Mauritius to keep economic stimulus

By Jean Paul Arouff

PORT LOUIS (Reuters) - Mauritius expects economic growth back above 5 percent in two years and the finance minister said in a budget speech on Wednesday that the budget deficit has not risen as rapidly as initially feared.

The Indian Ocean Island nation launched a $340 million stimulus package last December to spur growth amid the global recession and Ramakrishna Sithanen said Treasury would not withdraw it until the end of 2010.

He said the budget deficit for 2008/09 (July-June) was at 3 percent of gross domestic product and is seen at 4.5 percent for the second half of 2009 and for 2010. Sithanen did not give a deficit figure for 2009/10 financial year.

The government has realigned its financial year with the calendar year starting 2010. It issued a mini budget in May to cover the second half ending December.

"We have reached the conclusion that it is more prudent to allow economic recovery to take hold, to be cemented and to be sustainable before moving out of the stimulus package," Sithanen said.

"But at the same time we have to avoid the trap of a very high budget deficit."

The global economic slowdown hit the $9 billion economy hard, mainly because of its reliance on tourism, trade and its position as an offshore finance centre.

Sithanen told parliament the government estimates economic growth of 2.8 percent this year and sees 4.3 and 5 percent in the next two consecutive years.