- The Mauritian economy continues to exhibit resilience with growth at 4.7 percent in 2024 and contained inflation. The growth outlook remains favorable, though risks are to the downside.
- Mauritius needs to recalibrate the macroeconomic policy mix to rebuild fiscal space. The monetary policy framework needs to be strengthened while continued monitoring of macro-financial risks is essential to maintain financial stability.
- Advancing key reforms to foster external competitiveness and private sector-led growth while enhancing climate resilience will reduce external imbalances.
Washington, DC: The Executive Board of the International Monetary Fund (IMF) completed the Article IV Consultation for Mauritius. [1]
Mauritius' economy remains resilient. Real GDP grew by 4.7 percent in 2024, from 5.0 percent in 2023, driven by services, construction, and tourism. Headline inflation (12-month average) declined to
2.5 percent in March 2025 from 7.0 percent in 2023, helped by easing international food and energy prices and lower fuel excise duties. The external current account deficit widened in 2024 to
6.5 percent of GDP, mostly reflecting higher imports and freight costs. Gross foreign reserves increased to US$8.5 billion by end-2024, covering almost 12 months of imports. Looking ahead, the country needs to address fiscal and structural challenges, notably the high public debt, significant public investment needs, low productivity, and an ageing society.
The outlook for growth is favorable. Real GDP growth is projected to soften to 3.0 percent in 2025 due to weakening external demand, easing tourism activity, and the drought. Over the medium term, growth is expected at around 3.4 percent, reflecting demographic headwinds and labor shortages. Inflation is projected to average 3.6 percent in 2025 and remain within BOM's target range over the medium term. The external current account deficit is projected to reduce to 4.7 percent of GDP in 2025—reflecting lower oil prices, as exports grow modestly amid the slowdown in global demand—and to increase in 2026 due to subdued exports, but gradually decline thereafter. The primary fiscal deficit (excluding grants) for FY24/25 is projected to worsen by 3.4 ppt of GDP relative to FY23/24, to 6.5 percent of GDP, mostly driven by higher compensation of employees, social benefits, and grants and transfers. The stock of public sector debt is projected at around 88 percent of GDP at end-June 2025, and to gradually decline in the medium term.
Risks to the outlook are on the downside, including from global uncertainty, tariff wars, higher-than-anticipated fuel and food prices, and extreme climate shocks.
Executive Board Assessment [2]
The economy has recovered solidly from the pandemic and the outlook is favorable, but fiscal and structural challenges remain. The recovery has been driven by services, construction, and tourism. The medium-term outlook is favorable but held back by demographic headwinds and labor shortages. Mauritius is facing fiscal and structural challenges from high public debt, significant public investment needs for climate, low productivity, and an ageing society. Risks to the outlook are on the downside including from high global uncertainty, highlighting the importance of addressing fiscal and external imbalances to increase the resilience of the economy.
Fiscal policy should pursue frontloaded growth-friendly consolidation to shore up fiscal credibility, helping rebuild fiscal space while protecting the most vulnerable. Tax revenue should be increased and current and ESFs' spending contained while safeguarding critical social spending and growth-enhancing capital spending. Pension system reform remains key to support fiscal sustainability, especially given the ageing of Mauritius' population. Strengthening public financial management, including by streamlining ESFs, will support fiscal consolidation, transparency, and good governance.
BOM should start to gradually phase out its ownership of MIC and strengthen the implementation of the monetary policy framework by resuming uncapped issuance of 7-Day BOM bills (at the key policy rate). BOM should stand ready to tighten the monetary policy stance should inflationary pressures reemerge. BOM should adopt amendments to the BOM Act, including to ensure fiscal backing, to protect central bank independence. Ministry of Finance and BOM are encouraged to strengthen the commitment on their mutual agreement for BOM independence. Mauritius should continue to rely on exchange rate flexibility and FX purchases when opportunities arise, and in line with the monetary policy framework, to help further build foreign reserves buffers to ensure ability to respond to large external shocks.
Mauritius' external position at end-2024 is assessed as weaker than the level implied by fundamentals and desirable policies, and structural reforms to foster external competitiveness are needed to reduce external imbalances. Steady progress in strengthening the AML/CFT framework is welcome and should be sustained, including provisions related to non-resident and cross-border activity. Financial sector risks should continue to be closely monitored including of the real estate sector. Ongoing efforts to improve external sector statistics, including measurement of the GBCs sector, should be sustained. Statistical gaps and discrepancies should be addressed to improve the quality and credibility of macroeconomic statistics.
Mauritius should advance structural reforms that boost investment and innovation to secure longer-term private sector-led growth. Priorities include strengthening workers' skills through better education and narrowing gender gaps as well as advancing climate adaptation efforts to support economic resilience.
Mauritius: Selected Economic Indicators |
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[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.
[2] The Executive Board takes decisions under its lapse-of-time procedure when the Board agrees that a proposal can be considered without convening formal discussions.
