“The key issue is structural transformation of our economy”

Following the recent rate cut, Business Magazine met with the central bank governor Ramesh Basant Roi. Among the issues discussed, the savings rate and the possible impact on our economy of a policy reversal in the US as the Federal Reserve starts to hike. On that ground, he noted that monetary policy in major economies remains very accommodative, with many central banks lowering their policy rates amidst low inflation to boost growth. He pointed out thatjob-creating growth remains a policy concern despitegrowth is projected to pick up to above 4.0 percent in 2016.

He expected the interest rate cut to alleviate the debt-service burden of leveraged economic operators and to provide the necessary impetus to accompany investment decisions, adding that there is no conclusive empirical evidence that interest rate is a major determinant of saving. The most important factor that determines the level of savings is the level of income. “Income remains the principal determinant of savings in an economy; the fall in the savings rate is mainly on account of a fall in private sector savings. To boost the national savings rate, we must strive to increase the gross national income… Our policy emphasis needs to be on growth and employment.” For Mauritius, he said, what we need is clear: a business-inspiring strategy, a responsive private sector combined with an appropriate mix of policies.

Looking for lovely places to dine and have good time during the festive season? Our supplement ‘Dining Out’ suggests fine tables, including meetings with some Chefs of good repute for precious advice. Wish you nice reading.