Economic Governance and Management Chapter 4 Essential principles for securities and insurance supervision and regulation 420. 421. The CRM noted the Financial Services Development Act of 2001, as amended by the Financial Services Act of 2007. It provides for the establishment of the FSC. It has extensive powers for regulating, controlling and supervising non-banking financial institutions and insurance establishments. This more modern and regulatory framework was the result of consultation and sensitisation among insurance establishments before its adoption to ensure transparency and efficiency in its implementation. Despite the considerable progress made since 2005, the report of the IMF mission on the stability of the financial sector identified some weaknesses. These included: (i) low skill levels of staff; (ii) the absence of a risk-prevention and risk-management system; (iii) poor controls, which focus more on conformity with rules than on the quality of internal controls and risk management. The CRM conducted interviews with stakeholders, collected information and noted the steps taken to correct these weaknesses. It observed particularly that skilled labour has been recruited from foreign markets and that an MoU between the FSC and the BoM has been signed. iii. Recommendations 422. The African Peer Review (APR) Panel recommends that the government of Mauritius: • • 174 The International Association of Insurance Controllers spelt out these principles. They aim to: (i) protect investors; (ii) ensure equitable, efficient and transparent markets; and (iii) reduce systemic risks. The CRM noted that Mauritius has aligned itself to these principles after the Insurance Act review of 2005. The CSAR, however, does not mention it. The review of the legal framework intended to implement these principles. Develops an efficient communication, sensitisation and information strategy for popularising norms and standards and that it uses resources accessible to the different social and economic stakeholders to do so. [Parliament and government] Adopts measures to strengthen the capacity of (i) officials on the new budgeting and programming instruments, (ii) the bodies responsible for the internal and external control of public resources, (iii) unions and (iv) parliamentary officials in order to facilitate the implementation of the policies they enforce. [Parliament and government] Chapter 4 4.3 • • • Economic Governance and Management Implements the recommendations contained in reports prepared by the NAO, ICAC and the FSC on corruption and money laundering and on respect for international norms and standards. [Parliament and government] Strengthens the capacity and independence of the regulatory and supervisory institutions. [Government] Implements the recommendations of the December 2008 mission for evaluating the stability of the financial sector in order to improve compliance with norms and standards, and those of the September 2008 report on money laundering and the fight against financing terrorism. [Government] Assessment of performance on APRM objectives Objective 1: Promote macroeconomic policies that support sustainable development i. Summary of the CSAR 423. The CSAR presents Mauritius’s progress on this objective by reviewing: monetary policy and macroeconomic objectives; tax policy; savings and investment policy; wage policy; business facilitation; economic democratisation; environmental impact; and access to information. The CSAR presents government policies and related measures for each of them, presents an analysis of interviewees’ responses and perceptions, and makes recommendations. 424. The CSAR covers wage policy, business facilitation, economic democratisation, environmental impact and access to information, although corporate governance and socioeconomic development usually deal with these areas. This section will summarise only the issues related to the macroeconomic policies that are aimed at supporting sustainable development in Mauritius. Monetary policy and macroeconomic objectives 425. Price stability and economic growth. According to the CSAR, “after having slowed to 2.3 per cent in 2005, the economy rebounded in the following year, with a real growth rate of 5 per cent, and maintained this positive growth momentum with a real GDP growth rate of 5.4 per cent in 2007”27. Three main sectors currently drive the Mauritian economy: construction, tourism and financial services. The latter enjoyed above-average growth of 7.5 per cent in 2007, while 27 - The most recent real GDP growth rate obtained after the CRM as reported by the Bank of Mauritius is 5.1 per cent for 2006 and 5.5 per cent for 2007 (From BoM “Selected Economic Indicators” 21 De-cember 2009) 175