IMF Wraps 2026 Article IV Talks With Mauritius

Washington, DC: The Executive Board of the International Monetary Fund (IMF) completed the Article IV Consultation for Mauritius. ^[1]

Mauritius' economy remains resilient, but macroeconomic conditions have weakened amid a more adverse external environment. Real GDP grew by 3.2 percent in 2025, supported by continued strength in services-including tourism and financial services-and moderated by a contraction in construction. Inflation picked up in 2025 partly due to policy-related price increases, and eased in early 2026 before beginning to increase on the back of the war to 3.6 percent in April 2026. The external current account deficit widened to 7.1 percent of GDP in 2025, while gross international reserves increased to US$10.3 billion, remaining within the advisable range of the IMF's reserve adequacy metric. Public debt reached 86 percent of GDP at end‑June 2025 reflecting a significant fiscal loosening in FY24/25 driven by higher current spending, and is estimated to remain elevated at end-June 2026.

The outlook has softened and risks are tilted to the downside. Real GDP growth is projected to slow to 2.8 percent in 2026, reflecting adverse spillovers from the war-via weaker tourism and higher commodity prices-before recovering gradually to 3.2 percent over the medium term as higher investment offsets demographic headwinds. Inflation is projected to increase significantly in 2026, reaching about 6.4 percent (year‑on‑year) by end‑2026, before moderating toward the midpoint of the Bank of Mauritius' 2-5 target range over the medium term. The external current account deficit is projected to widen to 7.4 percent of GDP in 2026, before narrowing gradually over the medium term.

Fiscal consolidation is underway. While the primary deficit narrowed in FY25/26, public debt is expected to remain elevated over the medium term under unchanged policies. Risks to the outlook are tilted to the downside-including from heightened global uncertainty, higher energy and food prices, and delays in recalibrating the macroeconomic policy mix-while upside risks stem from a Chagos-related revenue windfall and eased geopolitical tensions.

Executive Board Assessment³ [2]

Executive Directors noted that Mauritius' economic activity remains resilient, although macroeconomic conditions are weakening amid a more adverse external environment. With risks tilted to the downside, Directors highlighted the importance of recalibrating the macroeconomic policy mix to rebuild buffers and strengthen macroeconomic resilience.

Directors underscored the need to step up fiscal consolidation to place public debt on a declining path and rebuild fiscal buffers. They emphasized the importance of containing current spending, including through pension reforms, while protecting the most vulnerable through temporary and well‑targeted support. Directors encouraged efforts to increase domestic revenue mobilization and agreed that any windfall revenues should be primarily used for public debt reduction. Strengthening public financial management and anchoring policy in a rules‑based fiscal framework would also help reinforce fiscal discipline.

Directors agreed that monetary policy should remain forward‑looking and stand ready for further tightening if risks of expectations de‑anchoring intensify. They emphasized the need to strengthen the implementation of the monetary policy framework and of a more forward‑looking communication to enhance policy effectiveness and credibility. Directors encouraged the Bank Of Mauritius (BOM) to continue to rely on exchange rate flexibility as a key shock absorber and to use foreign exchange interventions in a limited and targeted manner. They underscored the importance of safeguarding central bank independence, including through the swift adoption of amendments to the BOM Act and through reducing the central bank's involvement in non‑core activities.

Directors noted that while financial sector risks appear contained, close monitoring is necessary, including on real estate exposures, the bank‑sovereign nexus, and non‑resident and global business companies' flows as well as the adoption of virtual assets. Directors welcomed steady progress in strengthening the AML/CFT framework and encouraged the authorities to sustain it.

Directors agreed that structural reforms are needed to enhance competitiveness and reduce external imbalances. Priorities include mobilizing under‑utilized labor resources, strengthening the skills and training framework, as well as reviving productivity growth by improving the business climate, reducing structural bottlenecks, and advancing climate adaptation efforts. Directors welcomed the adherence to the Special Data Dissemination Standard Plus and encouraged continued efforts to further strengthen data quality and support informed policymaking.

[1] Under Article IV of the IMF's Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country's economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board.

³ At the conclusion of the discussion, the Managing Director, as Chair of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country's authorities. An explanation of any qualifiers used in summings up can be found here: http://www.IMF.org/external/np/sec/misc/qualifiers.htm