Sunday, June 21, 2009

Mauritius in line for AfDB budget support

CAPE TOWN, June 11 (Reuters) - The African Development Bank (AfDB) was considering offering Mauritius a loan to help deal with the impact of the global economic crisis, the Indian Ocean island's finance minister said on Thursday.

The bank has just lent $1.5 billion to Botswana to plug a large budget deficit and AfDB President Donald Kaberuka told Reuters this week that other countries were seeking support.

"He (Kaberuka) told me they will consider extending the same type of facility to Mauritius," Finance Minister Ramakrishna Sithanen told Reuters on the sidelines of the World Economic Forum Africa summit in Cape Town.

"I will be travelling to the AfDB to start discussions with them," he added.

Mauritius has suffered like other countries as the global downturn squeezes demand for its core tourism and textiles sectors. The economy is expected to grow by 2.3 percent in 2009, according to a Reuters poll of economists this month.

Sithanen said the facility was available to countries that had carried out economic reforms but were adversely affected by the downturn.

He did not say how much could be involved.

"This will depend on what our projections show for the requirement of the external balance," Sithanen said. "We are doing it as part of a contingency plan in case we hit that 'black swan.'"

Sithanen said the island was also continuing negotiations with the International Monetary Fund (IMF) for a Flexible Credit Line (FCL) as a precautionary measure because of the downturn.

"We have not finalised the figures yet. That will depend to a large extent on what will happen to the external balance," he said.

"It is very difficult to predict how much exports are going to be affected, by how much tourism is going to be affected. So we are taking a very flexible view. So now we are engaged in the principle of having access to these resources and then we will have to decide."