Biggest Mauritian Bank Sees Infrastructure Boost for Economy

(Bloomberg) -- Mauritius’s biggest bank expects economic growth to accelerate next year, driven by railway, road and other infrastructure projects, its chief executive officer said.

The Indian Ocean island nation’s economy will probably grow 4 percent in 2019, compared with 3.8 percent this year, MCB Group Ltd. CEO Pierre Guy Noel said in an interview Monday in Ebene, south of the capital, Port Louis.

“We are expecting to benefit, in 2019, from the full-year impact of major infrastructure projects,” he said.

Mauritius’s government is spending 15.6 billion rupees ($453 million) this year on capital expenditure to develop infrastructure including more than 3,000 social-housing units, buildings for the police and new parliament and Supreme Court buildings. That spending is forecast to increase by 15 percent next year, according to BMI Research.

While the country is facing a soaring import bill as it purchases more goods for construction, its impact on the current account will be offset by tourism revenue, the country’s biggest source of foreign exchange, and inflows related to financial services, the central bank said last month.

Luxury Villas

MCB also expects the economy to be buoyed by foreign investment in luxury villas and residences close to the sea, Noel said. Last year, direct investment in real estate was 8.8 billion rupees, representing about 50 percent of total gross inflows.

The bank is considering opportunities outside its home market, he said. The lender already derives more than 50 percent of its earnings from abroad.

“There is a wide array of opportunities on the African continent,” he said. “We have a well-defined strategy for our presence there.”

MCB’s shares have fallen 2.9 percent this year, underperforming the benchmark Mauritius Stock Exchange Semdex index, which has risen 0.1 percent over the period. The stock was unchanged on Wednesday.

©2018 Bloomberg L.P.