World Bank urges Mauritius to restore debt cap

The World Bank has reportedly urged Mauritius to reinstate an upper limit on its debt.

According to Bloomberg, the WB wants to see Mauritius help rein in its budget deficit and ease pressure on its finances, after abandoning it almost two years ago.   

While the suspension of the 60% debt-to-gross domestic product ratio cap was appropriate early in the coronavirus pandemic to allow for urgently needed spending in the face of sharply declining fiscal revenues, it should now be restored, Idah Pswarayi-Riddihough, the World Bank’s country director for Mauritius, was cited as saying in an article penned by Bloomberg’s Kamlesh Bhuckory.

“The public sector debt-to-GDP ratio estimated at 65% as at June 30, 2019 ballooned to 94.3% at the end of September, according to Finance Ministry data. That’s as the tourism-dependent nation increased its debt to shore up an economy suffering from its worst contraction in four decades due to the fallout from the pandemic. 

The government should now focus on more affordable spending patterns and high priority areas, Pswarayi-Riddihough said. 

The Finance Ministry is targeting a debt-to-GDP ratio of below 80% by end-June 2025.

Despite reopening of borders, real GDP “will likely not return to its pre-pandemic levels until at least 2024,” she said.

Original article at Bloomberg