AfDB Commends Mauritius Pension Reform, Urges 4 Key Structural Changes

The African Development Bank (AfDB) has praised Mauritius’s pension reform and called for broader structural changes. In its latest economic report on the island nation, published this week, the bank noted that the pension reform could help ease pressure on public finances.

The AfDB highlighted a concerning situation: Mauritius’s public debt now stands at 90% of GDP, well above the 80% threshold.

The budget deficit for the fiscal year 2024/2025 is expected to reach nearly 10% of GDP, mainly due to government spending exceeding tax revenues.

The report identified key challenges including high debt levels, low productivity, and weak export performance.

To address these issues, the bank recommends that Mauritius accelerate structural reforms. One praised measure is the pension reform.

The AfDB pointed out that universal pensions account for 61% of social spending, and making pensions more targeted could provide lasting relief to public finances.

The report also suggested other reforms. It calls for rewriting the education system to better match labor market needs, as many educated youth still struggle to find jobs.

Additionally, the bank warned about Mauritius’s heavy reliance on energy imports and the impacts of climate change.

Given new trade barriers, especially from the United States, the AfDB advises Mauritius to diversify its export markets and maximize benefits from trade agreements with India, China, the United Arab Emirates, and African countries.

Such strategic moves are seen as essential for building economic resilience and ensuring sustainable growth.

Source: Defi Media