PORT LOUIS (Reuters) - The European Union said on Monday it was giving Mauritius 140 million euros in direct budgetary assistance for 2011-2013 to help the Indian Ocean island’s reforms towards becoming a high-growth economy.
Alessandro Mariani, the EU’s ambassador to Mauritius, said the new grant was a substantial increase over a previous allocation, which reflected the island’s performance on reforms of its economy and the sugar sector.
Mauritian sugar producers have been hit hard after the European Union cut its guaranteed price for African, Caribbean and Pacific (ACP) sugar by 36 percent. The final tranche of price cuts took effect in October 2009.
Large-scale producers have sought to diversify their revenue by producing electricity and ethanol, and have shed human labour for machines. But small-scale producers have found it harder to cope.
“Mauritius has performed very well in the first phase of the accompanying measures for sugar protocol countries. This second allocation will continue to support the economic and sugar reform programme of Mauritius through general budget support,” Mariani said in a statement.
He said the EU would agree with the government on a number of priority areas to focus on over the next three years, without giving further details.
Last Friday, Mauritius’ Finance Minister Pravind Jugnauth said 2011 budget revenues would be down 3.8 billion rupees due to lower dividends from investments and the EU decision to allocate sugar export quotas only to Least Developed Countries.
Jugnauth said Mauritius would grow by 4.1 percent this year and by 4.2 percent in 2011.
Since 2006, the island has embarked on a raft of reforms to slash red tape and lure foreign investors, while donors have praised its coordinated fiscal and monetary response to the global slowdown.
“I was pleased that the newly-elected government’s maiden budget for 2011 is focusing on growth, productivity, and social justice,” World Bank Managing Director Ngozi Okonjo-Iweala told a news conference in Mauritius on Monday.