Mauritius enters the 2026-2027 Budget cycle at a defining economic crossroads. The country is confronted with a complex combination of persistent inflationary pressures, moderate economic growth, widening external imbalances, and elevated public debt levels. While recent budgets have articulated ambitious transformation agendas — particularly in the blue economy, artificial intelligence, and innovation — the central challenge now lies in execution within a constrained fiscal environment. The upcoming budget must therefore deliver a coherent strategy that simultaneously protects households, accelerates growth, and restores fiscal credibility.

The macroeconomic indicators underscore the urgency of reform. Inflation remains around 3.6%-3.7%; however, the effective increase in the cost of living for households is significantly higher due to rising food, transport, and energy prices. Economic growth is projected at 3.0%-3.4%, which is insufficient to generate strong income gains. At the same time, public debt exceeds 80% of GDP, while the current account deficit remains elevated at approximately 5%-6% of GDP. This combination reflects a deeper structural issue: Mauritius is evolving into a high-cost, import-dependent economy with insufficient productive growth.

In the short term, targeted interventions are essential to protect purchasing power. Carefully designed income-support schemes, smart subsidies for essential goods, and selective tax relief can provide immediate relief. However, in a high-debt context, such measures must remain targeted and temporary. The fiscal strategy must avoid broad-based subsidies that risk widening deficits without addressing structural issues.

The central pillar of the 2026-2027 Budget must be fiscal consolidation anchored in growth. This requires the establishment of a credible medium-term framework, including:

⚫ A progressive reduction of public debt toward 70% of GDP over the medium term

⚫ A fiscal deficit target below 4% of GDP

⚫ A shift toward a primary surplus position

However, fiscal consolidation cannot rely solely on expenditure restraint. It must be complemented by a robust revenue-mobilisation strategy. This includes improving tax compliance, reducing leakages, and modernising tax administration. New revenue streams should be explored in areas such as the digital economy, environmental taxation, and high-value services, without increasing the burden on low- and middle-income households.

At the same time, expenditure must be reoriented toward high-impact, growth-enhancing investments. Borrowing should increasingly finance productive sectors rather than recurrent spending. Infrastructure, renewable energy, and digital transformation offer strong economic multipliers and can support long-term growth while improving fiscal sustainability.

Gaps in implementation

A critical review of the 2025-2026 Budget reveals that several key growth initiatives remain under-implemented. The blue economy, despite its strategic importance, remains largely at a conceptual stage with limited measurable output. Similarly, initiatives in artificial intelligence and innovation have yet to scale beyond pilot programmes. Job-creation efforts have focused on training, but without sufficient industrial expansion, resulting in a persistent mismatch between skills and employment opportunities. These gaps highlight a broader issue: policy ambition has not been matched by execution capacity.

This failure in implementation has direct fiscal consequences. When growth initiatives do not materialise, expected revenue gains fail to occur, thereby increasing reliance on borrowing. In this sense, weak execution is a key driver of rising public debt. The solution lies in establishing a strong implementation architecture, including:

⚫ Time-bound project pipelines

⚫ Quarterly performance scorecards

⚫ A central delivery unit reporting at the highest level of government

To break the high-cost, low-growth cycle, Mauritius must adopt a productivity-driven growth model. This involves improving labour productivity, reducing bureaucratic inefficiencies, and lowering the cost of doing business. The digitalisation of public services, streamlined licensing procedures, and faster regulatory approvals are essential to unlock private-sector investment.

The external sector must also be strengthened. Export diversification toward African and emerging markets is critical to reducing the current account deficit and stabilising the currency. Import substitution, particularly in agro-processing and light manufacturing, can reduce foreign-exchange outflows while supporting domestic production.

Energy remains a key structural constraint. Reducing reliance on imported fossil fuels through accelerated renewable-energy deployment is essential. Institutions such as the Central Electricity Board must lead this transition, as lower energy costs will directly enhance competitiveness. Similarly, strategic entities like the State Trading Corporation can play a stabilising role in managing supply chains and mitigating price volatility.

The private sector, particularly SMEs, must be empowered as a central engine of growth. Improved access to finance, targeted tax incentives, and a more efficient regulatory environment are critical. Public investment must complement private-sector activity by focusing on infrastructure that enhances productivity and connectivity.

Ultimately, the relationship between growth, purchasing power, and public debt is inseparable. Sustained growth increases incomes, strengthens revenues, and reduces the debt burden over time. Conversely, weak growth combined with high expenditure leads to rising debt and reduced fiscal flexibility.

The 2026-2027 Budget must represent a decisive shift from policy ambition to policy delivery. It must move Mauritius from a consumption-driven, debt-supported model to a production-driven, export-oriented, and productivity-led economy.

The challenge is not merely economic — it is structural. Failure to act decisively risks entrenching a cycle of high costs, weak growth, and rising debt. Success, however, will depend on the government’s ability to implement reforms with discipline, clarity, and urgency.

The time for blueprint policies has passed. The time for execution, productivity, and fiscal responsibility has arrived.

Suttyhudeo Tengur

President, Association pour la protection des consommateurs et de l’environnement