Moody?s decision is no big surprise but it could have negative consequences. In view of the high budget deficit, Moody?s Investors Service reviewed the local currency government rating of Mauritius downwards. From A2, it fell to Baa1, far less good for the country. This is a strong signal that the economic model is coming to an end and needs reforming.

Moody?s had no other choice than to review the rating downwards since it considers there has been a constant rise in the level of public debt over the past five years. Hence, the ?debt burden is now far more important in Mauritius than in any other country in the same category?. But this is not the sole problem of the country. Its revenue is low and contributes to ?weakening State finances and reducing its solvency,? clarifies Moody?s.

The direct consequence of this revision could be an increase in interest rates, which means that loans will cost more to everyone. Eric Ng, economist and manager of Pluri-Conseil, states: ?The government will have to pay more because the market will require more remuneration.?

Jacques de Navacelle, director of the Joint Economic Council and former Barclays CEO, makes it clear. ?Money in Mauritius will become more expensive. Investors subscribing to treasury bills will claim a more important risk premium. This will have an impact on interest rates applicable to treasury bills and rub off on all interest rates in the whole country.?

But the consequences may even go beyond our shores. International investors will take it into account when thinking of investing in the country. The chief economist of the Mauritius Commercial Bank (MCB), Gilbert Gnany, is afraid that the rating downgrading ?sends a negative signal to investors?.

Even though he is not surprised at all by Moody?s conclusions ? which match his own - of the economic situation, such a decision may weaken the already difficult situation even more.

If the revision does not surprise anymore, it sends one more signal that it is high time for a complete reform of the system. Instead of discouraging economic stakeholders, this should shake them up and encourage them to find solutions. The presentation of the budget, due on Friday, should more than ever include bold reforms for the coming years. The economic model should change and we should adopt a new vision of the situation.