FORESTRY AND FISHING 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018F AV GROWTH 07-17 -2.2 -4.0 -2.0 +0.0 +2.0 +4.0 +6.0 +8.0 +10.0 +12.0 -0.4 +3.5 +3.7 +3.7 -0.2 +1.1 +2.0 +0.3 +1.1 +0.5 +2.7 +10.2 CHART 42: TOTAL EMPLOYMENT - AGRICULTURE, FORESTRY AND FISHING 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 0.0 20.0 40.0 60.0 THOUSAND SUGARCANE NON SUGAR Economic Review & Outlook: Sectoral % 24 BUDGET SUPPLEMENT " 2018-2019 27 THE SUGARCANE SUB-SECTOR The share of the sugarcane sub-sector in Agriculture has declined in recent years to reach 18.7 percent in 2017. Its share in GDP has consequently declined to 0.6 percent. Gross value added in the sub-sector declined by 7.9 percent in real terms in 2017 compared to a 5.2 percent growth in 2016. It is expected to register a zero growth in 2018. In 2017, some 49,973 hectares, under sugarcane cultivation, were harvested, down by 2.9 percent compared to 2016. CHART 43: CONTRIBUTION OF SUGARCANE SECTOR 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018F 0.00 0 1.00 20 40 % % 2.00 60 SUGARCANE AS A % OF AGRICULTURE (RHS) SUGARCANE AS A % OF GDP CHART 45: CANE AREA 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 45,000 60,000 50,000 55,000 65,000 75,000 70,000 HECTARES AREA UNDER CANE CULTIVATION CANE AREA HARVESTED CHART 44: REAL GROWTH RATE - SUGARCANE SECTOR 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018F AV GROWTH 07-17 -15.0 -10.0 -5.0 +0.0 % +5.0 +10.0 +15.0 +20.0 -9.9 +4.3 +14.9 -6.5 +2.4 -5.4 -2.2 -3.5 -3.8 +5.2 -7.9 0.0 -1.4 25 28 BUDGET SUPPLEMENT " 2018-2019 26 Sugarcane production amounted to 3.7 million tonnes in 2017, compared to 3.8 million tonnes in 2016. Total sugar produced was 355,213 tonnes in 2017, down from 386,277 tonnes in 2016. CHART 48: EMPLOYMENT - SUGARCANE SECTOR CHART 47: CANE YIELD 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 0.0 20.0 40.0 60.0 80.0 100.0 65.9 73.1 77.3 74.4 74.6 72.9 71.4 79.8 76.5 73.8 74.3 TONNES / HECTARES 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2.0 7.0 12.0 17.0 THOUSAND MALE FEMALE BOTH SEXES CHART 46: CANE AND SUGAR PRODUCTION 2007 3,400,000 300,000 350,000 400,000 450,000 500,000 3,900,000 4,400,000 4,900,000 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 CANE PRODUCTION SUGAR PRODUCTION (RHS) TONNES TONNES Average cane yield per hectare increased from 73.8 tonnes in 2016 to 74.3 tonnes in 2017, after two consecutive years of decline. In2016,thesugarcaneindustryaccountedfor30.0 percent of total employment in the agricultural sector. Employment in the industry was at around 12,400 in 2016, of which 71.8 percent were men. EMPLOYMENT THE SUGARCANE SUB-SECTOR (cont'd) Traditional Sectors (cont'd) BUDGET SUPPLEMENT " 2018-2019 29 NON-SUGAR AGRICULTURAL SECTOR The share of non-sugar agricultural activities in Agriculture increased to 81.3 percent. The non-sugar sector grew by 2.3 percent in 2017 and a growth of 1.3 percent is expected in 2018. CHART 50: REAL GROWTH RATE - NON-SUGAR SECTOR 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018F AV GROWTH 07-17 0.0 +2.0 +4.0 % +6.0 +8.0 +4.5 +1.5 +6.9 +2.7 +3.9 +4.1 +1.8 +6.5 +1.6 +3.2 +2.3 +1.3 +3.5 CHART 51: TEA PRODUCTION 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 0 2,000 4,000 6,000 8,000 10,000 GREEN TONNES BLACK TEA CHART 49: CONTRIBUTION OF NON-SUGARCANE SECTOR 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018F 0.0 0 50 % 100 1.0 % 2.0 3.0 NON SUGARCANE AS A % OF AGRICULTURE (RHS) NON-SUGARCANE AS A % OF GDP TEA PRODUCTION Tea plantation covered an area of 622 hectares in both 2016 and 2017. Some 7,300 tonnes of green tea leaves were produced in 2017. The production of manufactured tea (Black Tea) increased by 1.9 percent from 1,353 tonnes in 2016 to 1,379 tonnes in 2017. 27 30 BUDGET SUPPLEMENT " 2018-2019 FOOD CROPS A total of 7,780 hectares, under food crops, were harvested in 2017, representing an increase of 0.2 percent. The production of food crops increased by 0.3 percent from 106,271 tonnes in 2016 to 106,621 tonnes in 2017. CHART 52: FOODCROPS 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 90,000 5,000 7,000 9,000 110,000 130,000 120,000 100,000 TONNES HECTARES PRODUCTION AREA (RHS) CHART 53: TOTAL FISH PRODUCTION TONNES 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 5,000 20,000 30,000 25,000 15,000 6,377 5,660 6,706 5,887 5,283 4,780 5,795 12,637 14,239 16,698 22,732 FISH PRODUCTION Fish production increased by 36.1 percent, from 16,698 tonnes in 2016 to 22,732 tonnes in 2017. Production of other catch (mainly tuna for processing and exports), which accounts for 92 percent of total fish production, rose by 40.8 percent. Fresh coastal fish catch decreased by 2.6 percent. LIVESTOCK In 2017, production of beef from live cattle amounted to 2,078 tonnes, 6.2 percent higher thanin2016.Ninetysixpercentoftheproduction came from the slaughter of imported cattle which increased by 4.7 percent in 2017. Production of goat meat and mutton went up by 33.3 percent from 42 tonnes in 2016 to 56 tonnes in 2017. The production of pork decreased by 4.1 percent. 28 Traditional Sectors (cont'd) BUDGET SUPPLEMENT " 2018-2019 31 POULTRY The production of poultry increased by 3.7 percent from 45,800 tonnes in 2016 to 47,500 tonnes in 2017. MILK AND CHEESE EMPLOYMENT Total employment in the non-sugar sector was 28,900 in 2016, 36.3 percent of whom were women. CHART 54: LIVESTOCK SLAUGHTERED CHART 55: LOCAL PRODUCTION AND IMPORTS OF MILK 2007 2006 2008 2009 2010 2011 2012 2013 2014 2015 2016 15,000 18,000 21,000 24,000 27,000 30,000 NO OF HEADS TONNES 2013 2014 2015 2016 0 6,000 12,000 18,000 24,000 5,025 5,025 4,525 4,025 IMPORTED MILK LOCAL PRODUCTION OF MILK 5.0 25.0 THOUSAND 2007 CHART 56: EMPLOYMENT - NON SUGAR SECTOR 2008 2007 2009 2010 2011 2012 2013 2014 2015 2016 MALE FEMALE BOTH SEXES THOUSAND 25.0 5.0 15.0 Some 4,025 tonnes of fresh milk and cream were produced in Mauritius in 2016. Imports of fresh and dried milk went up from 17,857 tonnes in 2015 to 22,414 tonnes in 2016. 29 32 BUDGET SUPPLEMENT " 2018-2019 30 MANUFACTURING The manufacturing sector includes Sugar Processing, Food, Textiles and Other Manufacturing activities. ` Chart 57 shows that the share of the manufacturing sector, in terms of contribution to GDP, has been decreasing. CHART 58: REAL GROWTH RATE - MANUFACTURING CHART 59: TOTAL EMPLOYMENT - MANUFACTURING CHART 57: MANUFACTURING AS A % OF GDP 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 11 13 15 17 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018F AV GROWTH 07-17 +0.0 +1.0 +2.0 +3.0 % +4.0 +5.0 +2.6 +2.9 +2.4 +1.9 +0.7 +2.1 +4.7 +1.8 +0.1 +0.3 +1.4 +1.3 +1.9 90.0 100.0 110.0 105.0 95.0 115.0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 THOUSAND 112.9 113.4 104.5 103.1 99.5 98.8 101.6 101.6 101.0 98.7 The manufacturing sector grew by 1.4 percent in 2017, compared to 0.3 percent in 2016. In 2018, the sector is expected to grow by 1.3 percent, with improvements in Textile and Food. 2017 2018F In 2016, some 98,700 people were employed in the manufacturing sector. Traditional Sectors (cont'd) BUDGET SUPPLEMENT " 2018-2019 33 The output per employee increased to Rs 546,160 in 2016. SUGAR MANUFACTURING In2018,theindustryisexpectingasugarproductionofaround355,000tonneswhichisthesameasin2017. In 2017, the sugar manufacturing sector grew by 2.4 percent. It is expected to register a zero growth rate in 2018. CHART 60: OUTPUT PER EMPLOYEE IN MANUFACTURING 300,000 350,000 400,000 450,000 500,000 550,000 600,000 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 RS CHART 61: TOTAL SUGAR PRODUCTION 340,000 390,000 440,000 490,000 TONNES 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 CHART 62: REAL GROWTH RATE - SUGAR 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018F AV GROWTH 07-17 -15.0 -10.0 -5.0 +0.0 +5.0 % +10.0 +15.0 +20.0 -12.8 +5.6 +18.0 -2.9 +4.1 -5.8 -5.1 +6.6 +2.4 +0.4 +0.8 0.0 +0.7 31 34 BUDGET SUPPLEMENT " 2018-2019 32 In 2016, there were around 1,400 employees in the sugar milling sector. FOOD PROCESSING Food processing activities are expected to grow by 1.0 percent in 2018, higher than the 0.2 percent growth in 2017. Total employment in the sector increased to around 18,300 in 2016. CHART 63: TOTAL EMPLOYMENT - SUGAR CHART 64: REAL GROWTH RATE - FOOD, EXCLUDING SUGAR CHART 65: TOTAL EMPLOYMENT - FOOD, EXCLUDING SUGAR 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 0.0 0.5 1.0 1.5 2.0 THOUSAND 1.5 1.5 1.5 1.5 1.5 1.5 1.4 1.6 1.8 1.6 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018F AV GROWTH 07-17 -2.0 0.0 5.0 10.0 15.0 20.0 0.0 +2.0 +4.0 % +6.0 +8.0 +10.0 +2.7 11.4 12.1 13.2 13.8 14.5 15.2 16.5 17.3 18.2 18.3 +6.1 +4.2 +4.1 -1.4 -0.3 +7.6 +2.4 +3.0 +1.4 +0.2 +1.0 +2.7 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 THOUSAND Traditional Sectors (cont'd) BUDGET SUPPLEMENT " 2018-2019 35 TEXTILE Textile manufacturing is expected to expand by 1.0 percent in 2018, following a contraction of 0.7 percent in 2017. Total employment in the sector was around 47,100 in 2016, compared to around 48,600 in 2015. OTHER MANUFACTURING Othermanufacturingsectorsgrewby4.5percentin2017andareexpectedtoexpandby2.0percentin2018. CHART 66: REAL GROWTH RATE - TEXTILE 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018F AV GROWTH 07-17 -10.0 -5.0 0.0 +5.0 % +10.0 +15.0 +9.8 +0.3 0.0 0.0 +3.0 +2.6 +4.2 +1.0 +0.8 -1.1 -2.8 -0.7 -5.8 CHART 67: TOTAL EMPLOYMENT - TEXTILE 0.0 20.0 80.0 60.0 40.0 THOUSAND 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 64.2 63.6 54.9 53.7 50.1 48.6 49.3 49.5 48.6 47.1 CHART 68: REAL GROWTH RATE - OTHER MANUFACTURING -10.0 -5.0 0.0 5.0 % 10.0 15.0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018F AV GROWTH 07-17 -4.3 -1.0 -0.2 +4.8 +4.5 +2.0 +2.1 +2.8 +1.8 +2.0 +0.6 0.0 +12.7 CHART 69: TOTAL EMPLOYMENT - OTHER MANUFACTURING 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 28.0 30.0 32.0 34.0 36.0 38.0 THOUSAND 35.8 36.2 34.8 33.8 33.3 33.3 32.7 31.9 33.5 34.3 Total employment in the sector was estimated at around 31,900 in 2016. 33 36 BUDGET SUPPLEMENT " 2018-2019 34 CHART 70: REAL GROWTH RATE - TOURISM 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018F AV GROWTH 07-17 -10.0 -5.0 0.0 5.0 % 10.0 15.0 +12.7 +1.7 4.9 +7.0 +3.2 +0.7 +1.9 +6.3 +7.2 +11.5 +5.2 +4.7 +4.7 TOURIST ARRIVALS Some 1.3 million tourists visited Mauritius in 2017, an increase of 5.2 percent from 2016. Tourist arrivals are forecast to increase to 1.4 million in 2018. Europe is the leading market with a share of around 60 percent of total arrivals. The number of tourists from France increased by 0.5 percent, from Germany by 14.5 percent, from UK by 5.6 percent and from Italy by 12.0 percent in 2017. Reunion and South Africa remained the main source countries in the African region, with tourist arrivals from South Africa increasing by 7.0 percent over the past year. Among Asian countries, arrivals from India grew by 4.4 percent, while those from China dropped by 8.1 percent in 2017. TOURISM The tourism sector is the fourth most important contributor to the economy, accounting for 7.1 percent of GDP. In 2017, it grew by 5.2 percent and it is forecast to grow by 4.7 percent in 2018. CHART 71: TOTAL TOURIST ARRIVALS 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018F 906,971 930,456 871,356 934,827 964,642 956,441 992,503 1,038,334 1,151,252 1,275,227 1,341,860 1,410,000 Traditional Sectors (cont'd) BUDGET SUPPLEMENT " 2018-2019 37 TOURISM EARNINGS Tourism earnings increased to Rs 60.3 billion in 2017, from Rs 55.9 billion in 2016. It is estimated at Rs 62.5 billion for 2018. [Note: As from 2015, tourism earnings figures include data from money changers and foreign exchange dealers.] Average expenditure per tourist increased to around Rs 44,900 in 2017 from around Rs 43,800 in 2016. CHART 72: TOURISM EARNINGS 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 40,687 41,213 35,693 39,456 42,717 44,378 40,557 44,304 50,191 RS MILLION CHART 73: AVERAGE EXPENDITURE PER TOURIST 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 44,860 44,293 40,963 42,208 44,283 45,967 40,839 42,642 43,587 43,835 44,938 38,000 39,000 40,000 41,000 42,000 43,000 44,000 45,000 46,000 47,000 RS 60,262 55,867 According to the Survey of Inbound Tourism carried out by Statistics Mauritius during the 1st Semester of 2017, tourists from Russia were the highest spenders followed by Switzerland, UK, China and the US. Tourists spent some 13.6 million nights in Mauritius in 2017. The average length of stay per tourist works out to 10.3 nights. Visitors from UAE spent the most per night in Mauritius, followed by their Chinese, American and Swiss counterparts. Some 60 percent of total expenditure was on accommodation, 12 percent on food and beverages, 9 percent on shopping, 7 percent on sightseeing and 4 percent on entertainment and recreation. Around 60 percent of tourists travelled on a package tour (where airfare, accommodation and other items such as meals, sightseeing, car hire are included in the tour price paid before departure from the home country of the tourist) and spent some Rs 5,005 per tourist per night compared to only Rs 3,595 by those travelling on non-package tour. Some 80 percent of total tourists stay in hotels, 8.5 percent in tourist residences, 5.5 percent with friends/relatives, and 5.3 percent in guest houses. More than 90 percent of tourists from India and the UK, and 80-90 percent of tourists from China, Germany, South Africa, Italy and Switzerland stay in hotels. SURVEY OF INBOUND TOURISM 1st Semester 2017, Statistics Mauritius 35 38 BUDGET SUPPLEMENT " 2018-2019 36 EMPLOYMENT Total employment in the Accommodation and food service sector, the major component of tourism, was estimated at around 40,800 in 2016. Output per employee was around Rs 705,000 that year. As at March 2017, it was estimated that there were 30,974 employees in large establishments in hotels, air transport services, tour operators, travel agencies and car rental, slightly higher than in 2016. CHART 74: EMPLOYMENT IN LARGE ESTABLISHMENTS, HOTELS AND TRAVEL & TOURISM ACTIVITIES 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 26,622 29,000 27,664 27,685 28,487 28,935 29,115 29,352 29,437 30,556 30,974 TOURIST ACCOMMODATION As at end December 2017, 111 hotels were operational in Mauritius and one was under renovation. The total room capacity of these hotels was 13,511 with 29,650 bed places. For the year 2017, the room occupancy rate of all hotels averaged 77 percent, up from 73 percent in 2016. The bed occupancy rate also increased from 65 percent to 68 percent over the period. Large hotels accounted for 51 percent of all hotels, 78 percent of total room capacity and 80 percent of total bed places. CHART 75: OCCUPANCY RATE ROOM OCCUPANCY RATE BED OCCUPANCY RATE 2012 2012 2013 2013 2014 2014 2015 2015 2016 2016 2017 2017 62% 65% 63% 65% 65% 67% 70% 72% 73% 76% 77% 79% 70% 68% 68% 65% 67% 63% 60% 58% 57% 55% 57% 55% ALL HOTELS LARGE HOTELS Traditional Sectors (cont'd) BUDGET SUPPLEMENT " 2018-2019 39 MODE OF TRANSPORT CHART 76: CRUISE VESSELS AND TOURIST ARRIVALS BY SEA 2012 2012 2013 2014 2015 2016 2017 0 0 10 20 30 40 10,000 20,000 30,000 40,000 23 23 23 29 30 18 15 CRUISE VESSELS (RHS) TOURIST ARRIVALS BY SEA 12,815 19,797 28,365 29,565 16,930 25,047 3,336 According to the Air Traffic Forecast Report 2017 ofAirportsofMauritiusLtd,thetotalseatcapacity in 2017 was 2,353,455. Air Mauritius is the largest carrier with 46.6 percent of seat capacity. The largest foreign airline is Emirates, with 361,636 outbound seats followed by Air Austral with 10.4 percent of seat capacity. CHART 77: SEAT CAPACITY IN MAURITIUS IN 2017 Air Mauritius 46.6% Emirates 15.5% Others 17.6% Air Austral 10.4% South African Airways 4.7% Air France 5.2% Source: Air Traffic Forecast Report 2017, Airports of Mauritius Ltd Ninety-eight percent of tourists travel by air to Mauritius. During the past few years, the number of tourists arriving by cruise ships has increased significantly. In 2017, some 29,600 tourists arrived by sea. GOLF COURSES There are currently nine 18-hole Championship golf courses around the island, designed by world leading golfers. GYMKHANA PARADIS GOLF VILLAS VALRICHES TAMARINA GOLF ESTATE MONT CHOISY CONSTANCE BELLE MARE ANAHITA ILE AUX CERFS AVALON GOLF ESTATE 18-HOLE CHAMPIONSHIP GOLF COURSES IN MAURITIUS 37 40 BUDGET SUPPLEMENT " 2018-2019 38 CONSTRUCTION In 2017, the construction industry recovered from a five-year contraction, with a growth rate of 7.5 percent. This upturn resulted mostly from higher private investment, especially in the tourism sector. Growth in the construction sector is expected to rise further to 9.5 percent in 2018, driven mostly by investment in major public infrastructure projects. CHART 78: REAL GROWTH RATE - CONSTRUCTION 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018F AV GROWTH 07-17 -10.0 -5.0 0.0 +5.0 % +10.0 +15.0 +20.0 +15.7 +11.8 +5.9 +4.3 -2.0 -3.0 -4.9 0.0 +7.5 +9.5 +1.4 -8.2 -8.5 CHART 79: INVESTMENT IN CONSTRUCTION 1,000 1,200 1,400 1,600 1,800 2,000 2,200 2,400 2,600 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018F RS MILLION Total investment in the construction sector increased by 12.6 percent in 2017 to reach Rs 1.3 billion. It is expected to increase by 9.3 percent in 2018 to Rs 1.4 billion Traditional Sectors (cont'd) BUDGET SUPPLEMENT " 2018-2019 41 Investment in building and construction work, whichaccountsfor63.0percentoftotalinvestment, increased by 7.6 percent from Rs 46,408 million in 2016 to Rs 49,917 million in 2017. It is expected to increase by 12.8 percent to Rs 56,303 million in 2018. CHART 80: INVESTMENT IN BUILDING AND CONSTRUCTION WORK 2015 2016 2017 2018F RS MILLION 13,067 11,677 12,287 14,199 16,078 26,026 12,802 24,828 9,872 24,859 10,726 21.925 EMPLOYMENT Total employment in the construction sector was estimated at 39,600 in 2016. Output per employee increased by 1.6 percent to reach Rs 404,722 in 2016. CHART 81: TOTAL EMPLOYMENT - CONSTRUCTION 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 38.0 39.0 40.0 41.0 42.0 43.0 44.0 THOUSAND 40.0 40.1 41.4 42.5 42.6 42.8 42.7 40.7 40.2 39.6 CHART 82: OUTPUT PER EMPLOYEE IN THE CONSTRUCTION SECTOR 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 320,000 340,000 360,000 380,000 400,000 420,000 440,000 460,000 Rs 39 RESIDENTIAL BUILDING OTHER CONSTRUCTION WORK NON-RESIDENTIAL BUILDING 42 BUDGET SUPPLEMENT " 2018-2019 40 FINANCIAL SERVICES The Financial and Insurance activities sector contributes around 10.5 percent to GDP. The sector expanded by 5.5 percent in 2017 and is expected to grow at the same rate in 2018. The total investment in the sector amounted to Rs 2.3 billion in 2017. Some Rs 1.8 billion are expected to be invested in 2018. CHART 83: FINANCIAL AND INSURANCE ACTIVITIES AS A % OF GDP 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018F 10.0 10.5 11.0 11.5 CHART 84: REAL GROWTH RATE - FINANCIAL AND INSURANCE ACTIVITIES 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018F AV GROWTH 07-17 +7.6 +10.1 +4.7 +4.5 +5.7 +5.7 +5.5 +5.5 +5.3 +5.7 +5.5 +5.5 +6.0 +0.0 +2.0 +4.0 +6.0 % +8.0 +10.0 +12.0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018f 1,000 1,500 2.000 2.500 3,000 RS MILLION CHART 85: INVESTMENT IN FINANCIAL AND INSURANCE ACTIVITIES % Traditional Sectors (cont'd) BUDGET SUPPLEMENT " 2018-2019 43 CHART 86: TOTAL EMPLOYMENT - FINANCIAL AND INSURANCE ACTIVITIES 0.0 5.0 10.0 15.0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 THOUSANDS 9.3 10.6 11.3 11.9 12.2 12.6 13.1 13.5 13.5 13.5 Output per employee works out to Rs 3.5 million in 2016. TABLE 1 : GLOBAL BUSINESS EVOLUTION Number of Live GBCs1 Category12 Category2 MCs3 Global Funds4 Jan-13 9,660 11,207 165 860 Jan-14 9,825 10,668 171 871 Jan-15 10,306 11,011 174 883 Jan-16 10,756 10,688 180 917 Jan-17 11,067 10,283 178 929 Jan-18 11,501 10,084 182 982 1: Exclude companies Struck off / surrendered licence/ licence revoked/ Licence Lapsed or changed regime during the year 2: Include Global Funds 3: MCs Management Companies (Include Corporate Trustees as from May 2008) 4: Exclude funds in process of winding up CHART 88: NUMBER OF LIVE GBCS JAN- 13 JAN- 14 JAN- 15 JAN- 16 JAN- 17 JAN -18 9,500 10,500 11,500 12,500 GBC (CATEGORY 1) GBC (CATEGORY 2) 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2,500,000 3,000,000 3,500,000 4,000,000 RS CHART 87: OUTPUT PER EMPLOYEE IN FINANCIAL AND INSURANCE ACTIVITIES Source: Financial Services Commission Source: Financial Services Commission The Financial and Insurance activities sector employed around 13,500 workers in 2016, representing 2.4 percent of total employment in the economy. GLOBAL BUSINESS The Global business sector contributed around 5.5 percent to GDP and grew by 4.5 percent in 2017. It is expected to expand at a higher rate of 4.7 percent in 2018. Between January 2017 and 2018, the number of live global business companies Category 1 (GBC1) increased by 3.9 percent to 11,501. During the same period, the number of GBC Category 2 declined from 10,283 to 10,084. 41 44 BUDGET SUPPLEMENT " 2018-2019 42 EMPLOYMENT Some 3,355 persons were employed in Management Companies in December 2016, compared to 2,987 in December 2015. Provisional CHART 89: EMPLOYMENT IN MANAGEMENT COMPANIES 2012 2013 2014 2015 2016 2017 2286 2451 2724 2988 3355 3614 CHART 90: TOTAL GBC1 OUTWARD INVESTMENT 2012 2013 2014 2015 2016 0 100 200 300 USD BILLION -10 10 50 70 30 % SHARE OF INVESTMENT TO INDIA (RHS) TOTAL OF GBC 1 INVESTMENT SHARE OF INVESTMENT TO AFRICA (RHS) In 2016, total outward investment through GBC1 entities amounted to USD 327.6 billion, out of which around 55 percent was to India. The share of total investment into Africa increased from 8.7 percent in 2015 to 9.6 percent in 2016. INVESTMENT figures for 2017 indicated a further increase of 3,614 in employment. Traditional Sectors (cont'd) BUDGET SUPPLEMENT " 2018-2019 45 In 2016, large establishments in the ICT sector employed around 15,390 persons, representing 4.9 percent of the total employment in large establishments nationwide. TABLE 2: EMPLOYMENT IN LARGE ESTABLISHMENTS - ICT SECTOR 2012 2013 2014 2015 2016 Large Establishments in ICT sector 136 138 140 134 129 Employment in ICT sector 12,972 14,094 14,747 15,006 15,390 Male 7,068 7,600 7,900 8,120 8,060 Female 5,904 6,494 6,847 6,886 7,330 CHART 91: ICT AS A % OF GDP 3 4 5 6 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018F ICT The ICT sector contributes around 5 percent to GDP, on average. CHART 92: REAL GROWTH RATE - ICT 00 +2.0 +6.0 +4.0 +8.0 % +10.0 +12.0 +16.0 +14.0 +15.1 +12.4 +11.7 +11.2 +9.4 +8.9 +6.9 +6.6 +7.1 +5.4 +4.4 +4.5 +9.0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018F AV GROWTH 07-17 Activities in the ICT sector expanded by 4.4 percent in 2017 and are expected to grow by 4.5 percent in 2018. 43 46 BUDGET SUPPLEMENT " 2018-2019 44 The proportion of the population aged 5 and above who can use computers reached 60.5 percent in 2016, indicating an increase of 1.7 percent compared to 2014. Mauritius has been consistently improving its performance in the ICT sector. The International Telecommunication Union ranked Mauritius, with anICTDevelopmentIndexof5.88,1stinAfricaand 72nd out of 176 countries worldwide in 2017. CHART 94: ICT INFRASTRUCTURE AND ACCESS 2007 2006 2008 2009 2010 2011 2012 2013 2014 2015 2016 0 50 100 150 200 PER 100 INHABITANTS FIXED TELEPHONE LINES MOBILE CELLULAR SUBSCRIPTIONS INTERNET SUBSCRIPTIONS CHART 95: ICT DEVELOPMENT INDEX 2014 2015 2016 2017 5.22 5.27 5.51 5.88 Source: International Telecommunication Union While the percentage of households with cellular mobile telephones increased by 2.6 percentbetween2014and2016,thepercentage of those with fixed telephones declined by 2.5 percent. The number of households with internet access increased by 11.3 percent in 2016, to reach 63.3 percent of total households. The number of mobile cellular subscriptions per 100 inhabitants went up from 139.5 in 2015 to 143.6 in 2016. This represented an increase of 2.9 percent, with 1,814,000 mobile cellular subscriptions in 2016. CHART 93: TRADE IN ICT TRADE IN ICT SERVICES TRADE IN ICT GOODS IMPORT EXPORT 2012 2012 2013 2013 2014 2014 2015 2015 2016 2016 2017 2017 0 0 2,000 5,000 4,000 10,000 6,000 15,000 8,000 20,000 RS MILLION RS MILLION In 2017, exports of ICT goods amounted to Rs 1,295million,whileimportswereRs9,653million. Trade in ICT goods was lower than in 2015 and 2016, mainly due to a decline in both imports and re-exports of cellular phones. Exports of ICT services amounted to Rs 4,385 million against imports of Rs 3,523 million. Traditional Sectors (cont'd) BUDGET SUPPLEMENT " 2018-2019 47 Emerging Sectors REAL ESTATE In 2017, Real Estate activities grew by 3.3 percent and are expected to expand by 3.4 percent in 2018. CHART 97: INVESTMENT IN REAL ESTATE ACTIVITIES Economic Review And Outlook: Sectoral CHART 96: REAL GROWTH RATE - REAL ESTATE ACTIVITIES 00 +1.0 +3.0 +2.0 +4.0 % +5.0 +6.0 +8.0 +7.0 +4.6 +4.8 +5.6 +6.2 +7.1 +6.9 +6.1 +5.3 +4.3 +4.1 +3.3 +3.4 +5.3 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018F AV GROWTH 07-17 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018F 14,000 19,000 24,000 29,000 34,000 RS MILLION In 2017, around 38 percent of total investment was directed towards the Real Estate sector. Investment in the sector went up by 6.3 percent and is expected to increase by 4.7 percent to reach Rs 31,297 million in 2018. 45 48 BUDGET SUPPLEMENT " 2018-2019 46 It was estimated that 50 IRS, 100 RES and 67 PDS residential units were sold in 2017. Between 2005 and 2017, total revenue from the sales of these residential units amounted to Rs 6,708 million namely Rs 2,709 million from IRS, Rs 3,023 million from RES, and Rs 976 million from PDS. CHART 98: GROSS DIRECT INVESTMENT FLOWS IN REAL ESTATE ACTIVITIES IN 2017 CHART 99: RESIDENTIAL UNITS SOLD 0 0 0 10 20 30 40 50 60 70 80 50 50 100 100 150 150 200 200 250 250 2015 2007 2009 2011 2013 2015 2017 2017 2016 2009 2010 2011 2012 2013 2014 2015 2016 2017 67 2 100 223 225 129 186 103 39 50 94 198 83 117 101 62 42 33 159 113 82 20 59 229 NUMBER OF IRS UNITS SOLD NUMBER OF RES UNITS SOLD NUMBER OF PDS UNITS SOLD CHART 100: REVENUE FROM SALES OF RESIDENTIAL UNITS IRS SALES REVENUE RES SALES REVENUE PDS SALES REVENUE 2005- 2010 2005-2010 2011 2012 2013 2014 2015 2016 2017 2011 2012 2013 2014 2015 2016 2017 0 0 0 200 400 600 800 1000 1200 1000 2000 3000 4000 5000 5000 10000 15000 20000 55.2 976.4 1 , 6 2 9 1 8 , 6 9 6 2 , 7 7 3 2 , 9 2 0 3 , 0 1 3 1 , 5 5 6 1 , 7 2 7 2 , 6 8 9 1 , 6 7 1 3 , 7 0 4 2 , 5 7 0 4 , 0 9 6 3 , 0 2 3 3 , 8 8 1 2 , 7 0 9 RS MILLION RS MILLION RS MILLION 2017 2016 Source: Economic Development Board 1. The Integrated Resort Scheme (IRS), the Real Estate Scheme (RES) and Property Development Scheme (PDS) are aimed at encouraging the acquisition of residential property in Mauritius by non-citizens. IRS/RES/IHS/PDS1 IRS/RES/IHS/PDS 65.7% Others 34.3% Source: Economic Development Board Emerging Sectors (cont'd) In 2017, Rs 8.8 billion of FDI were invested in Real Estate development, of which 65.7 percent went to projects under the IRS/RES/IHS/PDS Schemes. 1 1 , 0 2 5 BUDGET SUPPLEMENT " 2018-2019 49 47 PUBLIC FUNDED INSTITUTIONS PRIVATE & SELF-STUDY OVERSEAS CHART 101: ENROLMENT IN TERTIARY EDUCATION 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 15,880 9,612 9,531 11,248 10,003 17,372 19,882 21,766 11,661 10,907 10,063 13,464 22,442 21,562 18,603 17,994 23,627 8,958 10,151 17,664 22,793 21,621 16,250 11,099 9,911 17,212 20,966 9,460 10,663 10,939 CHART 102: ENROLMENT OF INTERNATIONAL STUDENTS IN TERTIARY EDUCATION LOCALLY 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 0 1000 2000 1500 500 MALE FEMALE TOTAL 2. Students on Self-study follow courses exclusively through the distance education/e-learning mode Total enrolment in tertiary education amounted to 48,089 in 2016. Around 80 percent (38,178) were studying locally and 20 percent (9,911) overseas. Of those based locally, around 55 percent (20,966) were enrolled in public funded institutions, 32 percent (12,303) in private institutions and 13 percent (4,909) were undertaking self-study2 without going through a tertiary institution locally. The number of foreign students in Mauritius has increased from 573 in 2007 to 1,736 in 2016. The students are mainly enrolled in medical programmes,businessmanagement,information technology, hospitality management and Law. It is estimated that an international student spends on average MUR 20,000 per month which includes tuition fees, accommodation costs and living expenses. KNOWLEDGE CENTRE OF EXCELLENCE TABLE 3: MAIN COUNTRIES OF ORIGIN OF INTERNATIONAL STUDENTS Number Percentage India 503 29.0 South Africa 231 13.3 Nigeria 146 8.4 Madagascar 122 7.0 France 110 6.3 Tanzania 82 4.7 Kenya 79 4.6 Theforeignstudentscamefrom 69differentcountries,mainlyIndia,SouthAfrica,Nigeria,Madagascar, France, Tanzania and Kenya. 2. Students on Self-study follow courses exclusively through the distance education/e-learning mode 50 BUDGET SUPPLEMENT " 2018-2019 48 MEDICAL HUB CHART 103: MAIN AREAS OF MEDICAL TREATMENT IN 2017 General Medical Check ups 36% Cardiology 17% Cosmetic and plastic surgery 15% General surgery 9% Other 23% Around 14 percent of foreign patients were from France and 16 percent from countries in the region. CHART 105: PUBLIC & PRIVATE SECTOR HEALTH PERSONNEL IN 2016 Doctors (incl.314 Specialists) 23.0% Dentists 1% Dentists 11% Qualified Nurses & Midwife 75% Qualified Nurses & Midwife 16% Pharmacists 17% Pharmacists 1% Doctors (incl.499 Specialists) 56.0% PUBLIC SECTOR SELECTED HEALTH PERSONNEL IN 2016 PRIVATE SECTOR SELECTED HEALTH PERSONNEL IN 2016 There are 5 regional hospitals and 2 district hospitals providing public healthcare services in Mauritius. In addition, there are 3 specialised hospitals for chest diseases, 1 for eye diseases, 1 for ear, nose and throat (E.N.T.) diseases, 1 psychiatric hospital and 2 Cardiac Centres. Seventeen private health institutions are also providing health care services. There are some 5,000 medical and paramedical personnel in the public sector and 2,900 in the private sector. CHART 104: MAIN COUNTRIES OF ORIGIN OF MEDICAL TOURISTS IN 2017 0 5 10 % 15 FRANCE SEYCHELLES COMOROS 3 3 MADAGASCAR 10 14 Source: Economic Development Board In2017,some11,000foreignpatients visited Mauritius for treatment compared to 18,000 in 2016. They choseMauritiusmainlyforadvanced treatment in cardiology, cosmetic & plastic surgery, hair grafting and fertility treatment. Emerging Sectors (cont'd) BUDGET SUPPLEMENT " 2018-2019 51 49 RENEWABLE ENERGY Bagasse was the main source of energy supply from the renewables. CHART 106: RENEWABLES AS A % OF TOTAL ENERGY REQUIREMENTS CHART 107: SOURCES OF RENEWABLES AS A % OF TOTAL LOCAL (RENEWABLES) REQUIREMENTS IN 2016 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 0 5 10 15 20 Fuel Wood 2.8% Hydro 3.8% Wind 0.7% Landfill Gas 0.7% Bagasse 90.9% Photovoltaic 1.1% In 2016, around 15 percent of the total primary energy requirement was produced from local renewable sources comprising hydro, wind, landfill gas, photovoltaic, bagasse and fuel wood. Energy production from photovoltaic went up by 18.2 percent in 2016, from 2.2 ktoe3 to 2.6 ktoe. Production from wind increased significantly from 0.2 ktoe to 1.5 ktoe that is around 7 folds. 3. Ktoe: thousand tonnes of oil equivalent 52 BUDGET SUPPLEMENT " 2018-2019 50 CREATIVE INDUSTRY Between 2016 and 2017, the contribution to GDP of the Arts, Entertainment and Recreation sector increased from 3.0 percent to 3.1 percent . The sector expanded by 4.7 percent in 2017 and is expected to grow by 4.8 percent in 2018. CHART 108: ARTS, ENTERTAINMENT AND RECREATION AS A % OF GDP CHART 109: REAL GROWTH RATE - ARTS, ENTERTAINMENT AND RECREATION 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018F 1.50 2.00 2.50 3.00 3.50 0 +2.0 +6.0 +4.0 +8.0 % +10.0 +12.0 +14.0 +8.1 +11.5 +10.9 +5.5 +6.7 +7.7 +7.7 +6.8 +4.8 +4.7 +4.7 +4.8 +7.2 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018F AV GROWTH 07-17 CHART 110: INVESTMENT IN ARTS, ENTERTAINMENT AND RECREATION 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018F 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000 RS MILLION In 2017, some Rs 571 million were invested in the Arts, Entertainment and Recreation sector. In 2018, investment is expected to increase substantially to Rs 1,785 million, mainly due to the construction of the Multi-Sport Complex at Cote d'Or. Emerging Sectors (cont'd) BUDGET SUPPLEMENT " 2018-2019 53 51 CHART 111: TOTAL EMPLOYMENT - ARTS, ENTERTAINMENT AND RECREATION In 2016, employment in the sector increased from around 11,600 to around 12,200 persons. Output per employee increased from Rs 1,066,293 in 2015 to Rs 1,078,700 in 2016. 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 0 5 10 15 THOUSAND 4.6 5.4 6.4 7.6 7.6 8.9 9.8 10.6 11.6 12.2 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 980,000 1,030,000 1,080,000 1,130,000 1,180,000 RS CHART 112: OUTPUT PER EMPLOYEE IN ARTS, ENTERTAINMENT AND RECREATION 54 BUDGET SUPPLEMENT " 2018-2019 52 4. The Republic of Mauritius established that the outer edge of the continental margin in the relevant land territory in the Chagos Archipelago Region (Egmont and Diego Garcia Islands) extends beyond 200 nautical miles. As required by the United Nations Convention on the Law of the Sea (UNCLOS Article 76), Mauritius made a submission to the Commission to set out the coordinates of the outer limits of the Extended Continental Shelf (ECS). BLUE ECONOMY Mauritius has a total maritime zone of 2.6 million km2 , of which 2.3 million km2 represents the Exclusive Economic Zone. An additional expanse of 396,000 km2 is co-managed with the Republic of Seychelles.4 Emerging Sectors (cont'd) EXCLUSIVE ECONOMIC ZONE OF THE REPUBLIC OF MAURITIUS SUBMISSION IN THE REGION OF RODRIGUES ISLAND JOINT MANAGEMENT AREA (MAURITIUS AND SEYCHELLES EXTENDED CONTINENTAL SHELF) PRELIMINARY INFORMATION IN THE CHAGOS ARCHIPELAGO REGION BUDGET SUPPLEMENT " 2018-2019 55 53 SEAPORT In 2017, out of the 3,184 vessels which visited Port Louis, 34 percent were fishing vessels while 17 percent were carrying containers. The share of cruise vessels has increased by about 1 percent in 2017. CHART 113: REAL GROWTH RATE - SEAFOOD CHART 114: TOTAL EXPORTS AND IMPORTS OF FISH AND FISH PREPARATIONS TABLE 4: VESSEL TRAFFIC 0 +5000 +10000 +15000 +20000 0.0 - 5.0 +5.0 +10.0 % +15.0 +2.2 +6.8 +12.0 +11.3 -1.6 +6.4 -2.8 +9.8 +6.6 +3.6 +4.0 +1.6 +5.2 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018F AV GROWTH 07-17 2011 2012 2013 2014 2015 2016 2017 RS MILLION NET EXPORTS EXPORTS (F.O.B VALUE) IMPORTS (C.I.F VALUE) +201 +1,767 +2,719 +3,590 +3,563 +2,945 +1,637 2011 2012 2013 2014 2015 2016 2017 Vessel Traffic 2,654 3,476 3,652 3,329 2,947 2,934 3,184 Containerised Vessels 543 624 669 607 568 567 538 Dry Bulk Carrriers 53 57 61 58 52 56 58 Tankers (Liquid Bulk Carriers) 74 71 70 61 78 141 115 General Bulk Vessels 13 11 5 7 103 101 100 Fishing Vessels 767 851 993 1,067 953 977 1,067 Cruise Vessels 23 23 15 18 23 28 30 Others 1,181 1,839 1,839 1,511 1,170 1,064 1,276 5. Re-exports are goods which are exported in the same condition as imported or after undergoing minor operations which leave them essentially unchanged THE SEAFOOD SECTOR In 2017, imports of seafood products increased year-on-year from Rs 11,132 million to Rs 12,634 million. These imports were re-exported, processedandcannedforexports,andconsumed locally. Total re-exports5 in 2017 were estimated at Rs 3,503 million, while processed seafood products exported amounted to Rs 10,768 million. A net export of Rs 1,637 million in the seafood sector was recorded. Source: Mauritius Port Authority 56 BUDGET SUPPLEMENT " 2018-2019 54 Total cargo traffic (both imports and exports) increased from 7.3 million tonnes in 2016 to 7.7 million tonnes in 2017. In 2017, some 379,371 containers were handled in 2017 – 250,916 containers (TEU: 20 foot equivalent units) for imports and 128,455 for exports. CHART 115: CARGO TRAFFIC CHART 116: CONTAINER TRAFFIC 2011 2012 2013 2014 2015 2016 2017 0 2.0 4.0 6.0 8.0 10.0 MILLION TONNES 5.4 5.9 5.7 5.7 5.7 6.0 6.4 1.3 1.3 1.1 1.1 1.2 1.1 1.1 2011 2012 2013 2014 2015 2016 2017 300,000 320,000 340,000 360,000 380,000 400,000 420,000 440,000 TEU'S IMPORTS EXPORTS Source: Mauritius Port Authority Source: Mauritius Port Authority Emerging Sectors (cont'd) 60 BUDGET SUPPLEMENT " 2018-2019 Printed by Government Printing Department La Tour Koenig Pointe aux Sables June 2018