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Moody’s maintains Mauritius’ Baa2 rating amid fears of looming downgrade



Moody's maintains Mauritius' Baa2 rating amid fears of looming downgrade

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.

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