The International Monetary Fund on Saturday says Mauritius needs to clarify its monetary policy to increase coherence.

The IMF said in a statement that the primary objective of the central bank was to maintain price stability and promote “orderly and balanced” economic development.

“There appears to be no consensus on the definition of price stability and on the role of the nominal exchange rate in the conduct of monetary policy,” the fund said.

It said the perceived multiplicity of objectives can risk overburdening monetary policy, spur policy inconsistencies, and potentially undermine the central bank’s ability to anchor inflation expectations.

“Announcing a medium-term inflation objective will prove instrumental in the implementation of a new policy framework.

“An inflation objective of about three per cent could serve as the foundation for the BOM’s (Bank of Mauritius‘s) policy actions and communication,” the IMF said.

The Indian Ocean island nation is trying to diversify its economy away from sugar, textiles and tourism into offshore banking, business outsourcing, luxury real estate and medical tourism.

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