By Shruti Menon Seeboo
All eyes were on the National Assembly this Thursday, 5 June 2025, as Mauritius heard its Budget 2025-2026. This isn’t merely an annual financial statement; it’s the inaugural budget presented by the new government, which came to power with a resounding and overwhelming win in the general elections held last year. The gravity of this moment was underscored as Dr. the Hon. Navinchandra Ramgoolam, GCSK, FRCP, in his multifaceted role as Prime Minister, Minister of Defence, Home Affairs and External Communications, Minister of Finance, and Minister for Rodrigues and Outer Islands, took the floor to deliver the Budget speech, thereby laying out the government’s financial and economic roadmap.
Prime Minister Ramgoolam began his address with a stark portrayal of the national situation inherited from the previous administration, emphasising a profound sense of responsibility and humility. He minced no words in describing the state of affairs, stating, “Behind the façade mounted by the unethical and incompetent previous Government lie a shredded social fabric, perilous governance, cross-cutting institutional failures, a decaying democracy, public finances in a shambles, and an economy in dire straits.”
He then meticulously outlined the crippling legacy left behind:
- An “unsustainable public sector debt of Rs 642 billion representing 90 percent of GDP.”
- “A budget deficit of 9.8 percent of GDP.”
- A staggering “Rs 180 billion from reckless printing of money with devastating consequences on inflation and the exchange rate of the rupee.”
- A “huge trade deficit of Rs 203.7 billion representing 29.4 percent of GDP.”
The Prime Minister did not hold back in expressing his dismay, characterising the situation as “An unimaginable nightmare scenario that beggars belief.” He added, perhaps with a touch of irony, that it truly seemed “tout était possible ensemble pour eux,” drawing a parallel to Murphy’s law: “What won’t happen will happen.”
The immediate consequence of this fiscal mismanagement, he highlighted, is that “debt servicing alone is consuming Rs 21.8 billion of the budget.” This substantial sum, he lamented, “could have been used for funding essential development expenditure on education, healthcare, and social security, among others.”
A call for fundamental change and bold measures
Prime Minister Ramgoolam unequivocally stated that the inherited situation is “clearly unsustainable.” He also acknowledged mounting international pressures from “tariff and trade wars,” leading to “heightened uncertainty, high volatility, and unpredictability.” He warned of a severe consequence if the country failed to change course: “If we do not change course, there is a real risk of a sovereign rating downgrade, which would further worsen our situation and push the country deeper into crisis.”
Recognising the gravity of the situation, the Prime Minister stressed “an urgent need for a fundamental reappraisal of our accustomed way of doing things.” He firmly believes it is “in the best interest of the population and businesses that we take bold measures now so that we can build a more resilient economy and society for all.”
He acknowledged that Mauritius has “for far too long… postponed facing up to fundamental changes and making fundamental choices.” Now, he declared, “We have chosen what is right for the country. There is no other option. We must break the mould to stop the rot – now.” He powerfully articulated the critical juncture facing the nation: “The choices we make today will shape the better future we deserve or doom us to drift aimlessly, never seizing the chance to create real change.”
From Abyss to Prosperity: The Path Forward
As a “responsible Government,” Dr. Ramgoolam pledged a commitment to bring “the budget deficit, the borrowing requirement and debt to sustainable levels within the next three years.” He clarified that this pursuit of fiscal discipline would be carefully balanced with the imperative “to shore up investment and economic growth, protect the most vulnerable and address emerging challenges like demographic transition, climate change and disruptive technology such as Artificial Intelligence and blockchain.” The government’s approach, he affirmed, will be one of “fiscal responsibility with empathy and compassion.”
It is with this ethos that the government has chosen the path forward, encapsulated in the theme: “From Abyss to Prosperity: Rebuilding the Bridge to the Future.”
To achieve this ambitious goal, Budget 2025-2026 sets out a comprehensive plan resting on three core pillars:
- Economic Renewal
- A New Social Order
- Fiscal Consolidation
The Prime Minister concluded this opening segment by reaffirming the government’s guiding principle: “We will realise these objectives while putting people at the centre of all our decisions. Our topmost priority is and will always remain the wellbeing of the population.”
ECONOMIC RENEWAL: SHAPING INNOVATIVE MAURITIUS
Transitioning to the first pillar, Prime Minister Ramgoolam unveiled the government’s strategy for “economic renewal,” asserting a shift in the nation’s economic paradigm through structural reforms. “We must imperatively unlock growth, contain external deficits, boost productivity and investment to create well paid jobs for our youth and raise standard of living for all,” he declared, adding a resolute commitment: “We will not let financial restraints stand in the way of economic growth.”
This ambitious vision hinges on a “New Economic Model” driven by six key elements:
- Research & Development and innovation;
- Resource repurposing for higher productivity;
- Transformative investments;
- Updated trade strategies;
- Smart investment in productive infrastructure; and
- A focus on consumer well-being.
I. Unlocking Innovation with R&D and Artificial Intelligence
Detailing the measures to “unlock innovation,” Dr. Ramgoolam emphasised the critical link between current research and future advancements. “It is well known that research today is innovation tomorrow,” he stated, announcing the establishment of a new National Research and Innovation Institute (NRII) under the Ministry of Tertiary Education, Science and Research. This institute will support both public and private sectors, while also streamlining existing public research institutions for enhanced effectiveness.
In a direct move to stimulate policy innovation, the Prime Minister revealed an allocation of Rs 200 million to various Ministries for research purposes. Furthermore, all parastatal organisations and State-Owned Enterprises will be mandated to develop “an R&D and innovation plan that conforms with our vision of Innovative Mauritius.” Progress on this “Innovative Mauritius mission” will be closely monitored by the High-Level Steering Committee on the Government Programme at the Prime Minister’s Office.
Empowering Innovation through Open Data and Big Data
The government’s commitment to data-driven innovation was further solidified with the Prime Minister’s announcement of a blueprint for the ICT sector, developed by the Ministry of Information, Technology, Communication and Innovation (MITCI), aimed at “digitalising the country for operational efficiency and enhanced productivity.” The implementation of this blueprint will be carried out “as speedily as possible.”
To foster greater data utilisation, additional funding will be provided to Statistics Mauritius to build capacity for implementing open data and big data. Crucially, Mauritius has also secured technical assistance from the International Monetary Fund (IMF) for a Report on Observance of Standards and Codes (ROSC), described as “the most comprehensive review and assessment of statistical systems.” The ultimate aim, Dr. Ramgoolam underscored, is “to safeguard governance and integrity of data and establish clear institutional boundaries to prevent undue political or external influence.”
Further bolstering digital infrastructure, Rs 70 million is being allocated to set up a Tier IV Government Data Centre for disaster recovery. Legislative changes are also underway, with amendments to the Data Protection Act to meet EU requirements and the alignment of the Cybersecurity and Cybercrime Act with international standards. A Cyber Security Operation Centre will also be established, “based on the UK model.”
The government is also committed to “strengthening and internationalising the protection of creators’ and inventors’ legal rights to their ideas.” To attract foreign research laboratories, a package of incentives will be offered, including eligibility to a new Premium Investment Certificate, fast-track permits, and easy access to infrastructure.
A significant new initiative, the Innovative Mauritius Scheme, is being launched to offer “new fiscal incentives” to promote research and development and innovation.
Innovation at Work: Transforming Mauritius with AI
Recognising the transformative power of Artificial Intelligence, the Budget introduces several key measures. An AI Innovation Start-Up Programme will be spearheaded by the Ministry of ITCI, alongside the establishment of a dedicated AI Unit within the Ministry to “accelerate the transition to a digitally advanced economy.”
The government is actively fostering an “AI-driven culture in Mauritius,” with the public sector leading the way. The Prime Minister stated that the “Government leading by equipping all ministries with AI tools to enhance policy making and services,” earmarking Rs 25 million to “kick-start a Public Sector AI Programme.”
Financial incentives are also being provided for businesses: Start-Ups and MSMEs will be eligible to claim tax deduction on their investments in AI technologies up to an amount of Rs 150,000. Education is also a central focus, with the implementation of National AI Policy Guidelines in schools, the launch of an AI Proficiency Programme for educators and students, and the integration of AI as a mandatory module in all public higher education curricula.
II. Resource Repurposing to boost Productivity
Moving to the second key pillar of the new economic model, Prime Minister Ramgoolam addressed “Resource Repurposing,” defined as “more productive use of our labour, land and capital.” He asserted that “There is substantial scope for improving productivity to achieve higher levels of economic growth.” The initial focus in this area will be on policies to improve conditions in the labour market.
When Women Thrive, Our Entire Society Prospers
Recognising the pivotal role of women in the economy, the government is introducing several measures aimed at increasing their participation and fostering entrepreneurship. Firstly, the existing Workers’ Rights (Working from Home) Regulations 2020 will be superseded by the Workers’ Rights (Flexible Work Arrangement) to “make the job market more accessible to women.”
Secondly, significant enhancements are being made to support women in business. All DBM loans under the Women Entrepreneur Loan Scheme will now feature a grace period of 18 months for repayments, an increase from the previous 12 months. Additionally, the maximum credit limit on these loans is being raised from Rs 500,000 to Rs 1.2 million. Thirdly, women entrepreneurs will also have “access to a wide range of non-financial support including mentorship programmes, marketing assistance, and opportunities to build networks.”
To further boost women’s participation in the workforce, the government will “encourage both flexible and hybrid employment opportunities,” and will also “promote employment in the gig and digital platform economy.”
Supplementing our Labour Force with Foreign Talent
Addressing the “acute shortage of labour and skills which is severely impinging on investment and therefore economic growth,” the government is taking measures to expedite the recruitment of foreign labour and skills. This will be facilitated through “a fast-track and simplified rules based work permit system to be managed by the Economic Development Board (EDB).”
In a broader strategic move, the government will “come up with an innovative immigration policy.” Crucially, Prime Minister Ramgoolam clarified the intent behind these measures: “Let me be clear: we are seeking to supplement and not to replace local workers.”
The government also reaffirmed its commitment to investing in the future workforce, allocating Rs 550 million for training, reskilling and upskilling.
Acknowledging that “the current diaspora scheme is not performing as per expectations,” a new scheme is being implemented “to make it less restrictive for diasporas to return while creating opportunities for them to participate directly in our development.” Furthermore, a Diaspora and Global Advisory Council will be established under the Prime Minister’s Office, serving as a platform to “encourage greater participation from our diaspora and friends of Mauritius from overseas in our development.”
Land Repurposing: Reimagining Land Use for a Prosperous Future
The focus then shifted to optimising the productivity of land, another critical aspect of resource repurposing. The National Development Strategy for Land Use Planning will be comprehensively reviewed and aligned with the new development priorities.
A significant technological advancement is the implementation of the Digital Twin Mauritius Project, which will “help to optimise land use, reduce environmental impact, and support efficient planning for agriculture, development, and conservation.” The land database at Landscope will also be expanded to serve as a “digital marketplace for agricultural land, in particular, to foster greater food security.”
Public institutions holding significant land assets will “join efforts and come up with plans to maximise the use of their land assets.” A new Land Repurposing Scheme is being launched, which will “exempt owners of small agricultural plots from Land Conversion Permit provided their land are being used for alternative strategic investment projects as defined in the Scheme.”
Capital Productivity: Doing More with Less
The final aspect of resource repurposing involves enhancing capital productivity. The government will establish an Industrial Policy Coordination Committee to “oversee and direct the rollout of productivity-boosting strategies with particular emphasis on raising capital productivity in the manufacturing sector.”
Finally, measures are being put in place to expand certification, with the aim of boosting “consumer confidence, both locally and abroad, in Mauritian products.” This, the Prime Minister noted, “This should increase demand for such products and therefore investment.”
Advancing Sustainable and Inclusive Tourism for an Innovative Mauritius
The Prime Minister then addressed the crucial tourism sector, acknowledging that “Reimagining the future of tourism is a daunting but necessary exercise.” He stressed that the future of tourism would be built on “quality, value addition, sustainability, inclusion and resilience.” The government, in partnership with the private sector and other stakeholders, will work on a blueprint to “rethink the future of tourism in the light of both challenges and opportunities.” Dr. Ramgoolam noted that “The structural problems must be looked into,” pinpointing the two most critical current challenges as “its acute shortage of labour and its impact on the environment.”
The upcoming blueprint for tourism will consider the following key goals:
- “To focus on quality and value-added tourism so as to increase tourism spending as opposed to relying only on quantity and gross tourism receipts;”
- “To improve the branding, marketing and positioning of Mauritius;”
- “To embrace sustainability challenges of the industry so as to have an environment friendly tourism growth;”
- “To accelerate the role of technology, AI and innovation as a gamechanger in tourism demand and supply;”
- “To diversify our offers and our geographical footprint and to grow off peak arrivals and address seasonality;”
- “To ensure inclusion and growing opportunities for our compatriots;”
- “To address the critical issues of air connectivity and competitiveness;”
- “To propose solutions for the acute labour shortages in the industry; and”
- “To build a strategic partnership with the private sector and ensure better synergies and coordination between the public and private sectors.”
The Prime Minister stated that this blueprint “should propose development strategies, implementable objectives, key action plans and specific measures to face the new challenges and emerging opportunities,” emphasising that “The strategy must be flexible and adaptable to meet changing circumstances.”
To enhance the visitor experience upon arrival, Dr. Ramgoolam announced provisions for “the introduction of e-gates” at the airport. He summarised the overarching aim as “a new tourism strategy that is smarter, resilient, more sustainable and inclusive.” For the implementation of these initiatives, a sum of Rs 900 million has been allocated to the Ministry of Tourism.
Embracing Innovative Agriculture to Enhance Food Security
Shifting focus to the agricultural sector, the Prime Minister outlined the government’s commitment to “embrace innovative agriculture.” A new food resilience scheme is being established to incentivise controlled environment agriculture, which will include:
- Advanced techniques such as vertical farming;
- Indoor climate-controlled agriculture; and
- Modern production of seeds and fertilisers, among others.
To provide substantial support to the sector, Rs 800 million is being allocated “to support farmers, planters and breeders through various schemes and assistance programmes.” Furthermore, the government will provide “access to Artificial Intelligence for producers of food, especially the small and medium enterprises so that they can modernise their operations and produce safe food with a view to improving food sovereignty.”
Landscope will contribute to these efforts by developing food security projects through the leveraging of their land assets. Finally, in line with the government’s policy of widening opportunities and inclusiveness, Dr. Ramgoolam affirmed, “we will ensure that sugarcane planters earn a fair income.”
