27 June 2016

Mauritius: Ministerial Committee set up to look into repercussions of Brexit issue

Ministerial Committee under the Chairmanship of the Minister of Finance and Economic Development, Mr Pravind Jugnauth, was set up following Cabinet meeting on 24 June 2016 to look into and make recommendations on the repercussions of the exit of the United Kingdom from the European Union (EU).

The Minister of Finance and Economic Development met with representatives of both the private and public sectors on Friday regarding the issue of the exit of the UK from the EU. A communiqué issued on the same day by the Ministry of Finance and Economic Development says that Brexit will undoubtedly have repercussions globally and in Mauritius. 

Article 50 of the EU Treaty provides for a transition period of 2 years for the UK to negotiate the terms and conditions of its exit. It stipulates the following:

the Treaties shall cease to apply to the State in question from the date of entry into force of the withdrawal agreement or, failing that, two years after the notification, unless the European Council in agreement with the member state concerned, unanimously decides to extend this period.

The Committee noted that it would be left to the next UK Prime Minister to initiate any action to trigger Article 50. Hence, it is expected that a status quo would be maintained for at least the next three months.

Further, it was highlighted that Mauritius will thus be able to retain its current preferential market access and will continue to trade on a duty free and quota free basis during that period since the transitional period of two years would only begin after the UK notification.

The share of our total exports to the UK has dropped from 34 per cent in 2008 to 12.6 per cent in 2015 stemming, inter alia, from our market diversification strategy. Mauritius’ export denominated in UK Pound Sterling which was 18 per cent in 2008 has declined to 6 per cent in 2015.

The Committee pointed out that Brexit may weaken the UK economy in the medium term with implications for some sectors of the Mauritian economy. In this context, the Joint Public-Private Sector Technical Committee agreed to pursue its assessment of Mauritius trade with the UK in various sectors with a view to identifying areas which may be vulnerable.

On the other hand, the Bank of Mauritius (BOM) is monitoring closely all developments in the international financial markets. The BOM has re-affirmed that it stands ready to intervene and take measures, if necessary, to protect the economic interest of Mauritius.

Government will continue to monitor all developments related to Brexit very closely through the inter-Ministerial Committee.

No comments: