Mauritius: New Leasing Facilities in USD and Euro to Export-oriented Enterprises

Government is introducing as from today new leasing facilities in US Dollar (USD) and Euro to export-oriented enterprises of the textile sector under the Leasing Equipment Modernisation Scheme (LEMS) in Forex to bring a variation to the current LEMS in local currency.

Announcing the scheme, this morning at a press conference in Port Louis, the Vice-Prime Minister and Minister of Finance and Economic Development, Mr Xavier-Luc Duval, said that a sum of around Rs 90 million has been earmarked for the project for which the fixed rate line of credit made available to the lessees will vary from 2.9% in USD and 2.75% in Euro.

The rationale of the leasing facilities, he explained, is to broaden the scope of LEMS which has been operational since three years with a capital of Rs 1.4 billion and bears an actual rate of 7.25% in local currency. Besides, he said, it will further boost up the much required investment in equipment and machinery in the manufacturing sector and will also relieve the benefitting enterprises from currency risks since they are already dealing in Forex.

Another benefit of these new leasing facilities, he added, is to address the low capital productivity and increase the efficiency in that sector at a time where the global economy continues to remain fragile and our main export market Europe, representing over 60% of our exports, is expected to continue in recession.

With the new measures, Government will extend a line of credit to leasing companies at current relevant cost of capital of USD 0.9% and Euro 0.75%. Leasing companies, on their part, have agreed to apply a reduced margin of 2% for LEMS in Forex compared to 3% on LEMS in local currency.

During the press conference, VPM Duval also expressed his satisfaction following the release of the Errors, Omissions and Anomalies report on the Pay Research Bureau report 2013, which he said, has reduced the gap between the top earners and the low earners in the Civil Service. The report will cost Government an additional Rs 1 billion.