Mauritius: Selected Issues

IMF Staff Country Reports, July 15, 2022

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Mauritius: Selected Issues

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Bibliographic details

• Published: July 15, 2022
• Series: IMF Staff Country Reports
• DOI: https://doi.org/10.5089/9798400214844.002

Paper scope and main conclusion

• Reviews the fiscal rules framework in Mauritius with a focus on the calibration of the debt and budget balance ceilings.
• Concludes that a new medium-term debt anchor could be up to 80 percent of gross domestic product (GDP), compared to the anchor of 60 percent of GDP repealed during the pandemic.
• Recommends introducing a short-term operational rule based on the overall fiscal deficit ceiling of around 3 percent of GDP to help reduce debt.

Debt and deficit projections / scenarios

• Current level of debt: 99.2 percent of GDP in FY2020/21.
• Proposed medium-term debt anchor: up to 80 percent of GDP.
• Short-term operational rule: overall fiscal deficit ceiling of around 3 percent of GDP.
• Transition scenario proposed:
  • Fiscal deficit of 7.6 percent of GDP in FY2021/22.
  • Gradual decline in the deficit to 3 percent of GDP in FY2026/27 and beyond.
• Under the proposed rules, debt would fall from 99.2 percent of GDP in FY2020/21 to close to the anchor by FY2026/27.

Rationale and implications

• The revised debt anchor of up to 80 percent of GDP would better reflect Mauritius’ debt carrying capacity while supporting growth.
• The current level of debt stands well above the proposed anchor, necessitating a transition period to adjust deficits and reduce debt.
• Debt sustainability risks should continue to be assessed using the IMF’s Debt Sustainability Assessment tools regardless of whether the debt anchor has been met.

Policy recommendations and operational design

• Introduce a short-term operational fiscal rule:
  • Overall fiscal deficit ceiling of around 3 percent of GDP as the operational constraint.
• Consider a phased transition:
  • Gradually reduce the deficit from 7.6 percent of GDP in FY2021/22 to 3 percent of GDP by FY2026/27.
• Continue routine debt sustainability analysis:
  • Use the IMF’s Debt Sustainability Assessment tools to monitor risks throughout and after the transition.

Key statistics and metadata from the publication

• Pages: 34
• Volume: 2022
• Issue: 224
• Series: Country Report No. 2022/224
• DOI: https://doi.org/10.5089/9798400214844.002
• Stock No: 1MUSEA2022002
• ISBN: 9798400214844
• ISSN: 1934-7685
• Publication date on landing page: July 15, 2022

International Monetary Fund. Mauritius: Selected Issues (IMF Staff Country Reports 2022, 224).

Content in this bundle

• Mauritius: Selected Issues; IMF Country Report No. 22/224; June 2, 2022
  • Mauritius: Selected Issues; IMF Country Report No. 22/224; June 2, 2022 (Markdown version)
  • Mauritius: Selected Issues; IMF Country Report No. 22/224; June 2, 2022 (PDF)