Banking & Finance Insights - Country Updates

Bank of Mauritius issues a banking licence to Bank of China

The Bank of Mauritius has, on 18 March 2016, issued a banking licence to Bank of China (Mauritius) Limited, a locallyincorporated wholly-owned subsidiary of Bank of China.

The establishment of Bank of China (Mauritius) Limited is in line with the Bank of Mauritius's objective of attracting international banks to Mauritius to strengthen the position of Mauritius as an international financial centre.

National Assembly passes the Build Operate Transfer Projects Act 2016

As part of the Government's strategy to deliver large scale infrastructure projects, the National Assembly passed the Build Operate Transfer Projects Act 2016 (the Act) on 29 March 2016. The Act came into force on 05 April 2016.

The Act seeks to encourage active participation of the private sector to finance the country's infrastructure needs and governs the regulatory and contractual framework to be put into place where a Ministry, governmental department, statutory body or any other Government-owned or controlled entity enters into an agreement with a private party for the implementation of a BOT project1.

The Act disapplies the Public-Private Partnership Act 2004 and the Public Procurement Act 2006 in relation to BOT projects.

IMF concludes 2015 Article IV consultation with Mauritius and warns of spillover risks to the Mauritian banking sector

The International Monetary Fund's (the IMF) has, in its report of 11 March 2016, sounded the alarm in relation to various risks to the Mauritian banking sector. Pursuant to Article IV of the IMF's Articles of Agreement, the IMF produced its staff report to its executive board which informed discussion by the executive board and concluded the consultation with Mauritius.

Amongst the various issues flagged by the IMF, the staff report identified as risky, the strategy on Mauritian banks to increase their Segment B activities (foreign-sourced income, including from Global Business Companies and non-residents) in light of the challenges the IMF associated with assessing the funding risk from Global Business Companies and non-resident sources. Moreover, the IMF identified potential spillover risks into the Mauritian banking sector triggered, for instance, by a significant revision to the DTAA treaty with India or by an intensification of initiatives against tax base erosion and avoidance. Such events, the IMF forewarned, could lead to a decline in Segment B deposits in domestic...