More than two years into the pandemic, Mauritius is still grappling with rising debt levels across the State, households, and businesses.
As of March 2023, provisional figures from the Ministry of Finance show a public debt of Rs 483 billion, indicating a substantial increase in debt per capita compared to September 2021, when it was estimated at Rs 331,000.
The fluctuating value of the Mauritian rupee and the country’s Gross Domestic Product (GDP) have been influential factors in this debt scenario.
With the country experiencing economic recovery, businesses are increasingly resorting to borrowing for investments.
The growth rate, which was 8.8% in the previous year, is projected to be around 5.3% in 2023.
Commercial banks have been actively extending loans to businesses, with loans totalling Rs 304 billion granted by the end of May 2023, and the Mauritius Investment Corporation (MIC) disbursing Rs 49.42 billion to 50 entities during the same period.
Households are also taking advantage of various loan options, and FinClub has observed a 38% surge in loan requests between the last two quarters of 2022.
Some borrowers seek loans for personal reasons, while others, including workers receiving the guaranteed minimum income of Rs 15,000, find it easier to meet eligibility criteria.
However, experts caution against reckless borrowing for consumption purposes, as household debt levels continue to rise.
Amidst this growing debt landscape, banks are reaping profits, benefitting from increased borrowing by households and businesses.
SBM Bank reported post-tax profits of Rs 3.5 billion for the year ending December 2022, primarily driven by a substantial 10.5% growth in net loans.
Similarly, the MCB recorded a 13.3% growth in total assets between March 2022 and March 2023, mainly attributed to the increase in loans and advances to customers.
Source: Defi Media