Our Opinion

The Budget outlines plans to repurpose key resources—labour, land, and capital—to boost productivity. Mauritius’ workforce remains heavily concentrated in public administration and manufacturing, which together account for 35% of employment but offer limited long-term growth prospects. High-potential sectors such as ICT and tourism remain underutilised, employing just 5% and 14% of the workforce respectively (Figure 1). However, the Budget does not go far enough in addressing the structural reforms needed to realign workforce allocation with future economic priorities. Despite past announcements, progress on digital transformation within the public sector has been limited, hindering improvements in efficiency, transparency, and citizen engagement. Given persistent labour shortages, the proposed fast-tracked, rules-based work permit system for foreign labour is a welcome step. However, past attempts have often faltered in implementation—highlighting the urgent need for follow-through and institutional capacity to deliver on these reforms.

Fiscal consolidation remains a key priority, with the budget deficit standing at 9%. While pre-Budget expectations suggested that economic constraints would necessitate difficult sacrifices, the Government (despite recognising the unsustainable path of social allowances, pensions, and benefits) has avoided substantive reform. Instead, it proposes a gradual phasing out over three to five years, effectively preserving the existing welfare framework. Recurrent expenditure is projected to rise by 4% in the coming year, with only marginal reductions elsewhere. To finance this, the Budget leans on a 10% increase in tax revenues and the use of Rs10bn from the Chagos Settlement. Significantly, the fiscal burden is being shifted to the private sector and the Government is maintaining operational spending it previously criticised - marking a missed opportunity for meaningful, forward-looking reform.

In recent years, levies such as the Solidarity Levy and the Climate Change Levy have eroded business confidence and incentive to invest, undermining the momentum required to sustain economic dynamism. This year’s Budget introduces new tiered taxation, a “fair share” contribution on high-income earners and companies, an alternative minimum tax on specific sectors, a capital gain tax on non-citizen property resale and a top-up tax on global businesses. Compounding these challenges is the discontinuation of previously successful initiatives like the Smart City Scheme. However, such measures (introduced at a time when Mauritius seeks to attract private wealth and foster emerging sectors) risk dampening investor sentiment. Tax policy should be aligned with growth objectives, not impede them.

Public sector investment remains a central pillar of the Government’s strategy, with Rs180 bn earmarked over the next five years, particularly for road and water infrastructure. 

For instance, the current allocation of Rs5.4 bn for port development is lower in both scale and expected returns. In contrast, a well-structured PPP could double the capital mobilisation to Rs10.8 bn and nearly triple the economic impact, driven by higher investment efficiency and operational productivity. The combination of greater upfront funding and a stronger economic multiplier reveals a value gap of Rs22.7bn between PPP and non-PPP models—underscoring a significant missed opportunity for transformative infrastructure advancement (Figure 2).

Overall, the Budget introduces some fresh ideas to support emerging sectors, but in substance, it remains largely aligned with past priorities. The rollout of new taxes risks undermining investor confidence and could dampen economic activity at a time when renewed momentum is essential. 

Yet, the lack of clarity and detail surrounding key budget measures raises concerns. This is a critical moment to move beyond intentions and deliver measurable impact.