Mardayah Kona Yerukunondu: Welcome address - launch of the
Regional Centre of Exellence workshop
Welcome address of Mr Mardayah Kona Yerukunondu, First Deputy Governor of the
Bank of Mauritius, at the launch of the Regional Centre of Excellence workshop on
Sovereign Debt Management, Sustainable Bonds, and Debt Transparency, Ebene, 26
July 2023.
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Dr The Honourable Renganaden Padayachy, Minister of Finance, Economic
Planning and Development
The Honourable Mahen Kumar Seeruttun, Minister of Financial Services and
Good Governance
Mr Harvesh Kumar Seegolam, Governor of the Bank of Mauritius and Chairperson
of the RCE Governing Board;
Mrs Sadhna Sewraj-Gopal, Second Deputy Governor of the Bank of Mauritius
Mr Rajeshsharma Ramloll, Senior Counsel, Solicitor General and Vice
Chairperson of the Financial Services Commission
Mr Sarwansingh Purmessur, Permanent Secretary of the Ministry of Financial
Services and Good Governance
Heads & members of diplomatic corps in Mauritius
Board Members of the Financial Services Commission
Board Members of the Bank of Mauritius
Members of the RCE Governing Board
Mr Carmine Di Noia, Director for Finance and Enterprise Affairs of the OECD
Chairpersons of institutions
Representatives from the OECD
Distinguished Panellist and Speakers
Members of the Press
Distinguished Guests
Ladies and Gentlemen
It is my singular pleasure, to welcome you and all the participants to yet another event
hosted by FSC Mauritius, through its Regional Centre of Excellence. The Regional
Centre of Excellence (RCE), as you know, was established, in 2019, in collaboration
with the OECD. The Governing Board of the RCE is chaired by the Governor of the
Bank of Mauritius, and comprises amongst others, the Director of the Independent
Commission Against Corruption and members from the OECD. The RCE has as
objective the delivery of capacity-building programmes for the Southern and Eastern
African region.
Ladies and gentlemen, the Regional Centre of Excellence is situated at the 'Rue du
Savoir' in Ebène. For those who do not understand French, 'Rue du Savoir' means
'Knowledge Street'. So this is the address of the Regional Centre of Excellence.
It's all about learning, and knowledge, and this time our organising team chose the
theme 'Sovereign Debt Management, Sustainable Bonds & Debt Transparency' . This
theme is highly topical as, in the aftermath of the COVID-19 pandemic, many countries
are struggling with high debt levels, soaring funding costs and deteriorating market
conditions.
Distinguished guests, sovereign debt is necessary to finance governments' operations
and meet their financial obligations. Its importance can be understood from various
perspectives:
1. It plays a vital role in maintaining economic stability. Governments borrow,
to fund public infrastructure projects, social welfare programs, and other
development initiatives, that stimulate economic growth and improve the
standard of living of their people.
2. Sovereign debt, also allows governments to cover budget deficits and
maintain the smooth functioning of public services.
3. Sovereign debt provides governments with the necessary funds to respond
swiftly and effectively to economic crises, as we have witnessed, during the
global financial crisis and the COVID-19 pandemic.
In the words of Alexander Hamilton, the founder and chief architect of the American
financial system, 'A national debt, if it is not excessive will be to us a national blessing."
Governments that manage their debts responsibly and repay their obligations on time
build investor confidence. This leads to lower borrowing costs and encourages both
domestic and foreign investments. This in turn, helps maintain a stable currency and
promotes economic growth.
However, ladies and gentlemen, excessive sovereign debt poses significant risks and
challenges. Lack of financial discipline has already resulted in a few casualties,
Lebanon, Sri Lanka, Tunisia and Zambia, to name a few. As beautifully put by Henry
th
"Debt is like any other trap, enough
Wheeler Shaw, a 19 century American humorist,
to get into, but hard enough to get out of.'
Sovereign debts were already at record highs when the COVID-19 pandemic hit the
planet. As central banks pursue policy normalization and debt reaching unprecedented
levels, it is becoming more difficult for developing countries to obtain finance. This has
translated into challenging market conditions and increased vulnerabilities, especially in
developing and emerging economies.
There is a need for governments and policymakers to keep a balance between
borrowing for development and ensuring debt sustainability. Debt transparency can play
a crucial role in allowing creditors to take informed lending decisions and support the
effective use of debt for growth-enhancing projects. The sustainable bond market has
been growing rapidly since a few years. Sustainable bonds aim to finance green and
social projects that are aligned with internationally accepted principles.
Distinguished guests, I'll share some figures to showcase our efforts. Mauritius has
managed to bring down its public sector debt ratio to GDP from 96.2 per cent in June
2021 to 81.9 per cent in March 2023. The Honourable Minister of Finance here present
opted to adopt a prudent fiscal stance.
Given the growing importance of sustainable finance in recent years, a number of
initiatives have been taken by both the public and the private sectors in Mauritius. A
technical team comprising representatives from the Ministry of Finance, Economic
Planning and Development and the Bank of Mauritius is currently working on the
Environmental, Social and Governance framework. In June 2021, the Bank of Mauritius
published a 'Guide for the Issue of Sustainable Bonds in Mauritius' , that lays down the
foundation for the issuance of Green, Blue, Social, Climate and Sustainability Bonds in
Mauritius. In December 2021, the FSC released its 'Guidelines for the issue of
Corporate and Green Bonds in Mauritius". In January 2022, a non-bank financial
institution became the first Mauritian company to issue green bonds and plans to raise
Rs3 billion over next five years. In February 2023, the same organisation announced
the creation of a new Rs9 billion Medium-Term Note Programme.
rd
Significant strides have been made on the global front. During the 3 G20 Finance
Ministers and Central Bank Governors Meeting held in Gujrat, India, just one week ago,
Finance Ministers and Central Bank Chiefs opened talks on debt restructuring deals,
multilateral bank reform and finance, to tackle climate change. The aim was to steer the
global economy towards strong, sustainable, balanced and inclusive growth.
For the Group of G20, addressing debt vulnerabilities in lower and middle-income
countries, in an effective and comprehensive manner, is a priority. Accordingly, it has
tasked the International Financial Architecture Working Group to develop a G20 Note
on actions to be taken to enhance financing for Sustainable Development Goals, in line
with the G20 Sustainable Finance Roadmap, with due consideration to country
specificities. As fixed-income markets recover, a more selective approach to bond
buying is likely to favour sustainable bonds. There is already a strong demand from
investors and rising expectations for governments and organizations to deliver on their
ESG commitments.
I have no doubt that the discussions over the next couple of days will be enriching, with
some key take-aways for each of us. Climbing the debt-transparency ladder requires
sound legal and debt-management practices. A sustainable world means working
together to create prosperity for all.
Ladies and gentlemen, I wish you all well.
I thank you for your kind attention.