Download HISTORICAL SUCCESS Sustained Growth (Percent)

AID FOR TRADE
ARCHITECTURE
MAURITIUS VIEW
1
EXPECTATIONS FROM AFT
Type of assistance: Non-debt increasing
Eligibility: All DCs suffering from erosion of
preferences
Duration: Between now and end of 10th EDF
Modality:
Budget
Support
preferred/
infrastructure, human capital and social safety nets
2
WHY NON DEBT INCREASING?
Public finance cannot support market rate
debt given need to consolidate in response
to shocks
 Only transitional support concentrated on
initial years- will decline over the period
 In present value terms, cost of support is
lower than cost of preferences for ever
 High return -increasing resilience and
reducing reliance on aid

3
WHY BUDGET SUPPORT?

Policy flexibility

Faster response to adjustment needs

Adjustments are easier through the budget

A higher degree of national ownership

Improves coordination with other development
partners
4
HOW SHOULD AFT BE
OPERATIONALISED?






Seek grants under the AFT Scheme through
multilateral/bilateral channels
Linked to trade liberalisation as well as regional
integration
Have a well defined programme for the transition
Have a full costing of the programme
Have a self assessment checklist
Existing or future Regional Funds could be
redirected
5
Benefits of Redirecting Regional Funds

Same type of interventions would be supported at
the regional level
– Regional Infrastructure
– Upgrading of Human Capital
– Behind the Border Trade Facilitation

Higher payoffs as measured by:
– Reduction in external tariffs and removal of NTBs
– adoption of trade facilitation measures
– Improving scores on Doing Business and the Heritage
Index of Economic Freedom
6
ROLE OF INTERNATIONAL
INSTITUTIONS
Support for developing a programme
 Help identify the reforms
 Help with costing of the transition
 Endorse the programme and self assessment
checklist of each country
 Monitor the use being made of the AFT
money

7
Role of Regional Organizations
Provide a framework for encouraging
reform by countries ready to go while
assisting those that need more time
 Emphasize performance related policy
reform and assist in the monitoring
 Link multi-lateral liberalization and regional
integration

8
CASE OF MAURITIUS
Having to face the triple shocks of
dismantling of MFA, cut in the price of
sugar, rising energy prices
 Government finances and the
macroeconomic situation are deteriorating
 Making the transition is socially and
economically very costly and politically
difficult

9
OUR PROGRAMME

Fiscal consolidation

Investment Climate Improvement

Restructuring and consolidating existing
economic pillars

Diversifying into new economic activities
10
TARGETS AND INDICATORS
FISCAL CONSOLIDATION
 Golden
Rule
 Sustainable
Investment Rule
11
TARGETS AND INDICATORS
INVESTMENT CLIMATE

Move from 23rd in Doing Business to Top
10

Implementing the principle of Silent
Agreement
12
Consolidating Existing Pillars and
Diversification
2000
1990
TEXTILE
SUGAR
TOURISM
1980
1970
TEXTILE
SUGAR
TOURISM
FINANCIAL
SERVICES
FREEPORT
TEXTILE
SUGAR
TOURISM
FINANCIAL SERV.
ICT / BPO
REAL ESTATE
SEAFOOD/
AQUACULTURE
KNOWLEDGE
PHARMACEUTICALS
ENERGY
SUGAR
Monocrop
Economy
Manufacturing
& Tourism
Manufacturing
& Services
Economy
Business
Platform
13
OVERALL OBJECTIVE

From a 4-pillar to an 8-pillar economy in 10
years

First, we must succeed the transition
14
COSTS OF TRANSITION
Four billion euros over 10 years
 Frontloaded
Investing in production
1.9 billion

Infrastructure
1.8 billion
Training & retraining
100 million
15
SUPPORT FROM
INTERNATIONAL
INSTITUTIONS



IMF: Fiscal consolidation & finding fiscal space
for social safety nets
World Bank: Review of incentive framework,
need for infrastructure support, programmes to
assist reallocation of resources
IMF/WB assist countries in determining the cost
of transition from preference dependent to
liberalised trade as a basis to support their efforts
to mobilise financing under AFT
16
MECHANISMS FOR
INTERNATIONAL SUPPORT
NEEDED NOW
Shocks already having impact
 Cost of inaction by Int’l community is high
 Cost is low compared to benefits
 A visible AFT program could favourably
change the dynamics of the Doha Round
 Donor community need to lead

17
THANK YOU
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