Budget 2025-26: “Smart Plan, Tough Politics, Growth Challenges Ahead”

Jean Claude de l’Estrac, former general director of La Sentinelle Ltd., ex-editor of L’Express, and former minister, shared his analysis of the first budget presented by the Alliance du Changement, led by Prime Minister Navin Ramgoolam. He viewed the speech as a message of responsibility and a break from recent budget practices, though he questions whether the public service can implement the announced reforms.

He believed some unpopular measures, like raising the retirement age, were unavoidable given the current economic situation.

He also emphasized the need to attract foreign investment to boost growth.

Your thoughts on this first budget of the coalition government?
As an engaged citizen with extensive public affairs experience, I see this budget speech as that of a statesman prioritizing the national interest.

There’s a saying: politicians think about the next election, while statesmen think about future generations.

That’s what I see in this speech. However, I’m concerned about whether our public service, as it currently stands, can carry out the ambitious reforms announced.

Real investment doesn’t come from meetings in closed rooms.

The budget has sparked many negative reactions among the public. Are they justified?
They’re predictable, but not justified—though understandable. For many years, Mauritians have been fed public money we didn’t have, financed by debt that’s reached its limit, burdening future generations.

People saw the budget as just a time for distributing gifts. It was time for leaders to remind them of the economic realities.

Everyone knows you can’t keep living beyond your means forever.

How would you describe this budget politically?
It’s an intelligent budget. But ministers will face a difficult political period. In the coming months, before the results show, they’ll need strong communication skills to soften the blow of unpopular measures.

The most disliked measure is likely the increase in retirement age, which is actually easy to explain: longer life expectancy, an aging population, and a shifting age pyramid.

This budget is clearly two-phased. On one side, the government increases revenue through higher taxes. On the other, it reduces spending on social benefits and citizen services. But is it happening too fast?

I don’t think so. As the saying goes, “cut your coat according to your cloth.”

Some of the proposed steps might not materialize, but a government that doesn’t make tough, unpopular decisions in its first year probably won’t do so later, especially before upcoming elections.

What about the other measures? Will they be enough to revive the economy and create new sectors?
Reviving the economy means returning to growth—growth that’s notably stronger than the short-term projections. Growth depends heavily on investment, especially private investment, both local and foreign.

To attract foreign investors, we need to actively seek them out—Mauritius did this successfully for years.

It’s not about holding meetings behind closed doors; it’s about going to them and convincing them.

I recall a time when I, as Minister of Industry, literally went door-to-door to potential foreign investors.

Does this budget represent the promised break during the electoral campaign?
Yes, quite significantly. It features a new tone and more current language. But the real change will be in implementation. Past speeches often had little follow-through. The real challenge now is how the government will supervise these reforms and whether our public service, now a shadow of its former self, can manage and innovate effectively.

Are we seeing a shift toward neoliberal policies with measures like cutting subsidies and increasing citizen responsibility?
I see no ideological shift in the budget speech. It reflects a social-democratic tradition: taxing the wealthy while protecting the vulnerable as much as possible.

However, I’m not sure the most vulnerable are truly supported. In such a small country, it’s actually quite feasible to target aid more precisely. We know the names and faces of the poor.

Do the new tax measures unfairly penalize the middle class and small entrepreneurs?
Small businesses already struggling may suffer from some of the new taxes.

There’s a contradiction: on one hand, the government wants them to contribute to import substitution; on the other, they’re caught in a new tax net.

The government aims to revive growth through targeted public investments. Is that realistic now?
Not enough. We need to attract many more foreign investors. They are out there, being courted worldwide.

Mauritius has assets; the challenge is to play the right cards. The real competition happens elsewhere.

But the game is played with capable, convincing actors. Unfortunately, I hear about disastrous road shows based on poor diplomatic outreach.

Source: Defi Media