The public debt to GDP ratio of Mauritius increased significantly between 1970 and 1985, from 18% to 72%, the highest level in its history so far. One major cause of this was that since its independence, Mauritius adopted a development strategy of heterodox liberalization and diversification, which required investment and loans to expand its economy. However, due to continued growth, since 1985, the ratio stabilized and remained below 65% of GDP. Hence, Mauritius was not part of HPIC and did not receive any debt cancellation from China over the 2000-2018 period.
Mauritius has a well-established legal and institutional framework to manage its public finance. Mauritius issued a Debt Management Strategy under its Public Debt Management Act in 2008, which set objectives for the management of government and public sector debt portfolio and “established risk control benchmarks and medium-term targets for the composition, currency mix, interest rate mix, maturity profile and relative size of the public sector debt.” The Act set a ceiling for public sector debt relative to GDP. The starting ceiling point in 2008 was 60% of its GDP but the ratio has exceeded this ceiling point in 2015 with a 62.9% of GDP.
Key Projections for 2022
Debt to GDP Ratio
Mauritius has enjoyed steady economic growth since 2008, with an average growth rate of 3.8% a year, which led to high availability to pay debt service. According to the World Bank, Mauritius is classified as a high-income country and is one of only a few African countries eligible for sovereign loans from the International Bank for Reconstruction and Development.
In 2017, debt interest payments were equivalent to 7% of total expenditure, yet the rate by 2008 was 12%. For comparison, 10% of total government expenditure was allocated to the health sector in 2017, which facilitated the nation’s social security and helped achieve SDGs. Mauritius is not a signatory to the Open Government Partnership but has publicly provided government data on national budgets, public debt and circulars. The existence of a Debt Management Office and a publication of a medium-term debt strategy makes the country top-range in the Debt Transparency Index.
Revenue and Budget Balance
Projected debt service to China vs Other creditors
Chinese debt in Mauritius’s financing portfolio has remained small over the past two decades, with an average rate of Chinese debt relative to total external debt stocks at 7.41%. From 2008 to 2009, the estimated external debt stocks owed to China increased fivefold, from US$277 million to US$1321 million. One major reason was that China issued several large-scale loan projects in 2009 in the country according to the data from JHU’s China Africa Research Initiative. Notably, in 2009, China lent Mauritius US$260 million to expand the nation’s international airport along with an interest free loan of 40 million yuan (US$5.9 million) and a 30-million-yuan grant. China also pledged to speed up construction of a China-funded US$730 million Economic and Trade Zone north of the capital.
Mauritius’s Chinese debt to GDP ratio decreased every year since 2009. In 2016, China wrote off Mauritius’ debts amounting to Rs 450 million (US$11 million), which further brought down the country’s external debt. Although Mauritius has a good relationship with China, and recently agreed a Free Trade Agreement with China (October 2019), Mauritius has not signed a BRI MOU with China.
China Debt : GDP Ratio (%)
External Debt Stock to China vs. Other Countries (USD millions)
Although now classified as a high-income country by the World Bank and IMF, Mauritius has some significant outstanding financing needs for meeting the SDGs – in particular ensuring access to electricity and the internet for the population.
However, the IMF does not classify Mauritius’s debt sustainability position. The Jubilee debt campaign only predicts a risk of private debt crisis in 2020. This is mainly due to the larger proportion of long-term private sector debt in its financing portfolio, which accounted for 43% of its total debt stocks, compared to the public sector only at 13%. In terms of creditworthiness, Moody’s credit rating of the country is at Baa1, but with a negative outlook due to the COVID-19 outbreak. This means the country’s credit rating is the strongest amongst the countries analysed in this guide, which may mean it will be able to get sufficient future finance to meet its needs, albeit at a higher interest rate than many other countries.
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Health and Well being choices
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