Mauritius has maintained its previous Baa2 rating, Defi Media reported, citing the latest report by Moody’s Investors Service.
Moody’s last year downgraded Mauritius’ long-term foreign and local currency issuer rating from Baa1 to Baa2 and maintained the negative outlook.
The downgrade to Baa2 reflected the “weakening in fiscal and economic strength as a result of the shock brought on by the coronavirus pandemic.”
In its current calculation, Defi Media reported, Moody’s predicts that the debt of Mauritius
will be 78% of the Gross Domestic Product for the financial year 2022, fiscal deficit would be 4.5% of GDP while the budget deficit is expected to hover around 4% of GDP.”
It also cited the report as arguing that the main risk to Mauritius’ fiscal trajectory was the possibility of additional support to state-owned enterprises.
“This would increase the net borrowing requirement and the public assets, which would reduce the debt burden more than implied by the government’s net borrowing requirement.”
A continued deterioration in debt parameters could lead to a downgrade at the next rating, it added.
An issue rated Ba2 is judged to be speculative and is subject to substantial credit risk.
The report has sparked a wave of “negative commentaries” by think-tanks and media, amidst worries that this could lead to further downgrading of sovereign rating.
