IMF Publishes Reports on 2017 Article IV Consultation with Mauritius
IMF published its staff report and selected issues report in the context of the 2017 Article IV consultation with Mauritius. The staff report highlights that the authorities are well-advanced in modernizing financial sector regulation and should now address salient banking sector issues. BOM has strengthened off-site supervision by upgrading its bank rating (CAMEL) system with a new scoring method, has begun to conduct solvency stress tests, and has aligned its capital adequacy and liquidity regulation with the Basel III framework.
In addition, holding companies with financial sector subsidiaries are now under the supervision of the Bank of Mauritius (BOM) and the Financial Services Commission (FSC). The BOM is also upgrading its framework for bank resolution and crisis prevention. Financial stability surveillance and macro-prudential policy have been strengthened through empowering the Financial Stability Committee, which includes the Ministry of Finance and Economic Development (MOFED), the BOM, and the FSC. Having implemented many recommendations of the 2015 FSAP, the authorities should take additional steps to shore up financial stability. These include lowering the still-high stock of nonperforming loans (NPLs), which remains high at 7.1% (with a number of banks having delinquency ratios of 10% or higher), through a more stringent approach to writing-off legacy exposures and safeguarding the longer-term foreign exchange funding needs stemming from banks’ swift expansion abroad. In addition, a formal macro-prudential body could be established.
Overall, banks are well-capitalized, liquid, and profitable. Beyond the adoption of the Basel III Liquidity Coverage Ratio (LCR) governing short-term exposures, staff advised the BOM to introduce the Net Stable Funding Ratio (NSFR) in the medium term. Staff encouraged the BOM to perform supervisory liquidity stress tests assessing liquidity and funding positions over the entire maturity range and to continue to scrutinize potential credit risks arising from increasing cross-border exposures through enhanced home-host supervisory cooperation. Staff recommended curtailing the leeway that banks enjoy in their write-off practices by introducing in supervisory guidance specific past-due periods after which defaulted loans should be written off. Also, improving the effectiveness of the AML/CFT framework will contribute to safeguard the reputation of the jurisdiction. The authorities concurred with staff’s recommendations.
The selected issues report discusses implications of international tax transparency and anti-tax avoidance initiatives, modernization of the monetary policy framework, and boosting international competitiveness of Mauritius.
Related Links
Keywords: Middle East and Africa, Mauritius, Banking, Insurance, Basel III, NPLs, FSAP, Article IV, IMF
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Patrycja Oleksza
Applies proficiency and knowledge to regulatory capital and reporting analysis and coordinates business and product strategies in the banking technology area
Related Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.
