Mauritius economic and fiscal stability concerns

Mauritius is facing scrutiny regarding its fiscal and monetary stability. In late July 2026, Moody’s maintained a negative outlook on the country’s sovereign credit rating, citing high public debt, vulnerability to external shocks, and a need for a “demonstrable, durable reversal” of the rising debt trajectory. While the government planned to reduce the budget deficit from approximately 6% to 3.7% of GDP, Moody’s noted concerns regarding the partial suspension of pension reforms and the small, open nature of the economy.

By late August 2026, the International Monetary Fund (IMF) issued warnings to the Bank of Mauritius concerning operational deficiencies in monetary policy. The IMF reported that structural excess liquidity has created a gap between the official policy rate and market conditions, hindering the effectiveness of interest rate decisions.

Concurrently, the Bank of Mauritius observed a slowdown in domestic demand, marking the first decline in consumer spending since the Covid-19 pandemic, largely driven by reduced public consumption. Although investment has begun to recover after five quarters of contraction, household consumption remains characterized by only modest growth due to ongoing uncertainty.