Mauritius Faces Electoral Distractions as Economic Concerns Linger

The electoral context in Mauritius has recently monopolized public attention, often overshadowing important economic discussions. In the past few weeks, political developments have been so pronounced that some analysts have expressed concern that economic issues are being pushed to the background.

One analyst noted, “The approach of elections is characterized by campaigns and activities surrounding them. Consequently, the nation tends to operate at a slow pace as elections draw near.”

Dr. Chandan Jankee, a notable economist, elaborated on the relationship between politics and the economy, stating that the economy is fundamentally driven by political and electoral cycles.

“Good economics equates to good politics,” he explained. “Before elections, we often see the introduction of highly popular measures, followed by announcements from the government to tighten economic policies afterward.

This pattern is entirely normal.” He further explained that the economic models of most political parties are primarily based on the private sector; however, the private sector often remains cautious, waiting to see where the government will direct its investments.

“The economy isn’t completely stagnant. It’s similar to a car in neutral that continues to move forward. The capacity of our economy to absorb changes is significant and largely dependent on our resources. Yet, the private sector is carefully evaluating the risks it should take,” Dr. Jankee remarked.

Risks of Downgrade Looming

Despite the political focus, experts at Moody’s warn against neglecting the economic landscape.

Currently, Mauritius holds a Baa3 credit rating, which is not immune to potential downgrade risks.

A deterioration in the country’s external financial position or increased pressures on its balance of payments could apply negative pressure on this rating.

Based on Moody’s analysis, while Mauritius is projected to see a slight improvement in its debt accessibility, it is expected to remain above 10%, which is higher than the median of 8.5% typically observed for sovereigns rated Baa in 2024.

The report states, “A higher rate of economic growth would also contribute to a more rapid decrease in the public debt burden.

Conversely, a return to growth rates similar to those seen before the pandemic would limit advancements in reducing the public debt burden, meaning that Mauritius’ debt metrics would continue to lag behind those of most of its Baa3 counterparts.

This, in turn, would restrict the possibility of an upgrade in its credit rating.”

Source: Defi Media