The International Monetary Fund has warned that Mauritius’ economic outlook is weakening despite recent resilience, as global uncertainty and spillovers from the Middle East conflict weigh on growth and inflation prospects.
In a statement concluding its 2026 Article IV consultation mission, the IMF said the island nation’s economy expanded by 3.2 percent in 2025, supported largely by strong performance in services such as tourism and financial services. However, growth is projected to slow to 2.8 percent in 2026, reflecting external shocks, particularly the impact of geopolitical tensions on tourism demand.
The mission, led by Mariana Colacelli, noted that inflation, which rose in 2025 due partly to policy-driven price increases, has eased in early 2026 and remains within the central bank’s 2–5 percent target range. However, it is expected to rise again later this year amid higher global food and energy prices before moderating into 2027.
The IMF flagged widening external imbalances, with the current account deficit increasing in 2025, even as foreign reserves climbed to $10.3 billion by year-end. It cautioned that a prolonged conflict in the Middle East or tighter global financial conditions could further dampen growth, fuel inflation expectations and weaken the external position.
“Delays in recalibrating the macroeconomic policy mix may lead to a more difficult adjustment process,” the Fund said, highlighting the need for timely policy responses.
On fiscal policy, the IMF said Mauritius is expected to make progress in consolidating its public finances, with the primary fiscal deficit projected to narrow to 3.5 percent of GDP in the 2025/26 fiscal year, down from 6.5 percent the previous year. The improvement is largely attributed to stronger revenues, including proceeds from the Fair Share Contribution.
Nevertheless, public debt remains elevated at about 88 percent of GDP, underscoring the need to rebuild fiscal buffers. The IMF called for enhanced revenue mobilization and restraint in current spending, particularly on pensions and extra-budgetary transfers, while maintaining targeted support for vulnerable groups.
The Fund also emphasized the importance of strengthening fiscal governance through a rules-based framework.
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On monetary policy, the IMF said the current stance by the Bank of Mauritius is broadly appropriate but urged authorities to remain forward-looking and ready to tighten policy if inflation expectations rise above target. It also stressed the need to safeguard the central bank’s independence through timely legislative reforms.
The IMF welcomed steps taken by the central bank to unwind its involvement in the Mauritius Investment Corporation, including the return of undisbursed funds, as part of efforts to enhance transparency and policy credibility.
While macro-financial risks are currently contained, the Fund warned that vulnerabilities linked to cross-border financial activities, real estate exposures and shifts in global financial conditions require close monitoring.
Looking ahead, the IMF underscored the importance of structural reforms to sustain long-term growth. Priorities include boosting productivity, improving governance, enhancing labour market participation and skills, and strengthening climate resilience. These measures, it said, are essential to address demographic pressures and reduce both fiscal and external imbalances.
The Fund also highlighted Mauritius’ recent subscription to the IMF’s Special Data Dissemination Standard Plus (SDDS Plus), the highest tier of its data transparency framework, describing it as a sign of the authorities’ commitment to improving statistical quality and institutional credibility.
The IMF team said it held “constructive and open dialogue” with Mauritian authorities during the mission, which ran from April 22 to May 4. A full staff report will be prepared and submitted to the IMF Executive Board for consideration following management approval.
