harvesh seegolam : measures of the covid - 19 support programme and setting up of the mauritius investment corporation statement by mr harvesh seegolam, governor of the bank of mauritius, to the press, port louis, 29 may 2020. * * * friends from the media, ladies and gentlemen, good afternoon. welcome to this press conference. i will provide you with an insight on the current economic situation and also elaborate on the latest measures which the bank has announced under its ongoing covid - 19 support programme. let me at the very outset give you an overview on where the global economy stands. what we are experiencing today are unprecedented economic conditions. major companies around the world have shown worrying signs of distress leading to rapid job losses. the ensuing implications on financial stability are serious. i must emphasise that there is still substantial uncertainty on how the pandemic will evolve and what will be the ultimate impact on economies. as you are aware the world continues to face an unmatched crisis. global productive capacity and demand have shrunk massively as the pandemic intensified. both production and the global supply chain have been severely disrupted by the “ great lockdown ”, as termed by the imf. the global economic outlook has turned gloomier since april 2020, as countries struggle to contain the pandemic. most economists no longer see a ‘ v ’ shape recovery of the global economy and predictions are for a much longer downturn. more than 150 countries around the world will be facing a gdp contraction. policy responses by central banks faced with such worsening situations, central banks around the world are finding themselves in the frontlines. since the onset of the pandemic, central banks have resorted to all kinds of measures, whether conventional and unconventional measures to salvage their respective economies. central banks are being looked up as saviours in these testing times. domestic economic outlook and risks mauritius, as well, is not being spared by this global crisis. much has already been said about the impact and threat that the pandemic increasingly poses to our economy. the sectors most at risk include tourism, manufacturing in particular exports of textile, wholesale and storage, business and administrative activities, ict / bpo, transportation amongst others. these sectors account for nearly 40 per cent of gdp. the contraction in output this year will be severe and we have estimated that the economy could contract between 7. 5 % and 15 %. the bank is monitoring the situation closely.

and other stakeholders is reliable to help foster their confidence in the financial reports, are in line with the accounting standards and disclosure requirements and faithfully portray the economics of a transaction. independence of auditors to foster confidence in the bank ’ s financial statements, it is imperative that the independence of the external auditor is preserved. as far back as the late 90s, the banking legislation in mauritius was reviewed necessitating the rotation of the audit engagement partners every 5 years. further, the appointment of external auditors by financial institutions under our purview for the yearly audit of their financial statements is subject to the approval of the central bank. to reinforce this independence, we have proposed that it is the firm of auditors itself which is subject to rotation every 5 years as opposed to solely the engagement partners. the relationship between the supervisory authority, the internal auditor and external auditors as the work carried out by the internal auditor involves review of the internal controls, risk management and governance processes, the supervisor holds consultations with the internal auditors to discuss the functioning of the internal audit department and the findings of the department, particularly in areas presenting a significant risk and reviews the internal audit reports to identify control problems and areas of potential risks. 2 / 4 bis central bankers'speeches in many respects, the work of banking supervisors and external auditors may be perceived as complementary as they often look at the very same issues from a different point of view. in light thereof, the supervisor place reliance on the work of the external auditors, such as their report on the internal controls system in place at the banks and their management letter for a more efficient oversight of banks. in mauritius, every bank is required to appoint annually an external auditor to audit its accounts, and such appointment is subject to the approval of the bank of mauritius. the external auditor must be independent, experienced in the audit of financial institutions and have the necessary resources to undertake audits of financial institutions on a consolidated basis. if the financial institution fails to appoint an auditor approved by the central bank, the central bank may itself appoint the auditor. the role, duties and powers vested on the auditor are clearly spelt out in section 39 of the banking act 2004. auditors are required to submit a report on the financial statements of the financial institution, wherein, amongst others, the auditor must state whether the financial statements – ( i ) have been prepared in accordance with international accounting standards and any additional prudential requirements set out in guidelines issued by the central bank ;