As Mauritius prepares to unveil its 2025–2026 national budget on June 5, 2025, the government faces the intricate task of balancing fiscal consolidation with the need to stimulate economic growth. This budget is particularly significant, marking the first full fiscal plan under Prime Minister Navin Ramgoolam’s administration since his return to office in November 2024. The upcoming budget aims to address pressing economic challenges, including high public debt, moderate growth projections, and the imperative for sustainable development.
Current Economic Landscape
Mauritius’s economy is experiencing a deceleration in growth. The World Bank projects a GDP growth rate of approximately 3.9% for 2025, a decline from previous years, attributed to a gradual softening of public spending and export challenges.
Similarly, the International Monetary Fund (IMF) forecasts a growth rate of 3.2% for 2025, reflecting reduced public investment and exports.
Inflation remains a concern, with the Bank of Mauritius projecting a rate of 3.7% by the end of 2025, slightly above the mid-point target of 3.5%. This inflationary pressure is influenced by persistent underlying price pressures and potential global trade tensions.
Public debt is projected to reach 87.5% of GDP by the end of 2025, underscoring the need for fiscal consolidation to ensure long-term economic stability.
Government’s Fiscal Strategy
In response to these economic indicators, the government has initiated pre-budget consultations under the theme “A Bridge to the Future,” aiming to build a new model of development. Prime Minister Ramgoolam has emphasized the importance of stakeholder engagement in shaping a budget that addresses current challenges while laying the groundwork for sustainable growth.
The upcoming budget is expected to prioritize stabilizing the national economy by reducing unnecessary expenses and curbing financial waste. This approach aligns with the IMF’s recommendation for an ambitious medium-term growth-friendly fiscal consolidation plan starting in fiscal year 2025/26.
Key Considerations for the 2025–2026 Budget
1. Fiscal Consolidation: With public debt nearing 90% of GDP, the budget is anticipated to introduce measures aimed at reducing the fiscal deficit and managing debt levels. This may include rationalizing public expenditures and enhancing revenue collection mechanisms.
2. Economic Diversification: To mitigate external shocks and stimulate growth, the government may focus on diversifying the economy, promoting sectors such as fintech, sustainable finance, and renewable energy. Initiatives to attract private-sector investment in these areas are likely to be highlighted.
3. Social Welfare Programs: Balancing fiscal consolidation with social protection will be crucial. The budget may propose targeted social programs to support vulnerable populations while ensuring efficient allocation of resources.
4. Climate Resilience: Given Mauritius’s vulnerability to climate change, the budget is expected to allocate funds for climate adaptation and mitigation projects, including coastal protection and renewable energy initiatives.
The 2025–2026 budget presents an opportunity for Mauritius to address its fiscal challenges while setting a course for sustainable and inclusive growth.
By implementing prudent fiscal policies and fostering economic diversification, the government aims to build resilience against external shocks and lay the foundation for long-term prosperity.