Moody’s on Mauritius: ‘High government debt burden and COVID’s impact’

Mauritius’s credit profile (Baa2 negative) reflects its high debt burden and the after-effects of the coronavirus pandemic on the sovereign’s economic and fiscal strength, Moody’s Investors Service said in its latest report, according to l’Express.

“The government faces challenges in dealing with the fallout of the coronavirus pandemic, which has weakened the economic outlook, particularly for the tourism sector. Materially lower growth and large fiscal deficits would result in a further deterioration in fiscal strength. Our negative outlook for Mauritius largely reflects the downside risks from a slower than expected recovery in the tourism sector. This is likely to spill over into the rest of the economy and erode fiscal strength,” said David Rogovic, VP – Senior Analyst at Moody’s Investors Service. 

“Pandemic-related policy measures could also impact the effectiveness of the central bank’s monetary policies.” However, it has credit strengths including a dynamic and reasonably diversified economy.

Moody’s said Mauritius’s outlook could return to stable if the government is able to implement fiscal consolidation while containing medium-term inflation risks.