Mauritius Faces Rs 654 Billion Debt Crisis As Moody’s Demands Urgent Fiscal Action

The Mauritian government is facing intensifying pressure to curb a rising tide of national debt, which reached Rs 654.47 billion at the end of September 2025. Accounting for 89.3% of the country’s GDP, the debt load now represents a staggering burden of approximately Rs 525,957 per citizen.

The figures come amidst scrutiny from the credit rating agency Moody’s, which has expressed dissatisfaction with the pace of debt reduction.

Following a mission to the island in December, Prime Minister Navin Ramgoolam acknowledged the agency’s concerns, stating that while they recognised the government’s determination, “Moody’s… expects more effort from us.”

A Strategy for Recovery

In a bid to restore fiscal stability, the State has set a target to slash the debt-to-GDP ratio to 75% within three years, with a long-term goal of 60%. The strategy relies on three primary pillars:

• Fiscal Efficiency: A plan to save Rs 5 billion by eliminating waste and improving the management of public finances.
• Growth-Led Dilution: Expanding the GDP to naturally lower the debt ratio.
• Local Financing: The government intends to raise Rs 28,5 billion in the first half of 2026 through Treasury bills, three-year Treasury Notes, and Government of Mauritius Bonds.

While the finance ministry is expected to release updated figures at the end of January, economists warn that the road ahead remains precarious.

Expert Warnings and Divergent Views

Economic observers are split on whether the government’s “Year of the Economy” initiative will suffice.

Observer Tahir Wahab cautioned that the debt will likely breach the 90% GDP threshold, noting that upcoming Pay Research Bureau (PRB) report adjustments will inevitably spike public spending.

“The government can no longer be satisfied with speeches,” Wahab argued, calling for investment in emerging economic sectors to grow the national wealth.

Similarly, economist Sanjay Matadeen highlighted that while the debt is primarily denominated in rupees—limiting exposure to foreign exchange fluctuations—the state must “reduce public spending while increasing income.”

He suggested that “Government-to-Government” (G to G) negotiations with allied nations could be used to secure lower interest rates or longer repayment terms.

The Path Forward

Despite the rising figures, some remains optimistic. Observer Imrith Ramtohul believes the government has “no choice” but to intensify efforts following Moody’s clear stance.

The consensus among experts remains that sustainable reduction is only possible if the country can stimulate significant economic growth to outpace its borrowing.

Source: Defi Media