data/interim/cr-2011-259/document.md

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**© 2011 International Monetary Fund** August 2011
IMF Country Report No. 11/259

January 29, 2001 January 29, 2001
January 29, 2001
**Mauritius: Public Expenditure and Financial Accountability (PEFA) Assessment**

This paper was prepared based on the information available at the time it was completed in August 2011. The
views expressed in this document are those of the staff team and do not necessarily reflect the views of the
government of Mauritius or the Executive Board of the IMF.

The policy of publication of staff reports and other documents allows for the deletion of market-sensitive
information.


Copies of this report are available to the public from


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### **International Monetary Fund** **Washington, D.C.**

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# **INTERNATIONAL MONETARY FUND**

## Fiscal Affairs Department

# **MAURITIUS**

## **PUBLIC EXPENDITURE AND FINANCIAL** **ACCOUNTABILITY (PEFA) ASSESSMENT**

### **Prepared by staff from the Government of Mauritius,** **the IMF, EU, and the World Bank** **August 2011**



![](assets/figures/cr-2011-259-fig-p0002-001.png)

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The contents of this report constitute technical advice provided by the staff of
the International Monetary Fund (IMF) to the authorities of the Mauritius (the
"TA recipient") in response to their request for technical assistance. This report
(in whole or in part) or summaries thereof may be disclosed by the IMF to IMF
Executive Directors and members of their staff, as well as to other agencies or
instrumentalities of the TA recipient, and upon their request, to World Bank
staff and other technical assistance providers and donors with legitimate
interest, unless the TA recipient specifically objects to such disclosure (see
Operational Guidelines for the Dissemination of Technical Assistance
Information http://www.imf.org/external/np/pp/eng/2009/040609.pdf).
Disclosure of this report (in whole or in part) or summaries thereof to parties
outside the IMF other than agencies or instrumentalities of the TA recipient,
World Bank staff, other technical assistance providers and donors with
legitimate interest shall require the explicit consent of the TA recipient and the
IMF’s Fiscal Affairs Department.

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Contents Page


Preface ....................................................................................................................................... 5


Abbreviations ............................................................................................................................. 6


Executive Summary ................................................................................................................... 7


I. Introduction .......................................................................................................................... 14


II. Country Background Information ....................................................................................... 14

A. Country Economic Situation ................................................................................... 14
B. Budgetary Outcomes ............................................................................................... 16
C. Legal and Institutional Framework ......................................................................... 18


III. Assessment of PFM Systems, Processes, and Institutions ................................................ 19

A. Budget Credibility ................................................................................................... 19
B. Comprehensiveness and Transparency ................................................................... 24
C. Policy-based Budgeting .......................................................................................... 31
D. Predictability and Control in Budget Execution ..................................................... 33
E. Accounting, Recording, and Reporting ................................................................... 45
F. External Scrutiny and Audit .................................................................................... 48
G. Donor Practices ....................................................................................................... 52


IV. Government Reform Process ............................................................................................. 55


Tables
1. Summary of PFM Performance Assessment ...................................................................... 10
2. Budgetary Central Government Outturns ........................................................................... 16
3. Government Expenditures by Economic Classification ..................................................... 17
4. Impact of Special Funds on Budget Aggregate Outturn ..................................................... 17
5. Central Government Primary Budget and Actual Expenditure .......................................... 20
6. Comparison of Budget and Actual Capital Expenditure .................................................... 20
7. Comparison of Budget and Actual Aggregate Capital Expenditure ................................... 22
8. Actual Domestic Revenue Compared to Original Budget Estimates ................................. 23
9. Comprehensiveness of Budget Documentation .................................................................. 26
10. Public Access to Fiscal Information .................................................................................. 30
11. Budget Submission Dates .................................................................................................. 31
12. Taxpayer Registration ........................................................................................................ 35
13. Government Financial Accounts Audited.......................................................................... 49
14. Total Direct Budget Support Actual versus Estimated ...................................................... 53
15. Direct Budget Support Grants: Actual versus Estimates ................................................... 53

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16. Direct Budget Support Loans: Actual versus Estimates .................................................... 54
17. Aid Managed through National Procedures ...................................................................... 55

Annexes
1.  Stakeholders Met ............................................................................................................... 57
II. Background Documents and Previous Analytical Work References ................................. 60
III. Detailed Tables and Calculations ...................................................................................... 61

Annex Tables
A1. Material Special Fund Movements in the Assessment Period 2007-08 to 2009 .............. 61
A2. Taxpayer Cases ................................................................................................................. 62
A3. Comparison between Actual and Central Budgetary ........................................................ 63
A4. Taxpayer Audits ................................................................................................................ 63
A5. Taxpayer Debt ................................................................................................................... 64

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**PREFACE**

In 2010, the Government of Mauritius (GoM) requested the Fiscal Affairs Department (FAD)
of the International Monetary Fund (IMF) to assist in carrying out a Public Expenditure and
Financial Accountability (PEFA) assessment for Mauritius. The IMF, with support from the
World Bank (WB) and the European Union (EU), agreed to assist the government in an external
validation of a PEFA self-assessment and a formal agreement was signed in September 2010.

The PEFA methodology provides a framework for governments and other stakeholders to assess
key components of the public financial management (PFM) system in a country. The assessment
is based on a standardized format developed by a multi-donor group, including the IMF, WB, EU
and several bilateral donors. Over 100 countries have carried out, or are in various stages of
carrying out, PEFA assessments.

The authorities established a technical team of the Ministry of Finance and Economic
Development (MoFED) officials, reporting to Mr. Ali Mansoor, Financial Secretary, and led by
Mr. Gerard Bussier, Deputy Director, to coordinate the assessment process. With some initial
guidance from FAD the team undertook a self-assessment in conjunction with MoFED
departmental heads during October and November 2010 and submitted a comprehensive and
commendable report to the IMF-led PEFA mission team for validation in mid-November 2010.

The external team visited Mauritius in November 2010 and subsequently in February 2011 and
held extensive discussions with the government technical team, government officials, and other
stakeholders. The Vice Prime Minister, the Minister of Finance and Economic Development, and
several other senior government officials including the Financial Secretary participated in these
discussions. A full list of participating stakeholders is provided in Annex I.

The external PEFA review team was led by Mr. Peter Murphy (IMF) and included
Mr. Jason Harris (IMF), Irina Luca (WB), Mr. Patrick Kabuya (WB), and Mr. Maarten de Zeeuw
(EU consultant).

The draft report was subject to review by the government of Mauritius, the IMF, and the PEFA
Secretariat. The report was presented at a workshop with the Vice Prime Minister, the Minister
of Finance and Economic Development, MoFED officials, and other stakeholders in Port Louis
in February 2011.

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**ABBREVIATIONS**


ARC Assessment Review Committee


CISD Central Information Systems Division


EBU Extra-budgetary Unit


EU European Union


FAD Fiscal Affairs Department


GDP Gross Domestic Product


GFSM Government Finance Statistics Manual 2001


GoM Government of Mauritius


INTOSAI International Organization of Supreme Audit Institutions


IPSAS International Public Sector Accounting Standard


IRP Independent Review Panel


MDAs Ministries, Departments and Agencies


MoFED Ministry of Finance and Economic Development


MRA Mauritius Revenue Authority


NAO National Audit Office


OPSG Office of Public Sector Governance


PAC Public Accounts Committee


PEFA Public Expenditure and Financial Accountability


PFM Public Financial Management


PPO Procurement Policy Office


TAS Treasury Accounting System


UNDP United Nations Development Program


WB World Bank

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**EXECUTIVE SUMMARY**

**At the request of the Government of Mauritius (GoM), the IMF led an external assessment**
**of its public financial management (PFM) framework based on the Public Expenditure and**
**Financial Accountability (PEFA) methodology.** In line with the PEFA methodology, this
assessment focuses on the performance of the PFM framework, including the associated
institutions and procedures, during the last three fiscal years (FY2007-08, FY2008-09 and
FY2009). [1] Improvements in systems and processes taking place after December 31, 2009 have
not been considered in this assessment.

**Main findings**

**Mauritius continues to perform well against the PEFA benchmarks.** The scores show
progress compared to the 2007 PEFA assessment, with 27 out of the 31 reported ratings
higher or equal to those obtained in 2007. These positive results have been achieved despite
the challenges faced in the wake of the recent global financial crisis.


- **Central government (central government and extra-budgetary units) budget**
**credibility remains relatively strong** . Throughout the assessment period, actual
collections exceeded budgeted revenue; however actual primary expenditure
exceeded budget estimates by between 5 to 10 percent in the two fiscal years
FY2008-09 and FY2009. There were no arrears accumulated during the period.


- **There were, however, significant variations—between 10 to 17 percent per**
**annum—in the composition of spending.** The main reasons include: (i) reallocation
of funds out of the contingency allocations within the 2008-09 budget; and
(ii) significant underspending on the capital side of the budget in both the 2007-08
and the 2008-09 budgets of 23-24 percent. Both of these were used to fund to a fiscal
stimulus package aimed at supporting the economy.


- **Comprehensiveness and transparency have improved since the last PEFA**
**assessment** . The budget classification system adopted for the 2008-09 budget, which
incorporates a program budget approach for the first time, is based on the IMF
Government Finance Statistics Manual (GFSM) 2001. Budget documentation is
relatively comprehensive, meeting seven out of nine of the required benchmarks.
However, the analysis and discussion of macro-fiscal projections and fiscal outputs
are limited, and transactions between the central government and extra-budgetary
units are not fully reported.


1 Mauritius aligned its fiscal year to the calendar year commencing January 1, 2010; the PEFA assessment,
therefore, covers the two-and-a-half year period, July 1, 2007 to December 31, 2009.

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- **The monitoring of fiscal risks has been progressively strengthened over the**
**reporting period, though gaps still remain.** Monitoring and reporting of fiscal risks
is not always systematic and coverage remains incomplete―financial institutions and
extra-budgetary units are not monitored. Budget integrity is in general sound, with
some remaining issues in the monitoring and publication of contract awards and the
tracking of flows of funds to primary service delivery units.


- **A clear annual budget calendar exists and is largely adhered to** . The budget
circular provides the guidance necessary for line ministries to prepare a complete
and detailed budget submission. However, strategic planning capacity in government
remains limited and the links between macroeconomic projections, fiscal strategy,
ministry-level strategic plans, and the budget process require strengthening. In
particular, insufficient time is available at the early stages of the budget process for
discussions between line ministries and the Ministry of Finance and Economic
Development (MoFED) to determine strategic priorities within the fiscal framework.
This is particularly apparent on the capital side of the budget, where significant
capacity constraints result in substantial underspending.


- **Mauritius’ tax laws and regulations are generally of high quality.** Tax rulings by
the Mauritius Revenue Authority (MRA) are publicly available. The formal appeals
mechanism has, however, limitations, suggesting the need for a substantial redesign
to ensure its effectiveness. There also remains some concern about the level of tax
compliance of some professional groups. The penalty regime leaves tax authorities
significant discretion and does not take the degree of culpability of the taxpayer into
account, in particular, with respect to property transfer taxes. Tax collection efforts
are hampered by significant amounts of disputed assessments and accumulation of
collectible tax arrears, which together exceeded 4 percent of total revenue in 2008-09.


- **Budget execution systems are effective and comprehensive.** Cash flow forecasts
are prepared upfront for the fiscal year and are monitored through the treasury
accounting system (TAS). Warrants are released to ministries and departments at the
beginning of the year for the full year, allowing expenditure to be planned and
committed in advance. However, significant budget adjustments take place during the
year, which are subsequently consolidated into supplementary budgets. Domestic and
foreign debts are effectively recorded, managed, and reported. Payroll and personnel
records are not integrated, but payroll changes are properly authorized and fully
documented. Internal controls are sound with effective compliance testing by both
Internal Control Unit and the National Audit Office (NAO).


- **Competition, value for money, and controls in procurement are effective.** Most
procurement follows an open competitive tender process consistent with the 2006
Public Procurement Act and an appropriate mechanism is available for submission
and timely resolution of complaints.

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- **Internal audit is present in all large ministries and departments.** International
audit standards for risk analysis and internal audit are in use. Management response
varies across ministries and agencies, with actions being taken by accounting officers
on major issues, but sometimes with some delay.


- **Accounting and financial reporting are of a high standard** **with some early**
**transition from cash to accrual accounting taking place.** Bank reconciliations are
up-to-date, and there are no unreconciled accounts maintained in the general ledger.
Resources disbursed to service delivery units are recorded, and in-year budget reports
comparing budget and actual performance are available from the TAS. The
government financial statements are prepared annually within the required timeframe,
and are submitted to the NAO within the statutory deadline.


- **The NAO undertakes comprehensive annual financial audits of key high-risk**
**government institutions** . Low-risk units are audited every three to five years. From
July 2009, the NAO adopted a risk-based audit methodology consistent with the
directives of the International Organization of Supreme Audit Institutions
(INTOSAI). Audit reports are submitted to the legislature within the statutory
deadline.


- **The scope of the legislature’s budget review is limited to a review of medium-**
**term expenditure projections and priorities.** The legislature’s review process relies
on a full sitting of members, yet they only sit on a part-time basis. There are no
specialized committees and only limited technical staff to support budget review.
While the Constitution provides 30 days to review the budget, the actual time spent
on deliberations is usually no more than two weeks.

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**Table 1. Mauritius: Summary of PFM Performance Assessment**
(The change trajectory column reflects changes in scores but also qualitative changes that are not necessarily

reflected in the score)










































|Indicator|Scores<br>2010|Scores<br>2007|Change<br>Trajectory|Summary Explanation of 2010 Assessment|
|---|---|---|---|---|
|**Credibility of the Budget**|**Credibility of the Budget**|**Credibility of the Budget**|**Credibility of the Budget**|**Credibility of the Budget**|
|PI–1. Aggregate<br>expenditure outturn<br>compared to original<br>approved budget|B|A|↘|Actual central government primary expenditure did not<br>deviate from budget estimates by more than 10 percent<br>in any year. The decline in performance was primarily<br>due to a fiscal stimulus package that remained<br>substantially unspent.|
|PI–2. Composition of<br>expenditure<br>out-turn compared to<br>original approved<br>budget|D|B|↘|The variance in expenditure composition exceeded<br>overall deviation in primary expenditure in two out of the<br>last three years and between 10.0 percent and 17<br>percent in all three of the years under consideration. This<br>decline in performance also reflects continued<br>reallocation of funds from capital to recurrent.|
|PI–3. Aggregate<br>revenue out-turn<br>compared to original<br>approved budget|A|A|↗|Actual domestic revenue collection was greater than the<br>budgeted estimates in all three years, some<br>improvements occurred in forecasting accuracy in the last<br>two years.|
|PI–4. Stock and<br>monitoring of<br>expenditure payment<br>arrears|A|A|→|No stock of expenditure arrears exist, controls are strict<br>and all outstanding invoices are cleared at the year-end.<br>No change from 2007.|
|**Comprehensiveness and Transparency**|**Comprehensiveness and Transparency**|**Comprehensiveness and Transparency**|**Comprehensiveness and Transparency**|**Comprehensiveness and Transparency**|
|PI–5. Classification<br>of the budget|A|B|↑|The classification system was aligned with the<br>Government Finance Statistics Manual (GFSM) 2001 in<br>the 2008-09 budgets, together with the introduction of a<br>program-based budget classification. The COFOG<br>functional classification can be derived from the sub-<br>program classification.|
|PI–6.<br>Comprehensiveness<br>of information<br>included in budget<br>documentation|A|B|↑|Seven out of the nine benchmarks, as opposed to six in<br>2007, are met by the annual budget documents.|
|PI–7. Extent of<br>unreported<br>government<br>operations|D+|D+|↗|Extra-budgetary expenditure has not been fully<br>incorporated in the annual budget estimates or in in-year<br>budget execution statements. However, improved<br>disclosure is being made in the year-end financial<br>statements of extra-budgetary units (EBUs) and in the<br>extra-budgetary expenditure shown in the Digest of<br>Public Statistics. No change in overall score from the<br>2007 assessment.|
|PI–8. Transparency<br>of inter-<br>governmental fiscal<br>relations|B|A|↘|Although horizontal grant allocations to subnational<br>governments are transparent, they have not been based<br>on any objective rule-based criteria for more than ten<br>years; this was not reflected in the 2007 assessment.|

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|PI–9. Oversight of<br>aggregate fiscal risk<br>from other public<br>sector entities|C+|B+|↘|Government undertakes annually a partial analysis of<br>various aspects of fiscal risk during the budget process,<br>but this analysis and monitoring is not systematic. This<br>was not reflected in the 2007 assessment.|
|---|---|---|---|---|
|PI–10. Public access<br>to key fiscal<br>information|B|A|↘|Recent fiscal reports fulfill three of the six required<br>information benchmarks. This is two less than that<br>reflected in the 2007 assessment.|
|**Policy Based Budgeting**|**Policy Based Budgeting**|**Policy Based Budgeting**|**Policy Based Budgeting**|**Policy Based Budgeting**|
|PI–11. Orderliness<br>and participation in<br>the annual budget<br>process|B+|B|↑|A clear annual budget calendar has been introduced and<br>clear guidance is now provided―an improvement on<br>2007 assessment. The timetable is largely adhered to<br>and the estimates are approved by the legislature before<br>the new financial year commences.|
|PI–12. Multiyear<br>perspective in fiscal<br>planning,<br>expenditure policy,<br>and budgeting|C+|D+|↑|The budget now includes forecasts of the main fiscal<br>aggregates over three years on a rolling basis, an<br>improvement on 2007 assessment, but multi-year<br>estimates are not linked to subsequent annual estimates.<br>Debt sustainability analysis is effective, but limited<br>assessment of recurrent cost implication of investments<br>is undertaken.|
|**Predictability and Control in Budget Execution**|**Predictability and Control in Budget Execution**|**Predictability and Control in Budget Execution**|**Predictability and Control in Budget Execution**|**Predictability and Control in Budget Execution**|
|PI–13. Transparency<br>of taxpayer<br>obligations and<br>liabilities|B+|B|↑|Laws and regulations and rulings containing Mauritius<br>Revenue Authority’s (MRA) interpretation of them have<br>progressively improved as has the quality of information<br>given to the taxpayers. The Assessment Review<br>Committee (ARC) is however understaffed and at risk of<br>collapsing under an accumulating case load.|
|PI–14. Effectiveness<br>of measures for<br>taxpayer registration<br>and tax assessment|B+|B+|↗|Sound registration systems have been strengthened, but<br>MRA’s Corporate Plan from February 2008 continues to<br>highlight non-filing and non-payment by some<br>professional groups. The penalty regime leaves MRA<br>considerable discretion. Programs for taxpayer audit and<br>investigations are now compatible with standard norms.|
|PI–15. Effectiveness<br>in collection of tax<br>payments|C+|D+|↑|Tax debt collections have improved since 2007, but the<br>tax debt collection ratio remains low, due to a failure to<br>write-off old debts.|
|PI–16. Predictability<br>in the availability of<br>funds for<br>commitment of<br>expenditures|C+|A|↘|Cash flows forecasts are prepared and commitments<br>ceilings in the form of warrants for the full fiscal year are<br>available through the Treasury Accounting System (TAS).<br>However significant in-year budget adjustment increases,<br>of between 7 and 18 percent, were approved by the<br>MoFED during the assessment period, a decline on 2007<br>assessment.|
|PI–17. Recording<br>and management<br>of cash balances,<br>debt, and<br>guarantees|A|A|↗|A new Public Debt Act has been enacted.<br>Comprehensive debt records are maintained and<br>quarterly and annual reports produced. Clear policies for<br>contracting loans and issuance of guarantees, mainly<br>entrusting responsibility to the Minister of Finance, exist<br>and are followed.|

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|PI–18. Effectiveness<br>of payroll controls|B+|B+|→|Payroll and personnel records are not integrated, but<br>payroll changes are properly authorized and fully<br>documented. A new HR system is being rolled out, but<br>this is yet to be evaluated.|
|---|---|---|---|---|
|PI–19. Competition,<br>value for money and<br>controls in<br>procurement<br>|A|B+|↑|More than 75 percent of contracts above the national<br>threshold for small purchases are now awarded<br>competitively. Non-competitive methods are now justified<br>as per the 2006 Public Procurement Act. A complaints<br>mechanism is now operational through an independent<br>body (IRP) whose decisions are made public.|
|PI–20. Effectiveness<br>of internal controls<br>for non-salary<br>expenditure|A|A|→|An effective commitment control system exists.<br>Comprehensive internal control rules and procedures of<br>recording transactions also exist and are adhered to.|
|PI-21. Effectiveness<br>of Internal Audit|B+|B+|→|Internal Audit Units are operational in most of central<br>government entities but not all, especially extra-<br>budgetary units. Reports are issued per approved audit<br>plan. The Management typically acts on the units’<br>recommendations, but with some delays.|
|**Accounting, Recording and Reporting**|**Accounting, Recording and Reporting**|**Accounting, Recording and Reporting**|**Accounting, Recording and Reporting**|**Accounting, Recording and Reporting**|
|PI–22. Timeliness<br>and regularity of<br>accounts<br>reconciliation|A|A|→|Bank reconciliations are done daily and in-depth monthly,<br>within four weeks after month-end. There are no un-<br>reconciled accounts in the general ledger.|
|PI–23. Availability of<br>information on<br>resources received<br>by service delivery<br>units|A|A|→|The Accounting System records and provides reliable<br>information of all types of resources received and used<br>by service delivery units. Direct resources from donors in<br>cash and kind are not significant.|
|PI–24. Quality and<br>timeliness of in-year<br>budget reports|A|B+|↑|Classification of data in TAS allows direct comparison<br>with the original budget. However, the data excludes<br>decentralized units such as EBU’s. The reports, with data<br>of adequate quality, are issued monthly and are available<br>on the Ministry website.|
|PI–25. Quality and<br>timeliness of annual<br>financial statements|A|A|→|Consolidated financial statements are prepared annually<br>and include information on revenue, expenditure,<br>financial assets and liabilities. The statements, submitted<br>on time for audit are prepared using cash basis of<br>accounting and now comply with some aspects of cash<br>based IPSAS.|
|**External Scrutiny and Audit**|**External Scrutiny and Audit**|**External Scrutiny and Audit**|**External Scrutiny and Audit**|**External Scrutiny and Audit**|
|PI–26. Scope,<br>nature, and follow-up<br>of external audit|B+|B+|↗|The National Audit Office (NAO) now undertakes a<br>comprehensive independent financial audit of all key<br>government institutions on an annual basis using modern<br>audit techniques. Performance auditing has also been<br>introduced.|
|PI–27. Legislative<br>scrutiny of the<br> annual budget law|C+|B+|↓|Legislative review takes place, but the<br>comprehensiveness of the review is limited by lack of<br>time and support resources.|

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|PI–28. Legislative<br>scrutiny of external<br>audit reports|D+|D+|↓|The absence of Public Accounts Committee (PAC)<br>review reports and open hearings limits the effectiveness<br>of the PAC. Follow-up of the Audit report is also<br>constrained by the weakness of PAC reporting and<br>follow-up.|
|---|---|---|---|---|
|**Donor Practices **|**Donor Practices **|**Donor Practices **|**Donor Practices **|**Donor Practices **|
|D–1. Predictability of<br>direct budget<br>support|D|A|↓|Much of the aid is delivered by direct budget support.<br>Significant variations have occurred but are primarily due<br>to GoM’s active management of aid resources.|
|D–2. Financial<br>information provided<br>by donors for<br>budgeting and<br>reporting on project<br>and program aid|A|A|→|Forecasting and reporting procedures are of acceptable<br>standard.|
|D–3. Proportion of<br>aid that is managed<br>by use of national<br>procedures|B|No<br>Rating|↑|The increasing use of direct budget support is<br>progressively increasing the use of national procedures.|

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**I.  INTRODUCTION**


1. **The purpose of this PEFA assessment is to review the performance of Mauritius’**
**PFM framework.** The assessment provides a baseline for monitoring progress in the different
areas of PFM reform and supporting the authorities in defining, along with other inputs, a
coherent PFM reform strategy.


2. **This assessment mainly covers the activities of the central government.** This includes
44 ministries and departments (budgetary central government), and 110 extra-budgetary units
(EBUs). In this context EBUs comprise deconcentrated special funds and agencies performing
specialist government functions under the effective control of government ministries. Seven of
the EBUs, listed later in this report have a material impact on the fiscal operations of
government, as discussed under indicator PI-1.This definition of central government excludes
21 financial and 49 non-financial public corporations (public enterprises) and ten subnational
governments which together with budgetary central government represent the public sector. As
provided for in the PEFA analytical framework, key inter-governmental fiscal relations between
central government, public corporations and subnational governments are addressed in two
specific indicators (PI8 and PI9).


3. **The assessment is based on publicly available documents or supplementary**
**information provided by the authorities and other stakeholders.** These include the annual
budget documents, in-year financial reports, the annual financial statements and the digest of
public finance statistics for 2007-09. The information gathered has been cross-checked against
different sources to the extent possible.


**II.  COUNTRY BACKGROUND INFORMATION**


**A.  Country Economic Situation** **[2]**


4. **Mauritius has achieved remarkable success since its independence in 1968, with one**
**of the highest per capita incomes in Africa** . Gross domestic product (GDP) per capita has
increased from US$1,295 in 1980 to US$7,303 in 2010. Underpinning this performance has been
macroeconomic and political stability, robust institutions, an efficient administration, a favorable
regulatory environment, and a well-developed financial system. This has seen the emergence of a
number of major sectors in the economy, including sugar, tourism, textile manufacturing, and
financial services.


5. **The Mauritian economy has been subject to a number of major shocks over recent**
**years** . These include the 2005 phasing out of the multi-fiber agreement, sharp reductions in EU
protocol prices; which had significant impacts on sugar, manufacturing, and textile sectors and

2 Mauritius 2010 Article IV Consultation (IMF); Bank of Mauritius (2010), Monthly Statistical Bulletin;
Government of Mauritius (2010), 2011 Budget.

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the more recent global financial crises. As part of the response to the earlier shocks, the
government embarked on a major program of reforms focusing on improving fiscal performance,
enhancing competitiveness, improving the business climate, and widening opportunities through
increasing participation, social inclusion and sustainability. These reforms earned Mauritius the
title of “best place to do business in Africa” from the World Bank in 2008 and 2009.


6. **The economy reacted favorably to these reforms** . Real GDP growth recovered to
5.1 percent in 2008, and the unemployment rate fell to a five-year low of 7.1 percent–down from
a peak of 9.6 percent in 2005. While this period saw an increase in inflation–up to 9.7 percent in
2008–this was largely due to increases in food and energy prices. A large factor behind the return
to strong growth was the rapid expansion of the offshore financial sector, aided primarily by a
favorable double tax agreement with India, and strong growth in the tourism sector.


7. **The advent of the global financial crisis provided a further shock to the Mauritian**
**economy** . Although not directly impacted, due to a sound financial system and lack of exposure
to the asset backed securities, the subsequent recession in key export markets–primarily Europe–
did lead to a slowdown in economic activity, with GDP growth falling to 3.1 percent in 2009.
This was driven by a 13 percent fall in tourist earnings, which had been growing at an average
annual rate of 19 percent over the previous five years, and a contraction in the manufacturing
sector. These were partly offset by continued strong growth in the construction and offshore
financial sectors.


8. **The Mauritian economy is expected to recover strongly, with authorities projecting**
**growth to approach potential, estimated at 5 percent, over the next few years.** An important
contributing factor to the recovery has been the comprehensive policy package adopted in
response to the crisis, which included fiscal stimulus, monetary easing, maintaining foreign
exchange liquidity, strengthening the social safety net, and measures to facilitate private debt
consolidation and to preserve jobs. These measures prevented a large increase in the
unemployment rate, which remained around 7¼ percent over 2008 and 2009. Construction,
tourism, and financial services are expected to underpin growth going forward.


9. **Downside risks remain, particularly around the external sector.** Given Mauritius’
exposure to the Euro zone, through the manufacturing and tourism sectors, the continued
turbulence in that area presents significant downside risks to the economy. The high degree of
volatility in food and energy prices also present risks to the inflationary outlook.

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**B.  Budgetary Outcomes**


10. **The reported fiscal position has loosened recently, in response to the global financial**
**crisis.** The budget balance, as reported by the authorities has widened from a deficit of
3.3 percent in 2007-08, to a deficit of 3.9 percent in July-December 2009 (Table 2). The deficit is
estimated to have increased further in 2010 to 4.5 percent. Once net lending to state-owned
enterprises is taken into account, the increase in the deficit is somewhat smaller, at half a percent
of GDP due to loan repayments from SOEs over the period.


**Table 2. Mauritius: Budgetary Central Government Outturns**

(Percent of GDP)


**2007-08** **2008-09** **July–Dec 2009**


Total revenue and grant 21.2 22.9 22.3

Total revenue 21.0 21.9 20.2
Grants 0.2 1.0 2.1
Total expenditure and net lending 24.5 26.7 26.2
Current expenditure (ex interest) 17.9 20.0 19.4
Capital expenditure and net lending 2.4 2.7 3.3
Interest 4.2 3.9 3.6
Overall balance -3.3 -3.7 -3.9
Primary balance 2.7 2.7 1.1
Adjusted for accrual 0.0 0.1 0.2
Net financing 3.3 3.7 3.7
Domestic 3.4 2.4 3.5
External -0.1 1.3 0.1


Source: Ministry of Finance and Development

11. **The increase in expenditure and net lending is largely due to an increase in capital**
**expenditure.** Despite the close to 1 percent of GDP increase, the amount of spending on capital
expenditure over the period has been significantly lower than the amount budgeted for (Tables 2
and 3). This reflects over-optimistic budget estimates and capacity limitations within the
government to deliver.


12. **One of the interesting features of the Mauritian budget over recent years has been**
**the government’s response to the underspending on the capital side.** Rather than allowing the
underspends to flow through to the budget bottom line, resulting in smaller deficits, the
government has reappropriated the funds, and transferred them to a set of special funds, which
can subsequently spend the money on specific items over a period years.

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**Table 3. Mauritius: Government Expenditures by Economic Classification**

(Percent of Total Expenditure and Net Lending)


**Jul-Dec**
**2007-08** **2008-09** **2009** **2010**

Salaries and wages 20.6 22.5 22.3 23.0
Goods and services 11.6 10.9 10.4 13.3
Transfers and subsidies 40.8 41.8 41.2 38.4
Capital expenditure and net lending 9.7 10.0 12.4 12.2
Interest 17.3 14.8 13.7 13.2
Total Expenditure and Net Lending (MUR mln) 61,548 72,361 38,928 77,307


Source: Ministry of Finance and Economic Development


**Table 4. Mauritius: Impact of Special Funds on Budget Aggregate Outturn**

(Percent of GDP)


**Jul-Dec**
**2007-08** **2008-09** **2009** **2010**


Central budgetary government
Total revenue and grants 21.2 22.9 22.3 21.2
Total expenditure and net lending 24.5 26.7 26.2 26.1
Current expenditure 22.1 24.0 23.0 22.9
Of which transfers to funds 1.2 2.1 1.8 0.9
Capital expenditure and net lending 2.4 2.7 3.3 3.2
Overall balance -3.3 -3.7 -3.7 -4.8
4.8
Net financing -3.3 3.7 3.7


Special funds

0.9
Total revenues 1.2 2.2 1.9

0.9
Transfers from central government 1.2 2.1 1.8

0.0
Interest receipts 0.0 0.1 0.1

1.2
Expenditures 0.0 0.3 0.5

0.5
Current expenditure 0.0 0.1 0.2

0.7
Capital expenditure and net lending 0.0 0.2 0.3

Overall balance 1.2 1.9 1.4 -0.3
Adjusted central budgetary government
Total revenue and grants 21.2 23.0 22.5 21.3
Total expenditure and net Lending 23.2 24.8 24.9 26.4
Current expenditure 20.9 21.9 21.4 22.5
Capital expenditure and net lending 2.4 2.9 3.5 3.9
Overall balance -2.1 -1.8 -2.4 -5.1
Net financing 2.1 1.8 2.4 5.1

Source: Ministry of Finance and Economic Development


13. **These transfers have been recorded as current expenditure as far as budgetary**
**central government is concerned** . However, a significant proportion of these transfers represent

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an accumulation of financial assets in special funds (which are EBUs) and should, from a central
government perspective and in accordance with the _GFSM 2001_ standards, be treated as belowthe-line financing items. Over MUR 11 billion or 7.3 percent of GDP have been transferred to
these funds (identified in Annex III, Table A1) during the two-and-a-half years under
consideration.


14. **Adjusting for the transfers to the funds, and the subsequent payments out of**
**the funds results in significantly lower central government deficits to between 1.8 and**
**2.4 percent GDP over the period under consideration (Table 4).** This is because the transfers
exceeded the payments out of the funds, thus generating substantial savings. In later years (and
particularly in 2010 and 2011) it is understood the reverse is planned to take place–as payments
out of funds will exceed transfers in–the overall central government deficit will, therefore, be
considerably larger than reported, projected to reach 5.8 percent of GDP in 2011.


15. **There has been, however, limited public reporting on the use or balances in these**
**funds.** The disclosure of these past transactions, balances, and budgeted payments in the 2011
budget is a welcome improvement in transparency.


16. **Public debt is close to 60 percent of GDP at the end of the period under**
**consideration.** In 2008, the government introduced a public debt law requiring public sector
debt, including that of the state-owned enterprises, to remain below 60 percent of GDP. For
the years of the assessment the government has kept public debt below the limit.


**C.  Legal and Institutional Framework**


17. **Mauritius has a parliamentary model with the majority parties in the national**
**assembly electing the prime minister, who in turn forms the government and appoints**
**a cabinet of ministers.** The national assembly, comprising representatives from 20 mainland
constituencies and from the island of Rodrigues, is the prime law making body; a supreme court
heads the judicial system. The prime minister appoints a minister responsible for the finance and
economic development portfolio, currently a vice prime minister, who is responsible for the
overall policy and management of public finances.


18. **The PFM system is primarily regulated by the Constitution, the Consolidated**
**Finance and Audit Act 2008, the Public Debt Management Act 2008, and the Public**
**Procurement Act 2008.** Chapter X of the Constitution deals with finances including the PFM
roles of the executive, legislature, and judicial branches of government and Article 110 with the
appointment and the duties of the Director of Audit . A Financial Management Manual, together
with a range of circulars and other instructions, has been issued by the MoFED from time to
time. EBUs are governed by regulations issued by the MoFED under the Finance and Audit Act
(special fund provisions) or by their own individual legal frameworks approved by parliament.

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19. **The minister of finance and economic development, supported by the MoFED,**
**under the management of the financial secretary, is the primary executive authority**
**in relation to PFM.** Accounting officers (known locally as controlling officers) are appointed
and accountable for the delivery of program outputs in line ministries and departments and the
management of appropriated funds. The director of audit (equivalent to the auditor general
position in other jurisdictions) is responsible for the annual audit of the central government
accounts, including EBUs, as well as those of subnational government. Under the 1995 standing
orders and rules of the national assembly, a Public Accounts Committee (PAC) is established at
the beginning of each session to examine the audited accounts and report submitted by the
director of audit.


20. **The central government PFM system in Mauritius comprises a centralized treasury**
**accounting system (TAS) for budgetary central government units and individual budget**
**and financial management system arrangements for each EBU.** A detailed annual unified
revenue and expenditure budget is prepared on a rolling three-year program and sub-program
basis that outlines the key mission, strategies, program outputs, performance indicators and
targets to be achieved. Detailed estimates by economic category, including transfers to EBUs
and subnational government, are shown for each program and are summarized in various
consolidated budget statements. Budgetary central government entities account for their
transactions through the TAS and consolidated annual financial statements are prepared by the
accountant general. Budgeted transfers to EBUs are approved by responsible ministries and
disbursed by the MoFED.


21. **EBUs, subnational governments and public corporations have their own individual**
**budget, financial management, and financial reporting arrangements but are all required**
**to submit annual financial statements to the MoFED and director of audit.** In addition,
Public Finance Statistics are prepared by the Central Statistical Office (CSO) on an annual basis
and provide for a range of economic and functional analysis as well as central government and
general government consolidations **.**


**III.  ASSESSMENT OF PFM** **SYSTEMS,** **PROCESSES, AND INSTITUTIONS**


**A.  Budget Credibility**


**PI–1. Aggregate expenditure outturn compared to original approved budget**


This indicator measures the extent of difference between actual primary expenditure and
the originally budgeted primary expenditure (i.e., excluding debt service charges, but












|mally also excluding externally financed project expenditure).|Col2|Col3|
|---|---|---|
|**2010 Assessment (scoring method M1)**<br>**Dimension:**|**Score**<br>**2010**|**Score**<br>**2007**|
|In no more than one out of the last three years has the actual central<br>government expenditure deviated from budgeted expenditure by an amount<br>equivalent to more than 10 percent of budgeted expenditure|B|A|

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22. **Actual central government primary expenditure, including transfers to EBUs,**
**deviated from budgetary central government estimates by more than 5 percent in two of**
**the years considered.** Central government (Table 5) includes both the operations of central
budgetary government and EBUs (transfers have been eliminated). Given the degree of control
exercised by the government over donor funded project expenditure, and that they represent less
than 2 percent of total expenditure, these are included in the calculation; this is consistent with
the treatment undertaken in the 2007 assessment.


**Table 5. Mauritius: Central Government Primary Budget**

**and Actual Expenditure**



**2007-08**
**MUR mln**



**2008-09**
**MUR mln**



**July-Dec 2009**

**MUR mln**



Budget (Original) 47,774 59,721 33,949
Actual 46,334 55,017 31,784
Difference -1,440 -4,704 -2,165
Percent difference -3.0 -7.9 -6.4


Source: Ministry of Finance and Economic Development


23. **While the deviation of central government aggregate expenditure was relatively**
**low, it is important to note that there was a significant degree of deviation between**
**the aggregate capital and aggregate recurrent budgets.** In the first two years of the
assessment period, the capital expenditure outturn was significantly lower than budgeted,
underspending by nearly 25 percent in 2007-08, and by 23 percent in 2008-09 (Table 6).


**Table 6. Mauritius:** **Comparison of Budget and Actual Capital Expenditure**



**2007-08**
**MUR mln**



**2008-09**
**MUR mln**



**July-Dec 2009**

**MUR mln**



Budget (Original) 6,015.0 7,225.0 4,760.0
Actual 4,539.0 5,546.0 4,945.9
Difference -1,476.0 -1,679.0 185.9
Percent difference -24.5 -23.2 3.9


Source: Ministry of Finance and Economic Development


24. **The low variance was maintained even though a significant stimulus package was**
**introduced in September 2008 in response to the global financial crisis.** The stimulus
package, approximately 5 percent of GDP, was funded through a combination of unallocated
“rainy day” contingency funds provided in the original 2008-09 budget, and of reallocations
from capital expenditure. A significant portion of the stimulus package was transferred to special
funds from which spending took place, mainly in the subsequent year.

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**PI–2. Composition of expenditure outturn compared to original approved budget**

This indicator measures the extent to which variance in expenditure composition exceeded
overall deviation in primary expenditure (as defined in PI-1) during the last three years.












|2010 Assessment (Scoring method M1)<br>Dimension:|Score<br>2010|Score<br>2007|
|---|---|---|
|The variance in expenditure composition exceeded overall deviation in<br>primary expenditure by 10 percent in at least two out of the last three<br>years|D|B|



25. **The variance in budgetary central government expenditure composition exceeded**
**the overall deviation in primary expenditure by considerable margins in all three of the**
**years under consideration.** In 2007-08, the compositional variation was equivalent to
10.2 percent of primary expenditure; in 2008-09 it increased to 17.5 percent, before falling back
to 6.3 percent in the July-December 2009 half financial year (Table 7).


26. **There were three major reasons for the increase in compositional variance.** The first
was the financial crisis, as discussed above. The second was the consistent underspending on
the capital side of budget, which was been swept up and reallocated to the recurrent side of the
budget near the end of the financial year. The third was the adoption of substantial contingency
funds in the budget process, which were effectively unallocated during the budget process–
representing a general policy reserve–and then distributed as the year progressed. In 2008-09,
this contingency reserve was used to fund much of the stimulus package.


27. **Major in-year variances were:**

    - **In 2007-08:** a MUR1.7b (71 percent) increase in funding to agriculture and

forestry; MUR987m (2,200 percent) increase in funding to fuel and energy,
through the establishment of a renewable energy fund; and R891m (11 percent)
increase in funding to education. These were funded through reductions to
housing and community services, and an increase in total expenditure.


    - **In 2008-09 and 2009:** for 2008-09 a MUR2.6b (2,600 percent) increase to

manufacturing, this was funded through reductions to general public services—
the contingency reserve and social security; and, for 2009 a MUR643m increase
to transport and communication, due to increased road construction. This was
funded through reductions to education and social security.

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**Table 7. Mauritius: Comparison of Budget and Actual Aggregate Expenditure**

(Average percent variance)











































|Col1|2007-08<br>Budget Actual Abs var %var|2008-09<br>Budget Actual Abs var %var|July - Dec 2009<br>Budget Actual Abs var %var|
|---|---|---|---|
|Gen public services<br>Defense, public order & safety<br>Education<br>Health<br>Social Security<br>Housing & com services<br>Rec, cult & rel services<br>Fuel and energy<br>Agriculture & forestry<br>Mining, man & const<br>Transportation & comm<br>Environmental protection<br>Other eco services<br>Other expenditure<br>Total expenditure<br>Absolute variance<br>Total variance ($)<br>Total variance (%)<br>Avg var adj for overall var ($)<br>Avg var adj for overall var (%)|MUR<br>mln<br>MUR<br>mln<br>MUR<br>mln<br>MUR<br>mln|MUR<br>mln<br>MUR mln<br>MUR<br>mln<br>MUR<br>mln|MUR mln<br>MUR<br>mln<br>MUR<br>mln<br>MUR<br>mln|
|Gen public services<br>Defense, public order & safety<br>Education<br>Health<br>Social Security<br>Housing & com services<br>Rec, cult & rel services<br>Fuel and energy<br>Agriculture & forestry<br>Mining, man & const<br>Transportation & comm<br>Environmental protection<br>Other eco services<br>Other expenditure<br>Total expenditure<br>Absolute variance<br>Total variance ($)<br>Total variance (%)<br>Avg var adj for overall var ($)<br>Avg var adj for overall var (%)|4,628.6<br>4,515.1<br>113.5<br>-2.5<br>4,819<br>4,541<br>278<br>-5.8<br>7,812<br>8,703<br>891<br>11.4<br>4,757<br>4,680<br>77<br>-1.6<br>12,026<br>11,745<br>281<br>-2.3<br>4,096<br>3,144<br>952<br>-23.2<br>669<br>552<br>117<br>-17.5<br>44<br>1,032<br>988<br>2,245.2<br>2,462<br>4,228<br>1,766<br>71.7<br>170<br>112<br>58<br>-34.1<br>1,815<br>1,623<br>192<br>-10.6<br> <br> <br>1,969<br>1,596<br>373<br>-18.9<br>2,508<br>2,984<br>476<br>19.0<br>47,774<br>49,454<br>6,562<br>3.5<br> <br>13.7%<br> <br> <br>1,680<br> <br> <br>3.5<br> <br> <br>4,882<br> <br>10.2|10,791.0<br>9,303.6<br>1,487.4<br>-13.8<br>6,368<br>5,578<br>790<br>-12.4<br>9,367<br>9,659<br>292<br>3.1<br>6,353<br>5,824<br>529<br>-8.3<br>14,990<br>14,005<br>984<br>-6.6<br>1,852<br>2,392<br>539<br>29.1<br>915<br>692<br>223<br>-24.4<br>338<br>28<br>309<br>-91.7<br>2,067<br>2,680<br>612<br>29.6<br>830<br>3,449<br>2,619<br>315.5<br>2,463<br>3,262<br>799<br>32.5<br>2,970<br>2,082<br>889<br>-29.9<br>418<br>1,009<br>591<br>141.4<br> <br> <br>59,721<br>59,962<br>10,664<br>0.4<br> <br>17.9%<br> <br> <br>240<br> <br> <br>0.4<br> <br> <br>10,424<br> <br>17.5|5,746.9<br>5,723.8<br>23.1<br>-0.4<br>3,567<br>3,405<br>162<br>-4.5<br>5,513<br>5,190<br>324<br>-5.9<br>3,670<br>3,522<br>148<br>-4.0<br>8,114<br>7,836<br>278<br>-3.4<br>784<br>717<br>67<br>-8.5<br>507<br>358<br>149<br>-29.4<br>17<br>216<br>199<br>1,169.4<br>939<br>854<br>86<br>-9.1<br>210<br>161<br>50<br>-23.6<br>2,901<br>3,545<br>644<br>22.2<br>1,375<br>1,608<br>233<br> <br>604<br>582<br>23<br>-3.8<br> <br> <br>33,949<br>33,716<br>2,384<br>-0.7<br> <br>7.0%<br> <br> <br>-232<br> <br> <br>-0.7<br> <br>2,152<br> <br>6.3|


Source: Ministry of Finance and Economic Development

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28. **In order to regularize these variances, the government has passed a number of**
**supplementary appropriations.** These appropriations were however passed only _after_ the
reallocations had taken place, based on authorization from the MoFED. Given the quantum
of reallocation this is a concern, as it appears to pre-empt effective legislative control of
appropriation, a key element of the PFM system.


29. **This is a significant deterioration from the 2007 PEFA assessment.** In 2007, a B
was scored on the basis of compositional variance of less than 5 percent in two out of three
years, with a maximum variance of 7.8 percent. The assessment in both PEFAs has been
undertaken on a functional basis, rather than the preferred administrative or program basis.
In the future it will be important to move to at least the program basis.


**PI–3. Aggregate revenue outturn compared to original approved budget**


This indicator measures actual domestic revenue collection compared to domestic revenue
estimates in the original approved budget.












|2010 Assessment (scoring method M1)<br>Dimension:|Score<br>2010|Score<br>2007|
|---|---|---|
|Actual domestic revenue collection was below 97 percent of budgeted<br>domestic revenue in no more than one of the last three years|A|A|



30. **Throughout the period of assessment actual collections exceeded budgeted revenue.**
In 2007/08 collections exceptionally exceeded original estimates by 10.9 percent. According to
the authorities this was due to a number of factors, including the large payments of tax arrears
collected in that year, the introduction of advance company tax payments (resulting in a double
up of payments from some companies), and an unexpected behavioral response to a reduction in
the company tax rate from 22.5 percent to 15 percent. This rationale is consistent with the
outcomes from later years, which were within 4 percent of budgeted receipts (Table 8).
However, it should be noted that persistent underestimation of revenue receipts can also lead to
problems associated with loss of budget credibility and additional spending outside of the annual
budget process.


**Table 8. Mauritius:** **Actual** **Domestic Revenue Compared to**

**Original Budget Estimates**



**2007-08**
**MUR mln**



**2008-09**
**MUR mln**



**July-Dec 2009**

**MUR mln**



Budget (Original) 47,566.0 57,558.0 29,156.0
Actual 52,767.0 59,436.0 30,000.7
Difference 5,201.0 1,878.0 844.7
Percent difference 10.9 3.3 2.9


Source: Ministry of Finance and Economic Development

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31. **As in many countries,** **corporate tax revenues have proven to be the most difficult**
**to forecast.** A large part of the reason for this is the volatility of profits from offshore companies
(with headquarters mainly in India, and subject to the double tax agreement), which makes it
difficult to provide a reliable forecast.


32. **The Mauritius Revenue Authority (MRA) became operational on July 1, 2006,**
**arising from a merger of three departments organized on the basis of tax-type** . Since then
a functional organization has been adopted, and significant progress achieved in most line and
support functions of tax administration, particularly in the area of taxpayer education. With
respect to profit tax, an advance payment schedule was introduced, which smoothed the
government’s cash-flow by advancing revenue inflows over time.


**PI–4. Stock and monitoring of expenditure payment arrears**

This indicator has two dimensions and measures: (i) the level of arrears; and (ii) the availability
of data for monitoring the stock of arrears.


















|2010 Assessment (Scoring method M1)<br>Dimension:|Score<br>2010|Col3|Score<br>2007|Col5|
|---|---|---|---|---|
|(i) The stock of arrears is less than 2 percent of total expenditure|A|A|A|A|
|(ii) Reliable and complete data on the stock of arrears is generated<br>through routine procedures at least at the end of the fiscal year|A|A|A|A|



33. **There is no stock of expenditure arrears** . All commitments and invoices related
to the actual financial year are cleared and paid well ahead of the financial year-end or cancelled;
multi-year contracts are handled through annual commitment tranches. The commitment control
system supports in-year monitoring of any unpaid transactions. The treasury issues circulars on
closing of accounts, these require all ministries and departments to cancel or clear all
commitments and invoices prior to the end of the financial year. A three-day window is opened
after the year-end to allow payment of a few unpaid invoices (invoices already processed and
approved in the TAS, but for which payment has not been effected).


34. **In-year control is strict and all payments are effected promptly throughout the year.**
The accountant-general, director of audit and head of internal control cadre confirmed that no
arrears exist at the year-end. The director of audits report for December 31, 2009, only identifies
outstanding revenue collection arrears only as an issue.


**B.  Comprehensiveness and Transparency**


**PI–5. Classification of the budget**

This indicator assesses the quality of the classification system used for formulation,
execution and reporting of the central government budget.

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|2010 Assessment (scoring method M1)<br>Dimension:|Score<br>2010|Score<br>2007|
|---|---|---|
|The budget formulation and execution system is based on administrative,<br>economic and program classification using the_GFSM2001_ standards.<br>Functional classification can be derived from the program classification.|A|B|



35. **The classification system used for the budget was changed to** _**GFSM2001**_ **standards**
**in the 2008-09 budget, along with the move to program-based budgeting.** The budget
classification and chart of accounts include administrative, program, sub-program and economic
classification. Functional classification is obtained by mapping from the program and subprogram classification. The budget is appropriated by program.


36. **The transition to program-based budgeting has made it more difficult to identify**
**expenditure by functional classification.** Obtaining a functional classification of expenditure
now requires manual mapping from the program expenditure data in the TAS, which is very
time consuming. As a result, the published budget documentation no longer includes expenditure
according to functional classification. However, the CSO can provide the information upon
request (as for the PEFA mission), and does publish functional information in the Digest of
Public Finance Statistics, [3] following the completion of the financial year. The authorities noted
that this was a teething issue and they were committed to resolving the mapping issues in the
TAS, and a return to publishing functional information in future budget documentation.


**PI–6. Comprehensiveness of information included in budget documentation**


This indicator assesses the extent to which budget documentation information is made
available for scrutiny and approval by the legislature.












|2010 Assessment (Scoring method M1)<br>Dimension:|Score<br>2010|Score<br>2007|
|---|---|---|
|Recent budget documentation fulfills seven of the nine required<br>information benchmarks|A|B|



37. **The budget documentation in Mauritius is relatively comprehensive, with seven out**
**of the required nine benchmarks included in the annual budget documents.** The mix of
benchmarks included has however changed following the introduction of performance based
budgeting as shown in Table 9.


3 Annual Digest of Public Statistics 2008 and 2009, Central Statistical Office, Republic of Mauritius.

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**Table 9. Mauritius: Comprehensiveness of Budget Documentation**



**No.** **Item** **Included** **Source**
1 Macroeconomic assumptions, including at least No
estimates of aggregate growth, inflation, and
exchange rate



1 Macroeconomic assumptions, including at least No The main budget document
estimates of aggregate growth, inflation, and does provide information on
exchange rate GDP and inflation, but not the

exchange rate assumption
2 Fiscal deficit, defined according to GFS, or other Yes Main budget document
internationally recognized standard



Yes Main budget document



3 Deficit financing, describing anticipated
composition

4 Debt stock, including details at least for the
beginning of the current year



Yes Main budget document


Yes Main budget document



5 Financial assets, including details at least for the
beginning of the current year in a timely manner



5 Financial assets, including details at least for the Yes Appendix C of main budget
beginning of the current year in a timely manner document and in chart of

accounts
6 Prior year’s budget outturn, presented in the Yes Main budget document, but
same format as the budget proposal only the aggregates



6 Prior year’s budget outturn, presented in the Yes Main budget document, but
same format as the budget proposal only the aggregates

7 Current year’s budget (either the revised budget Yes Main budget document
or the estimated outturn), presented in the same
format as the budget proposal



Yes Main budget document



8 Summarized budget data for both revenue and
expenditure according to the main heads of the
classifications used, including data for the
current and previous year



8 Summarized budget data for both revenue and Yes Main budget document
expenditure according to the main heads of the provides the information on an
classifications used, including data for the economic and program
current and previous year classification

9 Explanation of budget implications of new policy No The budget speech outlines
initiatives, with estimates of the budgetary impact new initiatives, but does not
of all major revenue policy changes and/or some provide financial implications
major changes to expenditure programs



No The budget speech outlines
new initiatives, but does not
provide financial implications



Source: Ministry of Finance and Economic Development


38. **The macroeconomic assumptions are annexed to budget documents, except for the**
**exchange rate assumption.** This is relatively simple to adjust for future documents, and if
included will further inform the basis of the balance of payments, inflation and customs duty
projections all of which are dependent on the exchange rate assumption. Most of the information
in the budget documents is provided in tabular format, with limited analysis or discussion of the
programs, the macroeconomic projections, or the revenue and expenditure aggregates.


39. **The budget documents provide** _**GFSM2001**_ **based analysis of the fiscal deficit,**
**debt financing, debt stock and financial assets and contain summaries of revenue and**
**expenditure according to the main classification heads.** However, since introducing
program-based budgeting, the government has stopped providing summary expenditure data
by functional classification. This information is however made public in the publication of
the Digest of Public Finance Statistics, ten months after the end of the financial year.
Including this information would improve comparability with previous budgets as well as
with other countries.

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27


40. **The prior year’s budget data is presented at the aggregate level in the main**
**budget document.** Although this does not meet the strict requirement for this indicator,
the required detailed analysis of prior year’s budget outturn, is included in the prior year
financial statements which are presented at the same time as the budget. The revised current
year’s budget is presented in the same format as the budget proposal in the main budget
document.


41. **There is no explanation of the financial implications of new policy initiatives**
**included in the budget documentation.** While the Finance Minister’s budget speech
provides an exhaustive explanation of new initiatives, there is little information provided on
the cost to the budget, either in the budget year or over the medium term. As a result, it is
difficult to determine how large and/or important each new initiative is and their overall
impact on the budget.


**PI–7. Extent of unreported government operations**


This indicator has two dimensions measuring: (i) the level of unreported extra-budgetary
expenditure (excluding donor-funded projects); and (ii) the information on donor-funded projects
included in fiscal reports.




















|2010 Assessment (Scoring method M1)<br>Dimensions:|Score<br>2010|Col3|Score<br>2007|Col5|
|---|---|---|---|---|
|(i) The level of unreported extra-budgetary expenditure (other<br> than donor-funded projects) constitutes more than 10 percent of total<br>expenditure|D|D+|D|D+|
|(ii) Complete income/expenditure information for 90 percent of its<br>donor funded projects are included in fiscal reports|A|A|A|A|



42. **Central government gross expenditure is only partially reflected in the annual**
**budget estimates and in in-year budget execution statements.** However full disclosure
is made in the year-end financial statements of central budgetary government and in the
individual financial statements EBUs. In addition, a full summary analysis is provided in the
annual published Digest of Public Finance Statistics. Annual program budget estimates for the
period 2007/08 to 2009 however record transfers, by program, to EBUs. In the three periods
2007/08, 2008/09 and 2009 EBUs comprised over 110 agencies, special funds and statutory
funds. These transfers do not fully reflect gross expenditure as some of the EBUs have their own
revenue sources, from which additional expenditure can be financed, and which are not reported.


43. **In 2008/09 EBUs reported over MUR10 billion of surplus, according to the Digest**
**of Public Finance Statistics, in a surplus of revenues.** The 2011 budget estimates report that
significant savings also existed on a number of key EBU accounts in the period July–December
2009. These surplus funds were unspent at the year-end and were invested in domestic securities.
Ex ante, the budget documentation for FY2009, did not fully disclose the nature of government
operations referring only to transfers to EBUs in program estimates, equivalent to MUR21.9

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28


billion. It is noted that ex ante disclosures (including the budgets for seven material special
funds) were made, in the 2010 budget document, which provides greater levels of disclosure for
the key EBUs.


44. **Complete income and expenditure information for donor-funded projects are**
**included in fiscal reports and through the period represent less than 10 percent of**
**total central government expenditure.** Project specific donor financing, excluding
general budget support in the three fiscal periods 2007/08, 2008/09 and 2009 amounted
to MUR0.4 billion, MUR1.5 billion and MUR0.9 billion respectively. At 0.6, 2.2 and
2.3 percent respectively, these represent substantially less than 10 percent of total central
government expenditure.


**PI–8. Transparency of intergovernmental fiscal relations**


This indicator has three dimensions that measure the: (i) transparency and objectivity in the
horizontal allocation between subnational governments; (ii) timeliness of reliable information
to subnational governments; and (iii) extent of consolidation of fiscal data for general
government according to sectoral categories.




















|2010 Assessment (scoring method M2)<br>Dimensions:|Score<br>2010|Col3|Score<br>2007|Col5|
|---|---|---|---|---|
|(i) No part of the horizontal allocation of transfers from central government is<br>determined by transparent and rules based systems|D|B|A|A|
|(ii) Reliable information is provided on allocations ahead of completing<br>budget proposals and in-time significant budget changes|B|B|A|A|
|(iii) Fiscal information for (ex ante and ex post) that is consistent with central<br>government is collected for 90 percent of subnational government and<br>consolidated into annual reports within ten months of the end of the fiscal<br>year|A|A|A|A|



45. **Horizontal allocations to local authorities have not been based on any objective rule-**
**based criteria.** Subnational government consists of five municipalities, four district councils and
one regional government for Rodrigues. The municipal and district councils received full year
grants from central government, which totaled MUR1.7 billion in 2008-09 and covered
66 percent of local authority expenditure. These grants are not disaggregated. The last half-year
government grant of R1.3 billion for July-December 2009 covered 68 percent of expenditure.
At one time the grants were based on a specific formula, but since 1998-99 they have been
incrementally increased, on an annual basis, without reference to the previous formula
components. With the substantial change in the socio-economic structure of local governments in
Mauritius the old formulae is no longer representative. It is noted that the previous 2007 rating
did not reflect the absence of a rules based framework.


46. **The grant for the island of Rodrigues is negotiated annually as part of the budget**
**process, based on a formal budget submission** . This reflects the greater autonomous status
including its own elected assembly and several devolved government functions.

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29


47. **Local authorities are provided reliable information on budget allocations before the**
**start of their budgeting process.** For FY2007-08 and FY2008-09, local authorities received
information on grant allocations approximately one month (May) before the start of the new
budget year, which the MoFED acknowledges leaves limited time for preparation of detailed
budgets; however, according to the authorities, does allow sufficient time for incorporation of
any significant changes. The grant information for the period July to December 2009 was subject
to further delay, due to the change in financial year and eventually made available in July 2009.
This delay was a temporary transitional issue and has therefore been ignored in this assessment.


48. **Subnational governments report monthly and produce annual financial statements.**
Consolidated central and local government fiscal information by economic category is fully
reported in the Digest of Public Finance Statistics within ten months of the end of the financial
year. The July 2010 report of the director of audit confirms that the financial statements, for all
subnational governments for 2007-08, were submitted and, with the exception of one council
(Rose Hill), are certified within ten months of the year-end. The Digest of Public Finance
Statistics covering 2007-08 was published in May 2009, and for the 18 months, July 2008 to
December 2009, in October 2010.


**PI–9. Oversight of aggregate fiscal risk from other public sector entities**

This indicator has two dimensions and assesses the: (i) extent of central government
monitoring of EBUs and public enterprises; and (ii) extent of central government monitoring
of subnational governments’ fiscal position.




















|2010 Assessment (scoring method M1)<br>Dimensions:|Score<br>2010|Col3|Score<br>2007|Col5|
|---|---|---|---|---|
|(i) Most major EBUs and Public Enterprises submit annul fiscal<br>reports to central government but a consolidated overview is not<br>prepared|C|C+|B|B+|
|(ii) Subnational government cannot generate fiscal liabilities for<br>central government|A|A|A|A|



49. **Government analyzes various aspects of fiscal risk in formulating the budget, and**
**also monitors some of these risks during budget execution.** The fiscal risk analysis covers
public debt, loan guarantees and the operations of some key EBUs and Public Enterprises,
periodic review of pension liabilities and continuous review of implicit guarantees to financial
institutions. Risk assessments are not however consolidated systematically or consolidated into
a set of formal reports. The director of audit notes a number of risks that suggests the need for a
more formalized assessment process, including: (i) delayed submission of a number of EBU
financial statements (18) for statutory bodies in 2008-09 creating uncertainty on performance;
(ii) very short average maturity of the domestic debt profile as at the end of June 2009,
51 percent being due within the 18-month period to December 2010; (iii) increasing public debt
levels (close to the 60 percent fiscal rule limit) and debt servicing (averaging 20 percent of total

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expenditure) over the last three years; and (iv) significantly increasing arrears of revenue yearon-year.


50. **Subnational governments are required to maintain a balanced budget and**
**cannot enter into debt agreements, without the explicit authority of the ministry of local**
**government and the MoFED.** Subnational governments submit in-year accounts to
facilitate in-year monitoring by MoFED on a monthly basis, and have not engaged in any
borrowing.


**PI–10. Public access to key fiscal information**


This indicator assesses transparency by ascertaining the accessibility of fiscal information to
the public against a number of information benchmarks **.**












|2010 Assessment (Scoring method M1)<br>Dimension:|Score<br>2010|Score<br>2007|
|---|---|---|
|Recent budget documentation fulfills three of the six information<br>benchmarks as shown in Table 10|B|A|



51. **Annual budget documents in Mauritius are freely available to the public and in a**
**timely fashion.** All budget documents are placed on the MoFED website immediately upon the
submission of the budget to parliament and published documents are available. Monthly outturn
reports were not made publicly available over 2008-09 and July-December 2009, although the
ministry of finance resumed posting them as of 2010.


**Table 10. Mauritius: Public Access to Fiscal Information**


**No.** **Item** **Available** **Source**
1 Annual budget documentation Yes MoFED website

2 In-year execution reports No MoFED website
3 Year-end financial statements six Yes The treasury website
months after end of fiscal year

4 External audit reports Yes National audit office website


5 Contract awards No Some information is provided on
various ministry websites
6 Resources available to primary No
service units


Source: Ministry of Finance and Economic Development


52. **Audited year-end financial statements are made public well within the six months**
**from completion of audit.** In recent cases they have prepared the year-end reports within six
months of the end of the financial year, and then been audited within six months. The audited
July-December 2009 year-end accounts were publically available by May 2010. External audit
reports are placed on the National Audit Office website within six months of completion.

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31


53. **Contract awards are also published on executing agency websites, but there is**
**no aggregate statistical evidence, the individual award information is also deleted from the**
**website after 30 days** . There are clear requirements under the legal and regulatory framework
on the information on contract awards to be published. These include bidding documents,
independent review panel reports and information on awards to bidders within seven days of the
award of contract (100 percent). While individual executing agencies may comply with these
requirements, it is not possible due to limited aggregate statistics and monitoring, to assess the
overall situation.


54. **Information on resources available to primary resource units are not published in**
**the budget documents.** From discussions with authorities, it does not appear that this
information is readily obtainable from individual departments.


**C.  Policy-based Budgeting**


**PI–11. Orderliness and participation in the annual budget process**


This indicator has three dimensions and assesses the: (i) existence and adherence to a fixed
budget calendar; (ii) existence of quality of guidance on the preparation of budget
submissions; and (iii) timely budget approval by the legislature.
























|2010 Assessment (scoring method M2)<br>Dimensions:|Score<br>2010|Col3|Score<br>2007|Col5|
|---|---|---|---|---|
|(i) An annual budget calendar exists but substantial delays are<br>experienced in its implementation. The calendar allows<br>insufficient time for some ministries and agencies to meaningfully<br>complete their budget estimates|C|B+|B|B|
|(ii) A comprehensive and clear budget circular is issued to<br>ministries and agencies which reflects approved cabinet ceilings<br>prior to distribution to line ministries and agencies|A|A|C|C|
|(iii) The legislature has during the last three years approved the<br>budget before the start of the year|A|A|A|A|



55. **A clear annual budget calendar exists and is largely adhered to, although it does**
**not provide sufficient time for line ministries to prepare complete budget submissions.**
The issuance dates of the budget circular and time required for line ministries to complete the
submissions over the budgets included in the assessment period were as shown in Table 11.


**Table 11. Mauritius: Budget Submission Dates**



**Budget** **Date of Issue** **Submission Date**



**Weeks**
**Provided**



2007-08 Mar 6, 2007 Mar 30, 2007 3.4
2008-09 Feb 21, 2008 Mar 18, 2008 3.7
Jul-Dec 2009 Nov 29, 2008 Jan 31, 2009 9.0
2010 Aug 25, 2009 Sep 18, 2009 3.4

Source: Ministry of Finance and Economic Development

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32


56. **There is no fiscal policy paper produced prior to the budget circular and a three-**
**to four-week period does not provide enough time for agencies to prepare meaningful**
**budget submissions.** Linkage **s** between macroeconomic projections, fiscal strategy, ministry
level strategic plans and the budget process remain limited. A number of major departments
noted that they struggle to meet the deadline, and the quality of some of the submissions
related to capital projects is inadequate as a result of the need to meet budget deadlines.


57. **The budget circular provides clear guidance to line ministries over the budget**
**process, timing and information required in submissions.** The circular provides three-year
budget ceilings to each ministry, by program―although some substitution between programs
within the overall ceiling is permissible. The ceilings are approved by cabinet before the circular
is issued. The setting of expenditure ceilings for the budget circular however, receives limited
policy inputs from budgetary bodies, leading to relatively weak policy rationales behind the
ceilings, and weak acceptance of the ceilings by ministry policy makers. This is evidenced
by the subsequent submission of line ministry bids, which in some cases exceed the ceiling by
15-20 percent.


58. **The legislature has also approved the budget before the start of the fiscal year**
**in each of three fiscal periods under consideration.**


59. **The budget includes forecasts of the main fiscal aggregates over three years on**
**a rolling basis.** The program estimates are also provided on a rolling three-year basis in the
budget documents. However, there is no clear link between the outer years and subsequent
budgets estimates. This reduces the importance of the outer-year estimates to the budget process.
It also undertakes an annual debt sustainability analysis.


60. **Costed sector strategies exist for only a small portion of the budget.** The IT industry
and SME environment and agriculture sectors, together representing 8 percent of the budget are
the only sectors with fully costed strategies. Further work is being done on this measure, with the
education and health expecting to complete their strategies by mid-2011, and strategies in other
sectors at various stages of preparation.


**PI–12. Multiyear perspective in fiscal planning, expenditure policy, and budgeting**


This indicator has four dimensions and assesses the: (i) preparation of multi-year fiscal
forecasts; (ii) scope and frequency of debt sustainability analysis; (iii) existence of sector
strategies; and (iv) linkages between capital and recurrent estimates.




















|2010 Assessment (scoring method M2)<br>Dimensions:|Score<br>2010|Col3|Score<br>2007|Col5|
|---|---|---|---|---|
|(i) Forecasts of fiscal aggregates are prepared for at least two years on<br>a rolling basis|C|C+|D|D+|
|(ii) A DSA for external and domestic debt is undertaken annually|A|A|B|B|
|iii) Costed sector strategies represent less than 25 percent of total|C|C|D|D|
|(iv) Budgeting for investment and recurrent expenditure are<br>separate processes with no sharing of recurrent costs of capital|D|D|D|D|

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33


61. **There are only very limited links between investment and recurrent expenditures in**
**the medium-term budget estimates.** Recurrent costs are determined at the early stages of
capital project assessments, and ministries are requested to include these in their capital project
budget submissions. While some attempt is made to recognize significant recurrent cost
implications in the budget, overall recurrent expenditure implications are not fully captured in
sector strategies or in budget submissions.


**D.  Predictability and Control in Budget Execution**


**PI–13 Transparency of taxpayer obligations and liabilities**

This has three dimensions which assess the: (i) clarity and comprehensiveness of tax liabilities;
(ii) taxpayer access to information on tax liabilities; administrative procedures; and (iii) existence
and functioning of a tax appeals mechanism.
























|2010 Assessment (scoring method M2)<br>Dimensions:|Score<br>2010|Col3|Score<br>2007|Col5|
|---|---|---|---|---|
|(i) Legislation and procedures for all major taxes are comprehensive and<br>clear, with strictly limited discretionary powers of the government entities<br>involved|A|B+|B|B|
|(ii) Taxpayers have easy access to comprehensive, user friendly and up-to-<br>date information on tax liabilities and administrative procedures for all<br>major taxes and the RA supplements this with active taxpayer education<br>campaigns|A|A|B|B|
|(iii) A tax appeals system for administrative procedures has been established<br>but needs substantial redesign to be fair, transparent and effective|C|C|C|C|



62. **Mauritius’ tax laws and regulations are overall of good quality.** A significant number
of tax rulings (38 on VAT, 105 on other taxes) contain MRA’s interpretation of the law upon
which taxpayers can rely. These have been issued and made available via the MRA website.
Seven statements of practice have also been published. Existing tax concessions (also known as
tax incentives) have recently been removed or included in the various tax laws. All of these
developments promote transparency and limit the discretion of the authorities. In the period
under review, income tax was also simplified significantly; deductions were eliminated, whilst
at the same time rates were reduced significantly, from a top rate of 30 percent prior to 2006-07,
22.5 percent in 2006-07, to 15 percent in 2007-08. Agreements for the avoidance of double
taxation have been negotiated with 36 countries including regional partners and major global
investors, ten treaties are also being negotiated.


63. **Mauritius’ tax laws and regulations are readily accessible via the MRA’s website,**
**which is updated frequently throughout the year.** Multiple education sessions or awareness
campaigns are organized each year by the Taxpayer Education and Communication Department.
These communications are however in English only, and not in French or Creole, the primary
language of preference for most of the population. MRA’s taxpayer charter from December 2006
has two versions, an accurate written presentation (in Chapter 4 of MRA’s last two annual

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34


reports) that mentions taxpayer obligations and a graphical website presentation which has some
limitations.


64. **The formal appeals mechanism has some serious limitations which suggest the need**
**for a substantial redesign to ensure fairness, transparency and effectiveness.** Mauritius has
had a Tax Appeals Tribunal since 1984; in 2003 this was replaced by the current Assessment
Review Committee (ARC), a non-judicial body. The provisions governing the ARC have been
included in the MRA Act, although the ARC is and should be independent from MRA; potential
investors might be misguided in this respect, by the fact that the provisions concerning the ARC
were included in the Revenue Authority Act. Furthermore the scope of the ARC’s activities, in
conformity with its name is limited to assessments.


65. **Taxpayers have no right to appeal against rulings.** A taxpayer may adopt a position
different from an MRA ruling, and then object and appeal against an assessment in line with the
said ruling, but this is risky, and the current situation may lead to potential investments not being
realized. Taxpayers are entitled to appeal against decisions by the ARC to the Supreme Court,
but only with respect to matters of law, not matters of fact, this limitation is a serious one. MRA
currently wins over 80 percent of the cases.


66. **In addition, vacancies of the judicial officer positions at ARC have caused serious**
**delays in hearings and the determination of cases** . Since April 2009 it has had only one vicechairperson, and since early 2010 none. The MRA Act (Article 20(3) (a)(i)) requires that an
ARC panel shall endeavor to give its decision on the representations no later than eight weeks
from the start of the hearing. With respect to cases involving the Registrar-General this is
generally possible, but most cases involving MRA currently take months, and sometimes up to
two years. Detailed tables, shown in Table A3 of Annex III, which do not cover cases involving
the Registrar-General or those concerning Customs and Excise, show that the situation
deteriorated in 2008-09, with the number of pending cases rising by 81 percent, and the disputed
amount rising by (at least) 51 percent. It will take more than three years to clear all cases
currently pending before the ARC (ignoring any new cases lodged). In terms of numbers of cases
and amounts disputed, this stage of litigation was fairly stable between 2006-07 and 2008-09, but
the quality of reporting on the case statistics in MRAs annual reports needs to be improved.


**PI–14. Effectiveness of measures for taxpayer registration and assessment**

This indicator has three dimensions which assess the: (i) controls in the taxpayer registration
system; (ii) effectiveness of penalties for non-compliance with registration and declaration
obligations; and (iii) planning and monitoring of tax audit and fraud investigation programs.

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|2010 Assessment (scoring method M2)<br>Dimensions:|Score<br>2010|Col3|Score<br>2007|Col5|
|---|---|---|---|---|
|(i) Taxpayers are registered in a complete database system with<br>some linkages to other relevant government registration systems<br>and financial sector regulators|B|B+|A|B+|
|(ii) Penalties for non-compliance exist for most relevant areas, but<br>are not always effective due to insufficient scale and /or<br>inconsistent administration|B|B|B|B|
|(iii) Tax audits and fraud investigations are managed and reported<br>on according to a documented audit plan, with clear risk<br>assessment criteria for all major taxes that apply self-assessment|A|A|B|B|



67. **MRA maintains a database of registered taxpayers, including the central**
**business database of the Board of Investment to which it has direct access.** This covers
data on purchasers of real estate and vehicles; databases of all licenses issued by local
authorities, including construction licenses; and information held by its own field officers
responsible for tracking unregistered businesses. In recent annual reports [4] MRA presents
registration of taxpayers as shown in Table 12. This shows the impact of recent increases in
the level of tax exempt thresholds and a general rise in all other registrations in line with the
general progress in MRA’s operations. However MRA’s Corporate Plan 2008-10 reported
that compliance by professionals like architects and doctors was a matter of concern: only
65 percent and 69 percent respectively were filing returns, and only 48 percent and 59
percent were paying tax. During the missions various sources from the private sector
indicated that this remains the case. It appears this information was not apparent during the
first PEFA assessment of 2007. The same MRA Corporate Plan announces measures to
address the situation, and the Fiscal Investigations Department has been set up _inter alia_ with
the objective to focus on professionals, but an evaluation of the effectiveness of those
measures is not yet available.


**Table 12. Mauritius: Taxpayer Registration**












|Col1|2006-07|2007-08|Col4|2008-09|Col6|
|---|---|---|---|---|---|
|**Category** <br>||**Number**|**Growth Rate**<br>**(percent)**|**Number** <br>|**Growth Rate**<br>**(percent)**|
|Companies <br>Individuals–emoluments only <br>Individuals–self-employed/mixed<br>Income <br>Societies <br>Successions <br>Total|39,431<br>292,468<br>49,209<br>3,856<br>1,688<br>386,652|47,896<br>157,601<br>59,214<br>4,239<br>1,813<br>270,763|21.5<br>-46.1<br>20.3<br>9.9<br>7.4<br>-30.0|51,593 <br>102,199 <br>65,441 <br>4,496 <br>1,919 <br>225,648|7.7<br>-35.2<br>10.5<br>6.1<br>5.8<br>-16.7|



Source: Ministry of Finance and Economic Development

4 MRA Annual Report 2007/08, page 43, and MRA Annual Report 2008/09, page 37.

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68. **The design of the regime of tax penalties deviates from international standards in**
**a number of respects.** [5] The Income Tax Act provides for “a penalty not exceeding 50 percent,”
which gives MRA considerable discretion and MRA’s criteria to determine the penalty rate are
not communicated to the public. First, MRA has guidelines for determining penalties which
partly depend on the taxpayer’s agreement regarding the assessment raised, which might boil
down to punishing the taxpayer for holding certain legal opinions or for defending them in court.
Instead, it is international best practice to let penalties (expressed as a percentage of the amount
of tax not paid) depend explicitly on the degree of culpability of the taxpayer. Secondly, some
maximum penalties are fixed amounts which have been eroded by inflation over time. Some
mechanism should be in place to ensure regular adjustments are made. Such fixed rate penalties
should either be regularly subjected to review, or have an automatic adjustor built into
legislation. Thirdly, the phrase “on conviction,” instead of “on administrative conviction,”
suggests that MRA is always in need of the intervention of a penal court, not only for crimes but
even for routine offences perpetrated without reasonable cause or due to gross neglect, for
which, by international standards, the tax administration, should be the competent institution.


69. **The information in MRA’s Corporate Plan 2008-10 on compliance by selected**
**groups, including professionals suggests that the penalties are not effective to ensure**
**taxpayers compliance.** Any revaluation of real estate by the authorities with respect to the
Registration Duty on Transfer of Immovable Property automatically triggers a penalty of
100 percent, irrespective of the degree of culpability of the taxpayer, who in all circumstances
may arrive at a different estimate of fair market value than the authorities given that valuation
is not an exact science. Furthermore, there are concerns about MRA not enforcing the provisions
(mainly clause 22) in the Income Tax Regulations (1996) concerning the obligations of
employers and other withholders of taxes deducted at source to submit documentation matching
their payments.


70. **Since the inception of MRA in July 2006, audits of the various taxes have been**
**integrated and guided by risk criteria which are regularly evaluated.** The Large Taxpayer
Department attempts to audit at least 25 percent of its 800 to 900 taxpayers, so that on average
each taxpayer is audited every four years. In 2007-08 this target was not met (11.1 percent of all
LTD taxpayers), but in 2008-09 it was exceeded (Table A4 in Annex III). In spite of the sharply
increased number of audits (45 percent up), the total amount raised by additional assessments
went down in 2008-09. This is related to the recent changes in tax policy in 2007-08,
characterized by a reduction of tax rates accompanied by simplification, in particular a reduction
of the number of allowable deductions. This has led to a reduced need to impose amended
assessments, and enabled the audit staff to increase productivity in terms of the number of desk


5 See the last half of Richard K. Gordon: “Law of Tax Administration and Procedure”, Chapter 4 in V. Thuronyi
(Ed.): _Tax Law Design and Drafting_, Vol. 1, IMF, Washington DC, 1996, available via
www.imf.org/external/pubs/nft/1998/tlaw/eng.

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and field audits. The amended assessments for 2007-08 were exceptionally high due to the
Voluntary Disclosure Incentive Scheme that was in force in that year.


71. **Another yardstick for productivity, amount per amended assessment, went also**
**sharply up by 56 percent** . Other underlying factors in the increases in productivity were the fact
that field auditors were provided with laptop computers, as well as continued efforts in capacity
building of audit staff inside Mauritiu **s** or internationally. Like taxpayer audit, the tax
investigations function is covered by MRA’s annual plan. The annual plan defines the sectors
which the Fiscal Investigations Department will focus on. During the period reviewed progress
has been made in terms of numbers of investigations completed, and tax yield resulting from
investigations.


**PI–15. Effectiveness in collection of tax payments**

This indicator has three dimensions which assess the: (i) collection ratio for gross tax arrears;
(ii) effectiveness of transfer of tax collections to the treasury by the revenue administration; and
(iii) frequency of complete accounts reconciliation between tax assessments, collections, arrears
records, and receipts by the treasury.


















|2010 Assessment (scoring method M1)<br>Dimensions:|Score 2010|Col3|Score 2007|Col5|
|---|---|---|---|---|
|(i) The average debt collection ration in the two most recent fiscal<br>years was 60-75 percent and the total amount of tax arrears is<br>significant|C|C+|D|D+|
|(ii) All tax revenue is paid directly into accounts controlled by the<br>treasury or transfers to the treasury are made daily|A|A|A|A|
|(iii) Complete reconciliation of tax assessments, collections, arrears<br>and transfers to treasury takes place at least monthly within one<br>month of the end of the month|A|A|A|A|



72. **Effective collection efforts appear to be undermined by problems with writing-off**
**tax liabilities that cannot be collected.** These results in a lower ratio of tax debt collections to
tax debts than would have otherwise been the case. This prevents Mauritius from scoring higher
on this dimension. There has been recent progress since the MRA Act was amended in 2009 so
that the approval of the minister of finance is no longer required. Instead all write-offs are to be
approved by the MRA Board after comments from the director of audit. The Income Tax Act
says that if a taxpayer objects to an assessment, he shall pay 30 percent of the amount of income
tax and not of the _disputed_ amount of tax. If the taxpayer fails to do so, within about a month, the
law determines that the objection has lapsed; but the ARC follows the interpretation that this is
unconstitutional, and that it has the right to look into the matter if the taxpayer was not able to
pay up the amount in time.

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73. **MRA’s Annual Report 2008-09 reports significant amounts of disputed taxes** **and**
**collectible debt arrears equivalent to 4.1 percent and 4.7 percent of total revenue,**
**respectively.** By June 30, 2008, the disputed amounts equaled to MUR2.0 billion. Collectible
debt, in arrears, is of the same order of magnitude: MUR1.9 bn. By June 30, 2009, (Table A5) **.**
The MRA Annual Reports do not specify arrears concerning Customs Duties and Excises, and
do not report debt write-offs. MRA provided an “age analysis of debt,” showing that by June 30,
2007, 64.1 percent of the outstanding amount was overdue by two years or more, and that 8.0
percent was overdue between one and two years. The Tax Arrears Payment Incentive Scheme
from 2007-08 reduced the share of debts outstanding for more than two years to 44 percent, but
this effect may have been temporary. Figures for the most recent Financial Year (July 2009–
December 2009) are not yet available.


74. **The frequency of transfers of revenue collections to the Treasury Account is at least**
**once per day.** The main collection points are MRA head office, Customs House, and (of
subordinate importance) Customs Airport. Customs House sweeps their account twice per day.
MRA H/Q sweep every morning, but when there is a peak period (around the annual filing
deadline) they also sweep twice per day.


75. **Reconciliation** **takes places on a monthly basis.** This frequency is high with use being
made of the TAS. However, the follow-up to the reconciliation reports deserves attention.


**PI–16. Predictability in the availability of funds for commitment of expenditure**


This indicator has three dimensions that assess the: (i) extent to which cash flows are forecast
and monitored; (ii) reliability and horizon of periodic in-year information on ceilings or
expenditure commitment; and (iii) frequency and transparency of adjustments to budget
allocations above the level of management of the ministries.
























|2010 Assessment (Scoring method M1)<br>Dimensions:|Score<br>2010|Col3|Score<br>2007|Col5|
|---|---|---|---|---|
|(i) Cash flows are prepared for the fiscal year and updated monthly<br>reflecting actual cash inflows and out-flows|A|C+|A|A|
|(ii) MDAs are able to plan and commit expenditure at least six<br>months in advance in accordance with budgeted appropriations|A|A|A|A|
|(iii) Significant in-year adjustments are frequent but undertaken with<br>some transparency|C|C|A|A|



76. **Cash flow forecasts are prepared upfront for the fiscal year and are entered into the**
**TAS** . The cash flow forecasts, which are updated monthly, are monitored daily by the treasury
against actual daily cash inflows and outflows. The cash flow forecasts reflect revenue collection
profiles and spending plan requirements (based on the budgets), and are used in the
determination of financing requirements. Recording and management of cash balances and debt
are made on a daily, monthly, and quarterly basis.

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39


77. **Commitments ceilings in the form of warrants (authority to spend) are released to**
**ministries and departments by the accountant-general at the beginning of the year (after**
**the approval of the budget).** Funds are released when required as Treasury effects payments for
most of the ministries and departments through the single treasury account. Therefore, ministries,
departments and agencies (MDAs) are able to plan and commit expenditure for up to a year in
advance.


78. **However, significant in-year budget adjustments take place frequently during the**
**year, approved by the MoFED** . The reallocations are consolidated once or twice a year into
supplementary budgets and are presented to Parliament for approval of extra supplementary
appropriation. The supplementary budgets are made publicly available on MoFED website.
For the three periods, absolute variance between functional classification composition was
13.6 percent (2007-08), 17.9 percent (2008-09), 7 percent for July to December 2009 (refer to
PI-2) with the main allocation relating to reallocation from capital budget to recurrent budget.
This level of reallocation is therefore rated a C. This compares to previous years where, while
frequency of reallocations was relatively high, the amount of reallocations were low and hence
the score was A.


**PI-17. Recording and management of cash balances, debt, and guarantees**

This indicator has three dimensions which assess the: (i) quality of debt data recording and
reporting; (ii) extent of consolidation of the government’s cash balances; and (iii) systems
for contracting loans and issuance of guarantees.
























|2010 Assessment (scoring method M2)<br>Dimensions:|Score<br>2010|Col3|Score<br>2007|Col5|
|---|---|---|---|---|
|(i) Domestic and foreign debt records are complete, updated and<br>reconciled on a monthly basis with data considered to be of high<br>integrity. Comprehensive management and statistical reports are<br>produced at least quarterly|A|A|B|A|
|(ii) Most cash balances are calculated and consolidated at least<br>weekly, but some EBUs remain outside the arrangement|B|B|A|A|
|(iii) Central government’s contracting of loans, and issuance of<br>guarantees are made against transparent criteria and fiscal targets, and<br>always approved by a single responsible government entity|A|A|A|A|



79. **Domestic and foreign debt, including guarantees, are effectively recorded, managed**
**and reported by the debt policy and strategy unit in MoFED in conjunction with the Bank**
**of Mauritius (BOM)** . The Commonwealth Secretariat Debt Recording and Management System
(CS-RMS) is used to record debts. BOM records and reconciles monthly all central government
debts in its copy of the CS-DRMS database while the MoFED Debt Unit records and reconciles
monthly all other public sector debt and guarantees including those of public enterprises in their
copy of CS-DRMS database. The information in BOM is submitted manually to the Debt Unit,
for consolidation into a debt report that is made publically available on the MoFED website, not
later than one month after the end of every quarter and annually in Statement J of the

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government financial statements. The director of audit indicates that domestic and external debts
totaling MUR8,335 million and MUR3,471 million respectively incurred by agencies, local
government and public enterprises and guaranteed by government as of December 31, 2009,
were fully disclosed in the statement of public debt and in the statement of contingent liabilities.


80. **Central budgetary government cash holdings are monitored, consolidated,**
**and reconciled on a daily basis.** The reconciliation statements are available as and when
required from the TAS. However, the consolidation excludes cash held by extra-budgetary units.
This was not an issue addressed in the 2007 assessment, although cash balances at EBUs were
significantly less substantial at that time.


81. **The procedures for contracting loans and issuing guarantees are made against**
**transparent criteria and fiscal targets.** The Public Debt Management Act 2008 sets out
a comprehensive regime for establishment of a debt strategy, management of debt and
accountability including reporting. Key provisions include: (i) a borrowing ceilings (60 percent
GDP); (ii) identification in the budget of external financing estimates by loan; (iii) disaggregated
reporting in the budget of actual and forecast changes in debt stock by central budgetary
government, EBUs, subnational government and public enterprises; (iv) granting of sole power
to borrow to the MoFED; (v) a requirement that all loan agreements or guarantees are submitted
to the legislature within 15 working days; and (vi) full quarterly in-year and annual reporting on
the public debt. The ceilings, debt strategy, accountability and reporting requirements have been
observed during the period of the assessment, although the indications are that the debt stock is
increasing and without remedial action the ceiling may be breached in the near future.


**PI–18. Effectiveness of payroll controls**


This indicator has three dimensions that assess the: (i) degree of integration and
reconciliation between personnel records and payroll data; (ii) timeliness of changes to
personnel records and the payroll; (iii) internal controls of changes to personnel records and
the payroll; and (iv) existence of payroll audits to identify control weaknesses and/or ghost
workers.
























|2010 Assessment (scoring method M1)<br>Dimension:|Score<br>2010|Col3|Score<br>2007|Col5|
|---|---|---|---|---|
|(i) Personnel and payroll data are not directly linked but the payroll is<br>supported by full documentation for all changes made to personnel<br>records each month and checked against the previous month’s payroll<br>data|B|B+|B|B+|
|(ii) Required changes to the personnel records and payroll are<br>updated monthly generally in time for the following month’s<br>payments. Retroactive adjustments are rare|A|A|A|A|
|(iii) Authority to change records and payroll is restricted and results in<br>an audit trail|A|A|A|A|
|(iv) A strong system of payroll audits exists to identify control<br>weaknesses and/or ghost workers|A|A|A|A|

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41


82. **Payroll and personnel records are not integrated but payroll changes are authorized**
**and fully documented.** Personnel records are maintained manually at each ministry/department
and a process to progressively computerize the records has been initiated in 11 pilot sites. The
ministries/departments manually submit approved payroll related changes to Central Information
Systems Division (CISD) for processing in the payroll system. The payroll system is not linked
directly to TAS; payment information generated in the payroll system is submitted manually for
processing in TAS.


83. **Changes to personnel records and payroll are updated monthly in time for the**
**following month’s payments** . The changes are approved by authorized personnel officers in
ministries/departments. After processing the changes, the payroll is reviewed by the ministry for
accuracy. A computerized identity card and attendance system which controls the establishment
and monitor attendance of personnel is currently being transferred to a fingerprint-based system.


84. **Adequate and appropriate internal controls relating to changes in personnel records**
**and payroll exist and are complied with.** Authority to change records and payroll is restricted
and lies with the accounting officer who has authority to delegate the responsibility to an officer
not below the rank of assistant finance officer or executive officer. The officer approves the
variation forms that are prepared monthly and submitted by line ministry to CISD for payroll
processing. CISD verifies the officer’s signature before any processing is done. After processing
the payroll, CISD submits the monthly payroll lists back to the ministries to be confirmed and
signed. At the ministry level, actual payments are checked against previous month’s payment.


85. **After approval by ministries, the signed payrolls are submitted to the treasury**
**which enters them manually in TAS, and processes the payments to employee’s individual**
**bank accounts** . All payment and deduction details are also manually transcribed into individual
Salary Cards kept in Finance Sections in the ministries/departments for post-payroll verification.
The procedures are well documented in the Financial Management Manual.


86. **Both the internal audit unit and the director of audit perform compliance testing of**
**the internal controls of the payroll at ministry/department level** . The director of audit
performs substantive testing of the payroll and confirms the existence of an adequate audit trail
during year-end audit. The auditors have reported that an adequate audit trail exists and that no
major issues have arisen during the last three years. However, no IT system audit has been
conducted on the payroll system during the period of review.


**PI–19. Competition, value for money in controls in procurement**


This indicator has three dimensions which assess the: (i) use of open competition for
award of contracts that exceed the nationally established monetary threshold for small
purchases; (ii) justification for use of less competitive procurement methods; and
(iii) existence and operation of procurement of complaints mechanism.

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42






















|Dimension (scoring method M1)|Score<br>2010|Col3|Score<br>2007|Col5|
|---|---|---|---|---|
|(i) Accurate data on the method used to award public contracts<br>exists and shows that more than 75 percent of contracts above the<br>threshold are awarded on the basis of open competition|A|A|A|B+|
|(ii) Other less competitive methods, when used, are justified in<br>accordance with clear regulatory requirements|A|A|A|A|
|(iii) A process (defined by legislation) for submitting and<br>addressing procurement process complaints is operative and<br>subject to oversight of an external higher authority|B|B|C|C|



87. **Consistent with the 2006 Public Procurement Act, open competitive procurement**
**arrangements exist for contracts above the national threshold for small contracts**
**(currently MUR5 million).** The Procurement Policy Office (PPO) collects data on all the
contracts above MUR500,000 through the quarterly reporting by Procurement Boards; these
account for 90 percent of procurement in terms of value. According to these statistics, open
competitive procurement accounts for 88 percent in 2008 and 77 percent in 2009 of the number
of contracts above the small contracts threshold. In terms of value, the share of contracts above
the threshold was 98 percent in 2008 and 92 percent in 2009. Assessment of internal control
systems, confirm adequate oversight of the procurement systems and transactions, including
consistency of methods within thresholds.


88. **The data collected by PPO shows that, in terms of value, the percentage of non-**
**competitive contracts awards above the threshold of MUR5 million was 2 percent in 2008**
**and 8 percent in 2009.** Justification for non-competitive procurement is required under the law
and systems to record it are in place and subject to audit. According to Public Procurement Act
(PPA) 2008: when a public body uses a method of procurement other than open advertised
bidding or, in the case of procurement of consultancy services, a method other than competitive
methods, it shall note in the record of the procurement proceedings the grounds for the choice of
the procurement method. PPO receives quarterly reports from the PBs and checks the
justifications and requires additional information as needed. PPA justifications for noncompetitive procedures include: original equipment manufacturers, unique qualification of
consultants, limited number of suppliers, and continuity of supply. In a few cases the use of less
competitive methods is due to underestimation of the contract value. It is however noted that
there has recently been an increase in the use of less competitive methods above the national
threshold for small contracts, so the government needs to ensure that this indicator continues to
be subject to rigorous oversight.


89. **A complaints mechanism operated by an Independent Review Panel (IRP) is**
**now operational but as yet not fully effective.** All data for resolution of complaints is
subject to public scrutiny and is published on the PPO website. However, the fact that
complaints rulings are not binding introduces some risk that procuring entities may not
enforce the IRP decisions, which puts in question the effectiveness of the complaints
mechanism.

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**PI** - **20. Effectiveness of internal controls for non-salary expenditure**

This indicator has three dimension which assess the: (i) effectiveness of expenditure
commitment; (ii) comprehensiveness, relevance, and understanding of other internal
control rules and procedures controls; and (iii) degree of compliance with rules for
processing and recording transactions.


























|2010 Dimension Ratings (scoring method M1)|Score<br>2010|Col3|Score<br>2007|Col5|
|---|---|---|---|---|
|(i) Comprehensive expenditure commitment controls are in<br>place and effectively limit commitments to projected cash<br>availability and approved budget allocations|A <br>|A|A <br>|A|
|(ii) Other internal control rules and procedures are relevant and<br>incorporate a comprehensive and generally cost effective set of<br>controls, which are widely understood|A <br>|A <br>|A <br>|A <br>|
|(iii) Compliance with rules is very high and any misuse of<br>simplified and emergency procedures is insignificant|A <br>|A <br>|A <br>|A <br>|



90. **An effective and comprehensive expenditure commitment control system (linked**
**to TAS) is in place and effectively limits commitments to approved budget allocations**
**and projected cash availability.** Commitment and payment thresholds are established in the
TAS system once the accountant-general issues the annual or updated warrant to incur
expenditure; these are based on a commitment-based payment cash flow forecast within the
approved budget framework. The TAS system provides an in-built control mechanism for
commitment registration that does not accept any commitment that would generate a
payment above the authorized threshold, unless specific and appropriate authority is granted
through a reallocation or supplementary approval.


91. **A comprehensive and relevant internal control framework exists designed to ensure**
**that government resources are used economically, efficiently and effectively and assets are**
**safeguarded** . The internal control procedures and rules are documented in the Financial
Management Manual (FMM), Personnel Management Manual, Financial Circulars, and
Financial Instructions. The FMM is being revised (as it was issued in 1990) to incorporate the
internal control changes documented in financial instructions and circulars taking into account
the improved financial legislation supporting the fiscal reforms. Training for the internal controls
is however minimal and mostly informal: an aspect that could potentially hinder (although in
practice does not appear to have) the ability to understand the procedures, especially by new
employees, and impact on compliance with internal controls.


92. **The extent of compliance with the internal controls and recording transactions**
**is high.** Transactions are recorded in a timely manner in the TAS by the finance officers in
ministries/departments, and transaction information is regularly reviewed. The management and
officials also comply with the internal controls. The internal auditor undertakes regular reviews
of internal controls and confirms management and officials consistently comply with internal

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controls including those used for emergency procurement procedures. Reviews are also done on
other ministries/departments on a rotating basis. The director of audit also performs compliance
testing during the year-end audit and has not, in his audit reports for the past three years, reported
any adverse comments regarding the processing and recording of financial transactions.


93. **Self-accounting units prepare and record their own financial information, which**
**is also subjected to audit by the director of audit.** The units follow the same internal control
procedures as non self-accounting ministries and departments.


94. **The Internal Control Cadre (internal audit unit) has 22 teams permanently**
**positioned to perform internal audit in large ministries/departments, and three roving**
**teams that carry out internal audit in other ministries/departments on a rotating basis.**
The unit does not perform internal audits in EBU units, which have their own individual internal
auditors. The unit’s mandate is set out in the MoFED Circular No.12 of 2005(Internal Audit
Regulation). There is currently no independent legislation that supports the establishment of
internal audit and provides its functions. Internal Audit Charters exists in all entities where
internal audit is involved and these are signed by accounting officers. As at December 30, 2009,
the unit had 77 officials out of an establishment of 117 (with 16 above the rank of assistant
manager). More than 50 percent of the staff have professional accounting or audit qualifications.
Junior staff, mainly in the position of internal control officers, require more mentoring and
training to acquire appropriate professional qualifications.


**PI–21. Effectiveness of internal audit**

This indicator has three dimensions that assess the: (i) coverage and quality of internal
audit function; (ii) frequency and distribution of reports; and (iii) extent of management
response to internal audit findings.


















|2010 Dimension Ratings (scoring methodology M1)|Score|Col3|Score|Col5|
|---|---|---|---|---|
|(i) Internal audit is operational for the majority of central government<br>entities and substantially meets professional standards. It is focused on<br>systematic issues (at least 50percent of staff time)|B|B+|B|B+|
|(ii) Reports adhere to a fixed schedule and are distributed to the<br>audited entity, ministry of finance and the Supreme Audit Institution|A|A|A|A|
|(iii) Prompt and comprehensive action is taken by many (but not all)<br>managers|B|B|B|B|



95. **The unit applies internal audit methodology that is in line with International**
**Internal Audit Standards and the Institute of Internal Auditors (IIA) guidelines.** The
methodology is risk based and addresses systemic issues. The unit has not yet conducted IT
audit and hence IT related internal audits review are conducted on inputs and outputs, but
without detailed review of internal computer processes.

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96. **Internal audit reports are issued, once finalized, to the audited entities, MoFED,**
**Director, Office of the Public Sector Governance (OPSG) and the Director of Audit (on**
**request and followed up at least annually).** Internal audit is carried out according to an agreed
audit plan between the Internal Audit Unit and the audited entity prior to the start of the audit.
The annual audit plan is approved by the accounting officer at the start of each year. It clearly
defines the timing, extent of the audit coverage and the audit procedures to be followed. The
submission of the audit findings and the audit report adheres to a fixed schedule.


97. **Management response varies across MDAs. Action is taken by many (but not all)**
**Accounting Officers on major issues.** At the end of an internal audit an exit meeting is held,
where the draft internal audit report, with recommendations, is discussed with management.
Management is required to prepare an action plan on agreed recommendations and the timing
of their implementations. There is no evidence of formal follow-up and monitoring of
recommendations made by internal audit. Similar issues are repeated from one year to the next,
this is also noted in director of audit reports; an indication of weakness in implementation of
recommendations. The Office of Public Sector Governance (OPSG), in the Prime Minister’s
office, has been strengthened to address this issue, monitor the implementation of the
recommendations, and report to the Public Service Commission where there is limited or no
implementation. The initiative to establish audit committees for central government entities,
from 2006, was not successful and none is currently operational, this effectively limits the
demand for effective resolution of internal audit queries.


**E.  Accounting, Recording, and Reporting**


**PI–22. Timeliness and regularity of accounts reconciliation**

This indicator has two dimensions and assesses the: (i) regularity of bank reconciliations;
and (ii) regularity of reconciliation and clearance of suspense accounts and advances.




















|2010 Assessment (scoring method M2)<br>Dimensions:|Score<br>2010|Col3|Score<br>2007|Col5|
|---|---|---|---|---|
|(i) Bank reconciliation for all centrally managed bank accounts take<br>place at least monthly at aggregate and detailed levels, usually within<br>four weeks of the end of the period|A|A|A|A|
|(ii) Reconciliation and clearance of suspense accounts and advances<br>take place at least quarterly, within a month from the end of the period<br>and with few balances brought forward|A|A|A|A|



98. **Bank reconciliations** **for all central government managed bank accounts takes place**
**daily with follow-up on outstanding issues undertaken monthly, within four weeks from**
**end of month.** The government has bank accounts mainly in the State Bank of Mauritius and in
the Central Bank of Mauritius. Payments for central budgetary government are made through a
Single Treasury Account (at BOM) and appropriately recorded in TAS. Reconciliation

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statements are available through the TAS. Self-accounting entities, prepare their own bank
reconciliations, on a monthly basis.


99. **There are no suspense accounts maintained in the general ledger for central**
**budgetary government, deposit and advance accounts are reconciled monthly** . Transactions,
mainly unknown deposits, remain in the bank reconciliations for a maximum of three months;
a period when investigation are undertaken to identify the nature of the deposit. Once this is
determined the un-reconciled deposit is cleared and allocated to the correct general ledger
revenue account. There exist procedures for the granting of employee’s advances mainly car
loans; monthly reconciliations are conducted on these advances accounts. Other advances,
besides car loans, are not significant.


**PI** - **23. Availability of information on resources received by service delivery units**


This indicator assesses the extent to which information, is collected and processed, that
demonstrate resources (cash and kind) are received by front line service delivery units **.**










|2010 Assessment (scoring method M1)<br>Dimensions:|2010<br>Score|2007<br>Score|
|---|---|---|
|Routine data collection or accounting systems provide reliable<br>information on all types of resources received in cash and in kind by<br>both primary schools and health clinics across the country.|A|A|



100. **Resources disbursed to service delivery units are recorded in the TAS and provide**
**reliable information on the resources available, by zone, to frontline service delivery units.**
The chart of accounts in TAS allows capture and reporting of transactions–revenue and
expenditures–relating to a cost centre. The budgets for frontline service delivery units, such as
primary schools and primary health clinics, are however organized and administered by zone
(given the small size of frontline service delivery units in Mauritius); these are responsible for a
cluster of service delivery units. Transactions relating to frontline delivery units like schools and
health centers are captured in TAS, by the respective ministry, in the allocated zonal cost centre
codes, minimal amounts are disbursed and administered at unit level. There is no evidence of any
leakage of resources to frontline service delivery units. For any direct receipts received by
schools from third parties (parents) financial statements are prepared at school level presented to
the relevant third parties (parent community).


**PI–24. Quality and timeliness of in-year budget reports**

This indicator has three dimensions that assess the: (i) scope of reports in terms of coverage
and compatibility with budget estimates; (ii) timeliness of the issue of reports; and
(iii) quality of information.

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|2010 Assessment (scoring method M1)<br>Dimensions:|2010<br>Score|Col3|2007<br>Score|Col5|
|---|---|---|---|---|
|(i) Classification allows comparison to budget but only with some<br>aggregation, expenditure is covered at both commitment and<br>payment stages|A <br>|A|B|B+|
|(ii) Reports are prepared quarterly or more frequently issued within<br>four weeks of the end of the period|A <br>|A <br>|B|B|
|(iii) There are no material concerns about data accuracy|A|A|A|A|


101. **In-year budget execution reports for ministries and departments are available in**
**TAS which allows comparison between budget and actual spending.** Following approval by
parliament the budget appropriations for ministries and departments are manually uploaded into
the TAS system at the level of MoFED. Ministries/departments record transactions in the system
and budget execution reports can be generated at any time. The information includes expenditure
at both commitment and payments stages. Transfers to EBUs are included in these reports, but
detailed extra-budgetary units expenditures or own revenues, are not recorded in the TAS.
Therefore, it is currently not feasible to compare and monitor fully aggregated actual vs. budget
performance data for all central government entities including EBUs.


102. **In-year budget reports can be generated from the TAS system at any time.** These
are usually generated on a monthly basis and published on the website of MoFED and hence
accessible to the public at large. These reports exclude EBUs operations.


103. **Quality of in-year budget information is considered to be high.** The quality is
supported by the fact that there is high degree of compliance with requirements relating to
processing and recording transactions (PI-20). No significant data accuracy concerns have been
expressed by the director of audit and the internal audit unit.


**PI–25. Quality and timeliness of annual financial statements**

This indicator has three dimensions that assess the: (i) completeness of the financial statements;
(ii) timeliness of submission of the financial statements; and (iii) accounting standards used.




















|Dimensions to be assessed (Scoring method M1)|2010<br>Score|Col3|2007<br>Score|Col5|
|---|---|---|---|---|
|(i) A consolidated government statement is prepared annually and<br>includes full information on revenue, expenditure and financial<br>assets and liabilities|A|A|A|A|
|(ii) The statement is submitted for external audit within six months<br>of the end of the fiscal year|A|A|A|A|
|(iii) IPSAS or corresponding national standards are applied|A <br>|A <br>|**A **|**A **|



104. **The financial statements of budgetary central government and of individual EBUs**
**are** **prepared annually and include full information on revenue, expenditure and financial**

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**assets and liabilities.** The consolidated budgetary central financial statement is prepared to
comply with requirements of the Constitution, Sec 103 -109, and Finance and Audit Act. The
financial statements are prepared on a cash basis using a chart of accounts based on the _GFSM_
_2001_ manual classification system. To comply with the requirements in Finance and Audit Act,
Section 19.3, the financial statements include detailed statements of financial assets and
liabilities as well as the financial position (financial assets advances, cash and financial liabilities
short-term borrowings). In addition to regulatory requirements, IPSAS cash basis standards are
applied by the inclusion of the following statements: (i) cash flow statement; (ii) notes on
accounting policies; and (iii) comparison with the budget. Some accrual based information
relating to financial assets and liabilities is also disclosed in the statement of financial position.
The presentation is consistent from one year to the next. A number of EBUs are also utilizing
IPSAS (either cash or accrual according to the nature of their operations) in preparing their
financial statements.


105. **The financial statements are regularly submitted to the director of audit within the**
**statutory stipulated period of six months of the end of the fiscal year.** During the period of
review the government financial statements were submitted for external audit within four-five
months of the end of the fiscal year.


Fiscal Year Year-end Date Financial Statement Submitted to NAO
2007-08 June 30 November 7, 2008
2008-09 June 30 November 20, 2009
July-Dec 2009 December 31 May 31, 2010


**F.  External Scrutiny and Audit**


**PI–26. Scope, nature, and follow-up of external audit**


This indicator has three dimensions that assess the: (i) scope/nature of the audit performed
(including adherence to auditing standards); (ii) timeliness of submission of audit reports to
legislature; and (iii) evidence of follow-up on audit recommendations.






















|2010 Assessment (scoring method M1)<br>Dimensions:|2010<br>Score|Col3|2007<br>Score|Col5|
|---|---|---|---|---|
|(i) All entities of the central government are audited annually<br>covering revenue, expenditure and assets/liabilities. A full range<br>of financial and performance audits are performed that adhere to<br>recognized auditing standards focusing on significant and<br>systemic issues|B|B+|B|B+|
|(ii) Audit reports are submitted to the legislature within four<br>months of the end of the period covered and in the case of<br>financial statements from their receipt by the audit office|A|A|A|A|
|(iii) A formal response is made in a timely manner, but there is<br>limited evidence of systematic follow-up|B|B|B|B|

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106. **Under the provisions of the Finance and Audit Act 2008, the director of audit, who**
**heads the National Audit Office (NAO), the supreme audit institution (SAI), undertakes on**
**an annual basis a comprehensive independent annual financial audit.** This audit covers the
headquarter units of all ministries and departments and the majority of their divisions/subdivisions and EBUs. Due to limited resources and low risks the remaining units are audited on a
five-year rotational basis. The NAO annual report for 2009 notes that the total population of
units for audit as at the end of December 2009 equaled 1,468. The NAO activity statistics, shown
below (Table 13) for the 18-month period, July 2009 to December 2010, show 82 percent of
planned audits have been undertaken including 76 percent related to ministries and departmental
units. The report also notes that the number of units audited has risen (from 444 to 778 between
FY2007/08 and FY2009) significantly and that this, given the existence of some staff shortages,
is regarded as a satisfactory level of performance. The NAO also undertook three audits during
2009, including an assessment of the program-based budgeting implementation.


**Table 13. Mauritius: Government Financial Accounts Audited**

(July 2008-December 2010)



**Planned**

**units**



**Actual**

**Units**



**Completion**

**percent**



Ministries 402 304 75.6
Statutory bodies 201 164 81.6
Local authorities 133 133 100.0
Special funds 51 31 60.8
Rodrigues 142 129 90.8
Other funds 17 17 100.0
Total 946 778 82.2


Total population of accounts at December 31, 2010 was 1,468


Source: Ministry of Finance and Economic Development

107. **The director of audit has adopted a risk-based methodology and audit manual as of**
**July 1, 2009, consistent with the directives of the INTOSAI.** The audit approaches include
financial certification audits, performance reviews/evaluations, value for money audits, IT audit
and issues relating to corporate governance. The office has an establishment of 150 officers
comprising professional accountants and technical staff. To ensure compliance with INTOSAI
standards, the director of audit has established new quality assurance guidelines and has agreed
the NAO be subject to peer review by African Organization of Supreme Audit Institutions
(AFROSAI). A quality assurance unit has also been established to facilitate quality review work.


108. **The director of audit annual report on the accounts of the GoM, for the 18-month**
**period ending December 31, 2009, was submitted to the Vice Prime Minister and MoFED,**
**on the July 12, 2010.** The report, which includes the audited financial statements, is then tabled
in the National Assembly and placed on the homepage of the NAO website. This is within the

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50


seven months of the end of the fiscal year and within two months of submission of the financial
statements to the NAO. This sustains the reporting performance for earlier annual audits. The
report notes that out of the 110 plus EBUs some 14 sets of financial statements (a few for
multiple years) related to EBUs were outstanding, and 20 EBU financial statements primarily
relating to 2008-09 remained under examination.


109. **The NAO report documents the recommendations of the director of audit and the**
**responses of Accounting Officers’ agreed follow-up actions.** Accounting offices (referred to
as controlling officers) are required to provide a formal response within three weeks with an
action plan for follow-up of the Director of Audits’ recommendations. Follow-up of these plans
for all material issues is undertaken by the Office of Public Sector Governance (OPSG).


**PI–27. Legislative scrutiny of the annual budget law**

This indicator has four dimensions that assess the: (i) scope of the legislature’s scrutiny;
(ii) extent to which the legislature’s procedures are well-established and respected;
(iii) adequacy of time for the legislature to provide a response to budget proposals; and
(iv) rules for in-year amendments to the budget without ex ante approval by the
legislature.




















|2010 Assessment (scoring method M1)<br>Dimensions:|Score<br>2010|Col3|Score<br>2007|Col5|
|---|---|---|---|---|
|(i) The legislatures review covers fiscal policies and<br>aggregates for the coming year term as well as detailed<br>estimates of expenditure and revenue|B|C+|B|B+|
|(ii) Simple procedures exist for the legislature’s budget<br>review they are respected but they are not comprehensive|C|C|B|B|
|(iii) The legislature has at least the equivalent of one<br>working month to review the budget proposals|B|B|B|B|
|(iv) Clear rules exist for in-year budget amendments by the<br>executive and are usually respected, but they allow<br>extensive administrative reallocations|B|B|A|A|



110. **The scope of the legislature’s review covers medium-term expenditure projections,**
**and some limited review of medium-term priorities, although this occurs at the conclusion**
**of the budget process.** Discussions in the legislature have been confined to the annual budget
speech which outlines key fiscal policies and aggregates and details of the expenditure estimates
contained in the program, sub-program of item of expenditure. There is little detailed discussion
of the medium-term fiscal framework or medium-term priorities as this was not presented in the
estimates in the period under review.


111. **The legislatures review process relies on a full sitting of the parliament, members**
**however sit only on a part-time basis.** There are no specialized subcommittees, and support
staff is limited to a small office of two clerks. Given the limited nature of legislative review,
which, by not addressing the key fiscal and economic policies cannot be considered

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51


comprehensive in scope, this dimension is scored as a C, lower than the assessment in the 2007
assessment, although this is due to a reassessment of the existing procedures against the PEFA,
rather than any deterioration in procedures.


112. **The legislature is provided 30 days to review the budget, in accordance with the**
**constitution.** A maximum number of days are determined by the president of the assembly, after
consultation with the members. Although allowed 30 days, the actual time spent deliberating the
budget is usually around one to two weeks of very intensive sitting. This raises concern over the
effectiveness of current levels of scrutiny.


113. **Clear rules for in** - **year budget amendments are laid out in the constitution,**
**requiring a supplementary appropriation for any unappropriated expenditures.** These rules
are usually respected, however over recent years there has been a large expansion in the number
of authorizations for unappropriate expenditure at the bureaucratic level, in advance of the
supplementary appropriations. It is unclear what would eventuate if the legislature did not
approve those authorizations after the fact.


**PI–28. Legislative scrutiny of external audit reports**


This indicator has three dimensions that assess the: (i) timeliness of examination of audit
reports by the legislature; (ii) extent of hearing on key findings undertaken by the legislature;
and (iii) issuance recommended actions by the legislature and implementation by the
executive.















|Dimensions to be assessed (scoring method M1)|2010<br>Score|Col3|2007<br>Score|Col5|
|---|---|---|---|---|
|(i) The reports of the legislature review have not been compiled|D|D+|D|D+|
|(ii) In depth hearings have taken place with MoFED and responsible<br>controlling officers, but in camera and without any reports being<br>produced|A|A|A|A|
|(iii) No recommendations have been issued by the legislature|D|D|D|D|


114. **There are no reports that outline, in a timely manner, the results of examination**
**of the reports of the director of audit by the PAC during the period of the assessment**
**and of the key findings of the legislature** . Under the current Standing Orders and Rules of
the National Assembly 1995 (Section 69.2), a Public Accounts Committee (PAC) of the
parliament is required to be established with the primary duty to examine the audited
accounts of government as laid before the committee by the director of audit. It is
understood from discussion with the office of the clerk to the parliament that a PAC was
established and meetings were held during the period of the assessment. It is also understood
that a number of hearings were also held where accounting officers were required to answer
questions related to the annual audit report and that the director of audit and the accountantgeneral were in attendance. However although minutes of the meetings of these hearings

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52


were taken, no reports of the proceedings have been issued and no recommendations have
been made.


115. **Furthermore, these meetings were held in camera without any disclosure of the**
**proceedings and explicit evidence of implementation of recommendations cannot be**
**confirmed.** It is also noted that local practice is to seal the evidence of previous committee
proceedings once a new parliament has been elected. Unless any new PAC revisits the audit
reports this practice effectively limits the continuity, scope and timeliness of the PAC review
process.


116. **The absence of any recommendations by the PAC during the period of the**
**assessment undermines a key component in the PFM accountability cycle and severely**
**limits the effective oversight of the executive arm by the legislature.** The reasons behind
the breakdown of this process appear to stem from: (i) failure to recognize and prioritize the
importance of this process; (ii) the limited time available to members of the parliament; and
(iii) the limited allocation of resources for managing the process. It is understood that,
following the recent election, the new parliament addressed the issues relating to frequency
of hearings and recording of proceedings and the PAC is now meeting on a regular basis,
however the resources needed to support the process remain limited.


**G.  Donor Practices**


**D–1. Predictability of direct budget support**


This indicator has two dimensions that assess the: (i) annual deviation of actual budgetary
support from the forecast provided by the donor agencies at least six weeks prior to the
government submitting its budget proposals to the legislature; and (ii) the in-year
timeliness of donor disbursements.














|Dimensions to be assessed (scoring method M1)|2010<br>Score|Col3|2007<br>Score|Col5|
|---|---|---|---|---|
|(i) In at least two of the last three years direct budget support<br>outturn fell short of the forecast by more than 5 percent|D|D|A|A|
|(ii) In-year timeliness of donor disbursements|D|D|A|A|



117. **The annual deviation of estimated direct budget support to actual provision**
**of funds has been substantial over the years under consideration.** In 2007-08, actual
support came in 45 percent below estimated, in 2008-09, support came in 24 percent above,
and in July-December 2009 support came in 56 percent below estimated (Table 14). As
budget support has fallen short in two years out of three, this dimension scores a D, a large
change from the A assessed in 2007. However this does not imply a lack of predictability in
donor disbursements but rather issues related to conditionality, and active management by
the government of donor disbursements in accordance with cash flow requirements. This

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53


approach can be considered relatively prudent for the period under review, given the
backdrop of the global financial crisis.


**Table 14. Total Direct Budget Support Actual versus Estimated**



**2007-08**
**MUR mln**



**2008-09**
**MUR mln**



**July-Dec 2009**

**MUR mln**



Budgeted 5,155 6,113 7,205
Actual 2,834 7,547 3,182
Difference -2,321 1,434 -4,023
Percent variation -45.0 23.5 -55.8

Source: Ministry of Finance and Economic Development


118. **In assessing the causes of the variations, the grant support and loan support have**
**been separated out, as the factors driving each of them are quite different.** The reasons for
the large percentage variation in grant (Table 15) are twofold. In 2007-08, a large EU budget
support for the sugar sector was deferred because conditionality requirements were not met due
to prolonged negotiations at the political level in respect of reform, resulting in the deferral of
MUR2.2 billion of grants to the following year. The second factor is the fact that the government
has, on a number of occasions, requested that grant payments be deferred until the following year
for cash flow reasons.


**Table 15. Direct Budget Support Grants: Actual versus Estimates**



**2007-08**
**MUR mln**



**2008-09**
**MUR mln**



**July-Dec 2009**

**MUR mln**



Budgeted 2,935 4,025 2,624
Actual 454 2,781 3,182
Difference -2,481 -1,244 558
Percent variation -84.5 -30.9 21.3
Source: Ministry of Finance and Economic Development


119. **The variations (Table 16) to budget support loans are largely due to the financial**
**crisis and the government’s response to it.** In 2007-08, loans were distributed largely as
estimated in the budget. However, when the financial crisis emerged, after the 2008-09 budget
was approved, Mauritius sought, and was provided with an expansion of the World Bank’s
budget support loan from USD30 million to USD100 million, resulting in a large increase in
borrowing relative to budget. These borrowing facilities were carried over into 2009, but in the
event were not required or drawn-down, resulting in a large underspend. However, this was due
to lack of demand on the Government of Mauritius’ part, rather than any unwillingness to lend
on the part of donors.

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54


**Table 16. Direct Budget Support Loans: Actual versus Estimates**



**2007-08**
**MUR mln**



**2008-09**
**MUR mln**



**July-Dec 2009**

**MUR mln**



Budgeted 2,220 2,088 4,581
Actual 2,380 4,766 0
Difference 160 2678 -4,581
Percent variation 7.2 128.3 -100.0

Source: Ministry of Finance and Economic Development


120. **Budget support is provided on an annual or multi-annual basis.** Given the large
variations in disbursement timing, a D has been scored, but for the reasons outlined above, this
does not imply a substantive problem with the timing of donor disbursements.


**D–2. Financial information provided by donors for budgeting and reporting on**
**project and program aid**


This indicator has two dimensions which assess the: (i) completeness and timeliness of
budget estimates by donors for project support; and (ii) frequency and coverage of reporting
by donors on actual flows for project support.
















|Dimensions to be assessed (scoring method M1)|2010<br>Score|Col3|2007<br>Score|Col5|
|---|---|---|---|---|
|(i) Donors provide budget estimates for disbursement of project aid<br>at stages consistent with the government’s budget calendar and with<br>a breakdown consistent with the government budget classification|A|A|A|A|
|(ii) Donors provide regular reports at least quarterly on<br>disbursements for at least 85 percent of externally financed projects|A|A|A|A|



121. **In FY2009, with the exception of a few project loans and grants from Asian**
**Development Bank (ADB), International Fund for Agricultural Development (IFAD),**
**and China the majority of aid was funnelled to the budget as direct budget support.**
Project disbursements amounted to are very limited in Mauritius as most of the aid takes the
form of budget support. For FY2009 budget estimates and disbursement reports were
provided in a manner consistent with governments’ budget calendar and classification
requirements. Regular quarterly donor reports on disbursements are made for all projects.


**D–3. Proportion of aid that is managed by use of national procedures**


This indicator measures the proportion of aid managed by national procedures.

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55








|Dimension to be assessed (Scoring method M1)|2010<br>Score|2007<br>Score|
|---|---|---|
|(i) Overall proportion of aid funds to central  government that are<br>managed through national procedures|B|None|



122. **The proportion of non-budget support aid, as indicated under indicator D2,**
**relative to overall aid is small.** This non-budget support assistance primarily comes from
EU, India and China and is not managed through government procedures. Table 17 below
shows the proportion of aid managed using national procedures in 2009 as just fewer than
90 percent, this indicator is therefore rated a B.


**Table 17. Aid Managed through National Procedures**

(Percent of total)



**FY2007/08**



**FY2008/09**



**FY2009**



**Type of Aid**



**Type of Aid** **Actual** **Actual** **Actual**

**MUR mln** **MUR mln** **MUR mln**

Foreign grants
Direct budget support 454 2,781 3,182
Projects 0 0 0
Foreign loans
Direct budget support 2,380 4,766 0
Projects 305 1284 525
Total 3,139 8,831 3,707
Aid managed by donor 305 1,284 525
Percent of total aid 9.72 14.54 14.16

Source: Ministry of Finance and Economic Development



**Actual**
**MUR mln**



**Actual**
**MUR mln**



**IV.  GOVERNMENT REFORM PROCESS**


123. **An important focus of recent PFM reform efforts in Mauritius has been the**
**strengthening of the budget formulation and management framework.** This reform focus
is in line with the results of the 2007 PEFA assessment which identified budget formulation
as one of the key weaknesses in the PFM framework. The last three years has seen
substantial progress being made in establishing the foundation of a more performance
oriented program-based budgeting within a strengthened macro-fiscal framework. As can be
seen from the 2010 assessment the ratings in the three areas related to budget credibility,
comprehensiveness and transparency and policy-based budgeting show continued
improvement.


124. **There has been some concern that, although the support of core policy makers**
**for reform has been relatively strong, the socio-economic context does fully support**
**reform and some aspects of the complementary organizational reform are not making**
**sufficient progress.** Based on this analysis a number of proposals have been made for review

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56


of the linkages between performance-based budgeting and performance management and for
strengthening of the accountability of management, these have yet to be fully implemented.


125. **There has also been considerable work undertaken on strengthening budget**
**execution processes.** This includes a new legislative and institutional framework for
procurement and debt management and strengthened budget execution arrangements. These
reforms have also been under implementation during the period of the assessment and their
impact is reflected in increased ratings for a number of indicators. In addition, many other
PFM indicators related to accounting and financial reporting have maintained the high 2007
performance ratings in 2010.


126. **External audit reform has included the adoption of modern auditing standards**
**and methodologies and continued capacity development.** These have assisted the NAO to
maintain the high performance ratings given in the 2007 PEFA report in 2010.

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57


**Annex 1. Stakeholders Met**


**Name** **Position** **Institution**
Mr. A. Mansoor Financial Secretary MoFED

Mr. P. Yip Wang Wing Director, Economic and Finance MoFED
Mr. V. Bassant Director, Economic and Finance MoFED
Mr. A. Ponnusawmy Assistant Director MoFED
Mr. M. Bheekhee Lead Analyst MoFED
Mrs. D. Lan Hing Po Lead Analyst MoFED
Mr. A. Acharuz Senior Analyst MoFED
Mrs. S. Appanah Senior Analyst MoFED
Mrs. U. Beegun-Ramduny Senior Analyst MoFED
Mr. D. Baichoo Senior Analyst MoFED
Mr. S. Suhootoorah Senior Analyst MoFED
Mr. K. Guptar Advisor MoFED
Mr. I. Beejah Director, Internal Control MoFED
Mr. H. Ghamy Manager, Internal Control MoFED
Mr. J. Ramyed Analyst MoFED
Mr. N. Codadeen Analyst MoFED
Mr. P. Buchoo Analyst MoFED
Ms. R. Goolamamode Analyst MoFED
Mr. G. Gopee Director, MAB Prime Minister’s Office
Mr. A. Mudhoo Deputy Director Procurement Policy Office
Mr. J. Valaythen Accountant General The Treasury
Mr. C. Romooah Deputy Accountant General The Treasury
Mr. S. Ramdeen Assistant Accountant General The Treasury
Mr. S. Annauth Assistant Accountant General The Treasury
Mr. N. Rambajun Accountant The Treasury
Ms. S. Jugoo Accountant The Treasury
Ms. L.F. Cheung Kai Suet Director of Statistics Central Statistics Office
Mrs. R.Appadu Principal Statistician Central Statistics Office
Mr. E. Wong Ping Lun Statistician Central Statistics Office
Mrs. S. Geemul Senior Statistical Officer Central Statistics Office
Mr. R. Jugarnath Director of Audit National Audit Office
Mrs. P. Tse Yuet Cheong Deputy Director National Audit Office
Mr. P.K Napaul Deputy Director National Audit Office
Mr. Doorgakant Chief Examiner National Audit Office
Mr. F. Lotun Manager, Financial Operations Ministry of Local
Government and Outer
Islands (MOLG)
Mr. A. Rujub Acting Assistant Manager, F.O MOLG
Mrs. G. Toory Senior Financial Operations Police Department
Officer (SFOO)

Mr. V. A Kallee Assistant Manager, F.O Minstry of Public
Infrastructure, NDU & LTS
(MPI)

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58


**Name** **Position** **Institution**
Ms. F. Pauline SFOO MPI
Mr. J. K. Kasary SFOO MPI
Mr. M. Bhenick Assistant Manager, F.O MPI
Mr. B. Purusram Assistant Manager, F.O Min of Agro-Industry & Food
Security
Mr. C. Singelee Manager, F.O Min of Education and HR
Mrs. A. Suddoo Assistant Manager, F.O Min of Health and Quality of
Life
Mr. A. Cheerkoot Deputy Manager Central Informatics System
Division(CISD)
Mrs. O. Joggesser System Analyst CISD
Mrs. S. Bissoonauth Assistant Financial Operations CISD
Officer

Mrs. S. Lotun Deputy Clerk National Assembly
Ms. U. Ramchurn Clerk Assistant National Assembly
Mr. S. Lal Director General Mauritius Revenue Authority
(MRA)
Dr. P. Seth Director, Research Policy & MRA
Planning



Mr. N. Bisessur Assistant Director, Research,
Policy & Planning

Mr. P. Ramkissoon section head, Large Taxpayer
Department

Mr. Rajanah section head, Large Taxpayer
Department

Mr. M. Hannelas Director, Small & Medium Tax
Payers



MRA


MRA


MRA


MRA



Mr. D. Ramdin Director, Operational Services MRA
Mrs. Conhyedass Section head Debt Management MRA
Mr. T. Moorghen Acting Director, Tax Education MRA
and Communication

Ms. C. Gunnoo Director Fiscal investigations MRA
Mrs. S.D. Mooroogen Director Internal Audit MRA
Mr. S. Nadan Team Leader, Internal Audit MRA
Mr. V. Ramdonee Legal Advisor MRA
Mr. N. Moonusawny Director Financial Administration MRA
Ms. I. Reetun Assistant Director of Finance MRA
Mr. G. Kelly Team Leader MRA
Mr. R. Oree Team Leader MRA
Mr. H. Jankee Chief Economist Bank of Mauritius
Mr. J. Pandoo Head, Financial Markets Bank of Mauritius
Operations Division



Mrs. M. Heerah Pampusa Head, Financial Markets Analysis
Division



Bank of Mauritius



Mr. S.Gopaul Chief (Accounting & Budgeting Bank of Mauritius

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59


**Name** **Position** **Institution**
Division)
Mr. J. K. Ramtohul Head Accounting Budgeting Bank of Mauritius
Division



Mr. A. Bonieux Partner Price Waterhouse Coopers
Mr. A. Sandrazie President Mauritius Tax Payers
Association
Mr. Rungasamy Vice-President Mauritius Tax Payers
Association
Mr. M. Irshad Cassam Chairman Assessment Review
Laulloo Committee



Mr. M. Irshad Cassam Chairman Assessment Review
Laulloo Committee

Mr. R. Nookadee Secretary Mauritius Council of Social
Services (MACOSS)
Ms. P. Nagessur Administrative and Finance MACOSS
Officer



Ms. P. Nagessur Administrative and Finance MACOSS
Officer

Mr. A. Schaffert Head of EU Delegation EU
Mrs. L. Nosib Chargé de Projets EU
Ms. T. Živko Project Officer EU

Mr. Y. Hookoomsing Co-ordination Analyst Office of UN Resident
Coordinator
Mr. A. Patten Chargé de Projets AFD
Ms. S. Chaleon Project Officer AFD
Ms. A. Shall Consultant UNDP

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60


**Annex II. Background Documents and Previous Analytical Work References**


1. Annual Report of the Treasury 2007/8, 2008/9 and December 2009
2. Director of Audit Report 2007/8 and December 2009
3. Budget Estimates (detailed) 2007, 2008, 2009, 2010, 2011
4. Treasury Warrants file
5. Supplementary budget passed by parliament during the course of the year
6. Annual Report of the Bank of Mauritius for the Year ended 30 June 2009
7. Digest of Public Finance Statistics 2008, 2009.
8. National Audit Office Activity Reports 2007/08, 2008/09
9. Report of the Director of Audit year period 31st December 2009
10. NAO Report Implementation of Program Budgeting 2008/09
11. Report of the Public Accounts Committee March 2008.
12. Standing Orders of The National Assembly, 1995
13. NAO Performance Audit Reports 1,2 3
14. Final accounts of the Road Authority 2008, 2009
15. Public Debt Management Act 2008.
16. The Finance and Audit Act
17. Financial Management Manual
18. Audit Charter
19. Copies of Bank reconciliations
20. General ledger examples
21. http://www.gov.mu/portal/site/treasurysite
22. http://www.gov.mu/portal/site/MOFSite
23. Mauritius IMF FAD TA Reports 2008, 2009,2010
24. PEFA Manual and related materials

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61


**Annex III. Detailed Tables and Calculations**
**Table A1. Material Special Fund Movements in the Assessment Period 2007-08 to 2009**


**Movements in Special Funds** **2007-08** **2008-09** **July–Dec 2009** **Total**


Receipts 3,120 5,692 2,650 11,462

Maurice Ile Durable Fund 1,000 0 200 1,200



Human Resources, Knowledge & Arts
Development Fund



1,000 0 0 1,000



Food Security Fund 1,000 0 0 1,000

Local Infrastructure Fund 120 375 700 1,195

Social Housing Infrastructure Fund 0 1,167 0 1,167

Business Growth Fund 0 3,150 0 3,150

Road Decongestion Program Fund 0 1,000 1,750 2,750


Payments 0 747 718 1,465

Maurice Ile Durable Fund 0 103 105 208



Human Resources, Knowledge & Arts
Development Fund



42 61 103



Food Security Fund 0 9 55 64

Local Infrastructure Fund 0 0 154 154

Social Housing Infrastructure Fund 0 381 99 480

Business Growth Fund 0 212 243 455

Road Decongestion Program Fund 0 0 1 1

Net Expenditure from Funds -3,120 -4,945 -1,932 -9,997

Interest and Other Income 0 225 220 445

Other Sources

Non-Government FSD Receipts 1,696 1,696

Non-Government FSD Payments -1,696 -850 -2,546

Total Fund Receipts 3,120 7,613 2,970 13,703

Total Fund Payments 0 2,443 1,668 4,111

Remaining Balance in Funds 3,120 5,170 1,302 9,592

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**Table A2 (i). Taxpayer Cases**







|Col1|CIT|Col3|VAT|Col5|PIT|Col7|Total|Col9|
|---|---|---|---|---|---|---|---|---|
||**No.**|**Amount**|**No.**|**Amount**|**No.**|**Amount**|**No.**|**Amount**|
|**2007-08**<br>Cases at the start of the<br>year<br>Cases lodged<br>Cases struck out<br>Cases withdrawn,<br>agreed, allowed<br>Cases determined<br>Cases at the end of the<br>year<br>**2008-09** <br>Cases at the start of the<br>year<br>Cases lodged<br>Cases struck out<br>Cases withdrawn,<br>agreed, allowed<br>Cases determined<br>Cases at the end of the<br>year|<br>12<br>28<br> <br> <br>10<br>30<br> <br>30<br>51<br> <br>1 <br>10<br>70|209.4<br>247.7<br>7.3<br>449.9<br>449.9<br>325.0<br>1.7<br>71.3<br>574.8|85<br>70<br>1<br>12<br>48<br>94<br>94<br>97<br>6<br>6<br>44<br>135|208.4<br>145.8<br>0.2<br>5.6<br>68.5<br>207.9<br>208.0<br>225.6<br>2.7<br>7.4<br>18.7<br>348.5|196<br>102<br>1<br>116<br>181<br>181<br>269<br>102<br>348|<br>416.9<br>114.6<br> <br>0.27<br>150.8<br>380.4<br> <br>380.4<br>418.0<br> <br> <br>80.1<br>641.8|293<br>200<br>1<br>13<br>174<br>305<br>305<br>417<br>6<br>7<br>156<br>553|834.7<br>508.1<br>0.2<br>5.87<br>226.6<br>1,038.2<br>1,038.2<br>968.5<br>2.7<br>9.1<br>170.1<br>1,565.1|


Source: ARC, published and unpublished reports 2007-09


**Table A2 (ii). Taxpayer Cases**



**LTD** **VAT** **Income**



**Customs** **Total involvi**



**Registrar-**



**Tax** **MRA** **General**

**Second half of 2009**
Cases at the start of the 75 138 387 236 836 3,122
half year

Cases lodged 57 49 139 89 334 83
Cases struck out 2 10 16 4 32 75
Cases withdrawn, 0 11 10 4 25 58
agreed, allowed

Cases determined 21 21 56 8 106 760
Cases at the end of the 109 145 444 309 1,007 2,312
half year


Source: ARC, published and unpublished reports 2007-09



**Tax**



**MRA**



75 138 387 236 836 3,122

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63


**Table A3. Comparison between Actual and Central Budgetary**

**Government Primary Expenditure (MUR millions)**


**July - Dec**
**2007-08** **2008-09** **2009**

Budget (Original) 47,774 59,721 33,949
Actual 49,454 59,962 33,716
Difference 1,680 241 -233
Percent difference 3.5 0.4 -0.7

Source: Ministry of Finance and Economic Development


**Table A4 (i). Taxpayer Audits**











|Cases selected for audit by the LTD|2007-08<br>Target Actual<br>(percent) (percent)|2008-09<br>Target Actual<br>(percent) (percent)|
|---|---|---|
|Income Tax<br>VAT<br>PAYE<br>Gaming<br>Horse Racing<br>All cases|2.5<br>0.19<br>10<br>3.3<br>10<br>0.5<br>20<br>18.0<br>100<br>0.0<br>25<br>11.1|2.8<br>1.8<br>13<br>4.1<br>0 <br>2.0<br>22<br>69<br>100<br>100<br>25<br>29.2|


Sources: MRA Annual Report 2007-08 page 105 and MRA Annual Report 2008-09, page 105


**Table A4 (ii)** . **Taxpayer Audits**


**2006-07** **2007-08** **2008-09**
**Audit performance**

1,102 2,420 3,503
Number of audits

685 1,667 2,349
Of which office

417 753 1,154
Of which on site

3,178 4,599 2,608
Number of amended assessments

2,645 3,306 1,588
Of which Individuals [PIT]

351 879 715
Of which Companies [CIT]

182 414 305
Of which VAT

963.7 2,105.7 1,862.4
Amount of additional assessments (mln. MUR.)

195.0 450.1 342.9
Of which Individuals

580.6 754.9 997.6
Of which Companies

188.1 900.7 521.9
Of which VAT

0.303 0.458 0.714
Average amount per assessment

0.074 0.136 0.216
Individuals

1.654 0.859 1.395
Companies

1.034 2.176 1.711
VAT


Source: MRA Annual Reports 2006/07 page 32, 2007/08 page 47 and 2008/09, page 39

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64


**Table A5. Taxpayer Debt**



(2)
Noncollectible

debt,
beginning

of year



(3)
Collectible

debt,
beginning

of year



(4)
Additions

to debt

during
the year



(6)
Collectible

debt, end

of year



**Taxpayer Debt**
(millions of MUR)


**2007/08**



(1)
Total
debts,
beginning

of year



(5)
Collections

during the

year



(Personal) Income Tax 713.6 307.8 405.8 420.3 308.4 517.7


Corporate (Income) Tax 739.7 304.8 434.9 586.2 446.0 575.1


VAT 721.0 255.7 465.3 917.2 411.0 971.5


Gambling & Others 283.0 146.4 136.7 44.3 35.6 145.4


Total 2,457.3 1,014.7 1,442.7 1,968.0 1,201.0 2,209.7


As a percentage of (3) 83.2


**2008/09**


(Personal) Income Tax 809.2 291.5 517.7 159.2 230.7 446.2


Corporate (Income) Tax 1,525.9 950.9 575.1 357.8 340.5 592.4


VAT 1,563.3 591.9 971.5 276.4 471.1 776.8


Gambling & Others 277.6 132.1 145.4 3.2 36.1 112.5


Total 4,176.0 1,966.4 2,209.7 796.6 1,078.4 1,927.9


As a percentage of (3) 48.8


Column (1) = Column (2) + Column (3); Column (6) = Column (3) + Column (4) – Column (5)
Column (5) includes the collection of debts that arose after the beginning of the year.


Source: MRA Annual reports