Business
Moody’s Keeps Mauritius at Baa3, Cites Progress and Future Risks
Moody’s has maintained Mauritius’s sovereign credit rating at Baa3 with a negative outlook. The agency’s latest report, released on August 5 and available locally on August 6, highlights the reasons behind this decision and outlines steps Mauritius needs to take to potentially upgrade its score.
Key Points from Moody’s Report
- Negative Outlook Remains
Moody’s keeps a negative outlook on Mauritius’s credit rating due to uncertainties about the government’s ability to reverse recent financial deterioration.
Significant fiscal adjustments are needed, but their impact is uncertain.
Although reforms were announced in June, their success depends on politically sensitive decisions, such as cutting social spending and raising taxes.
- Conditions That Could Improve the Rating
A future upgrade to a stable outlook is unlikely without concrete fiscal reforms.
Moody’s suggested that if Mauritius implements a comprehensive budget plan that slows the rise of public debt without harming economic growth, the outlook could shift.
Possible measures include increasing revenue by removing tax exemptions and controlling government spending. Better management of public enterprise liabilities could also help improve the rating.
- Risks of Rating Downgrade
Delays in fixing public finances or increased financing needs that raise debt costs could lead to a downgrade.
Moody’s also warned that rising, unprovisioned liabilities from public enterprises pose a significant risk.
Additional Context
On January 30, 2025, Moody’s decided to keep Mauritius’s rating at Baa3 but changed the outlook from stable to negative.
Moody’s describes Mauritius as having a balanced credit profile, with stable economic growth, economic diversification, and political stability.
However, challenges remain, including high debt levels, a small economy, and vulnerability to external shocks due to open trade policies.
The agency noted that government policies have helped mitigate long-term external risks and that the country is holding substantial foreign reserves, which provide some cushion against external pressures despite ongoing current account deficits.
Source: Defi Media
