Economist Warns of Mauritius’s Alarming Rs644Bn Debt Levels

Kee Chong Li Kwong Wing, an economist and boss of Afrexinsure, a pan-African insurance company, has raised serious concerns about Mauritius’s rising public debt, currently standing at Rs 644 billion. Debt stood at RsRs 524.7 Billion only a year ago.

In an interview with Defi Media, the economist emphasises that without structural reforms, a solid recovery plan, and a significant boost in productivity, the country could face devastating consequences.

The Mauritian government reports that public debt has reached Rs 644 billion, equivalent to 90% of the country’s GDP. But how alarming is this debt level?

“The figure of 90% GDP has been manipulated so much that it raises questions about whether all defense and national security expenditures, as well as off-balance sheet contingent debts from struggling public enterprises and other state guarantees, have been included. We may have even surpassed the 100% mark,” he said.

For a small economy like Mauritius, which lacks natural resources and has a struggling central bank and financially beleaguered public enterprises, this debt level is indeed troubling, especially in light of a declining workforce and an aging population.

“Our public debt exceeds the IMF’s tolerance threshold for island nations, which is 75%,” he added.

Is this level of debt manageable?

“It can be manageable to some extent with strong measures, but it’s still quite concerning. If we are nearing 100% of GDP, we risk reaching a critical point that could collapse our economy under an unsustainable burden. As the global economy trends toward recession and potential trade conflicts escalate, we are exceptionally vulnerable to external shocks, affecting everything from oil prices to inflation and external aid availability.”

Li Kwong Wing stressed the urgent need for a thorough analysis of the country’s debt. “It’s crucial to conduct a clear and detailed evaluation of our public debt without the authorities manipulating figures to confuse experts from the IMF or Moody’s. We need to break down the debt quantitatively and qualitatively,” he stated.

This analysis should determine how much of the debt is productive versus unproductive—whether it funds populist expenditures without returns or supports growth-generating projects. “Economists in the developing world refer to it as ‘Get debt to get rid of debt’,” he explained.

Furthermore, the share of external debt, which is often denominated in foreign currencies and subject to variable interest rates, must also be scrutinized for risks associated with currency fluctuations and interest rates. “We have significantly increased our foreign debt with projects like the Metro Express and other large-scale construction efforts,” he concluded.

Source: Defi Media