The 2025/26 national budget marks a pivotal moment for Mauritius, as it will be the first full budget of the newly elected “Alliance du Changement” government. With a strong electoral mandate secured in November 2024, the coalition committed to three overarching priorities: taming inflation, stimulating sustainable economic growth, and safeguarding institutional independence and freedom.
This budget is more than a fiscal tool, it is the government’s first comprehensive policy statement to realign the economy after years of underperformance, fiscal erosion, rising inequality, and a weakening external position. It represents a crucial opportunity to restore confidence, reset national priorities, and demonstrate tangible progress against campaign promises. The need for bold, credible reforms is more urgent than ever.
Our trade deficit has also been worsening reaching USD 4.4Bn in 2024. The persisting trade deficit has worsened our current account deficit from Rs 29.6Bn in 2023 to Rs 44.7Bn in 2024, further deteriorating our Balance of Payments.
1. Macroeconomic Pressures and Fiscal Urgency
Mauritius is grappling with a budget deficit of Rs 48.5Bn, representing 6.7% of GDP, largely due to unproductive spending and an unsustainable rise in pension-related costs. This overshadows critical investments in education, health, and infrastructure. The IMF has called for tough reforms, including gradually increasing the retirement age and enhancing fiscal transparency.
Public sector inefficiencies and the recycling of capital projects (e.g., 95 of 137 projects in Budget 2024/25 were repeats) have eroded trust in government spending. With external vulnerabilities mounting, especially due to a real USD trade deficit of 4.4Bn, the government must present a bold and credible medium-term fiscal plan.
Recommendations include:
Enacting a Fiscal Responsibility and a new Debt Management Act (Utmost Crucial).
Raising revenues via green levies and a broader tax base.
Redirecting social spending toward productive sectors.
2. Sectoral Priorities for Growth and Resilience
A. Agriculture and Food Security
Agriculture contributes only 4.6% to GDP. Despite increasing food imports (Rs 57.6Bn in 2024), the sector receives just 1% of public expenditure. Government spending declined in real terms, and food self-sufficiency remains elusive.
A National Agro-Resilience Initiative should be launched, focusing on:
- Smart and organic farming.
- Tax breaks and huge subsidies on for Agro equipment (mini tractors, sprayers).
- Cold chain investment.
- “Eat What We Grow” campaigns.
B. Blue Economy
Mauritius exports Rs 17Bn in seafood but still imports Rs 12Bn. Its vast 2.3 million km² EEZ is underutilized.
Urgent measures include:
- A Seafood Export Zone not far from Port Louis.
- Investment in eco-friendly fishing and logistics.
C. Financial Services
Though this sector contributes 13.3% of GVA, real output has declined. Capital market depth is limited, with market cap to GDP at only 61.0% and foreign investor activity falling sharply.
Recommendations:
- Develop a robust capital markets ecosystem.
- Realign pension funds to support local investment.
- Incentivize fintech, cybersecurity, and green finance hubs.
D. Tourism
Despite 1.4M tourist arrivals, average daily spending is stagnant at USD 131. Investment fell by -9.3% CAGR, and tourism’s broad economic benefits remain limited.
Strategic pivot:
- Build more 3* and 4* hotels.
- Extend open skies policies to include low-cost carriers, enhancing air connectivity and making travel to Mauritius more affordable and accessible.
- Legalize and regulate informal tourism services.
- Incentivize investment in leisure parks, Nature and Ecotourism (Hiking & Trekking, Botanical and Biodiversity Tours), Marine & Water-Based Leisure (Diving and Snorkelling, Deep-Sea Fishing,
- Catamaran Cruises, Kitesurfing & Windsurfing, Underwater Activities), Wellness and Health Tourism, Cultural and Heritage Tourism, international standard Parks and attractions for Africa with international partners.
E. Real Estate and FDI Diversification
In 2024, real estate captured 72% of FDI, yet its GVA declined at a -3.4% CAGR since 2010, while housing prices surged by +144% over the past five years. The sector’s dominance distorts economic priorities.
Policy shift:
- Tighten regulations on speculative foreign ownership.
- Link real estate investment to economic value creation.
- Incentivize FDI into Agro processing, fintech, and manufacturing most probably through tax incentives.
3. Structural Reforms and Long-Term Strategy
To address structural economic weaknesses, the government must:
- Strengthen institutional independence to ensure credible, apolitical economic planning.
- Improve inter-ministerial coordination between Finance and Economic Planning.
- Embrace technology and digital transformation (e.g., AI, software, fintech).
- Launch Green and Blue Economy incentives, including green bonds, solar farms, and blue biotech training.
- Support research, higher education, and innovation through tax credits.
The 2025/26 budget must break decisively from the past. It must embody the electoral commitments made by the “Alliance du Changement”, controlling inflation, spurring inclusive growth, and preserving institutional autonomy. By aligning investment with long-term value creation, this budget can lay the foundation for a resilient, modern, and equitable Mauritius. The moment demands political courage and strategic clarity.