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Mauritius Economy Not in Danger: Finance Minister
The economy in Mauritius is not in danger, even though the country has approached the African Development Bank (AfDB) for a loan as a precautionary measure, finance Minister Ramakrishna Sithanen said on Friday.

One of Africa's most stable and prosperous economies over the past few years, the island state's key tourism and textiles sectors have been hit hard during the global downturn.

Economic growth was forecast at between 2-2.3 percent in 2009, down from growth of above 5 percent enjoyed since 2006.

"It is certainly not in danger. It is certainly not likely to be in danger in the short term," Sithanen told Reuters ahead of a series of South African meetings to woo investors.

"What we are doing is buying an insurance. We are taking precaution ... We are not going to use it unless there's a sharp and sudden deterioration on the external balance," he said.

On Thursday, Sithanen told Reuters he would start negotiations with the AfDB to consider a loan, similar to the bank's $1.5 billion loan to Botswana, to help the country deal with the impact of the economic crisis.

Mauritius was already negotiating with the International Monetary Fund for a Flexible Credit Line as as precautionary measure because of the downturn.

Sithanen brushed aside concerns of a rising budget deficit, which was predicted to rise to 4.8 percent of gross domestic product (GDP) by the end of 2009 and reach 5 percent by 2010.

This was just 0.5 lower than the 5.5 percent he considered as unsustainable.

"Based on our forecasts the deficit will come down in 2011 to about 3.2 percent ... so the deficit is sustainable."

Sithanen said the vital tourism sector, which accounted for some 8 percent of the Indian Ocean island's GDP, faced "hard" times and was expected to decline by 11-12 percent in 2009.

The textile and clothing sector, however, which accounts for 12 percent of GDP, was holding up relatively well with flat growth, he said.

"We are not in trouble, the economy is growing at 2 and 2.2 percent for 2009, so we are okay," Sithanen said.

Source: Mauritius

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