Editorial by Kesaven Moothoosamy, Executive Director – Intercontinental Trust Ltd
The Honourable Dr. Navinchandra Ramgoolam, Prime Minister and Minister of Finance, presented his second National Budget on Friday 19 June 2026 into a markedly more demanding world than his first: a Middle East war had closed the Strait of Hormuz for more than three months and sent oil prices to record highs, straining the import bills of an economy that buys nearly all its fuel and import much of its food, and only a fragile, conditional United States-Iran framework, concluded in the days before the Budget, has since eased crude back towards US $80. Against that backdrop, this Budget is the second instalment of a reform programme begun a year earlier. If the 2025-2026 Budget was about halting fiscal deterioration and restoring national credibility, this one is about holding that line and converting early stability into durable growth – a Budget of continuity and fine tuning that, as the Prime Minister was candid to acknowledge, stays with the difficult choices rather than reaching for the easier ones, in the knowledge that an economy cannot be rebuilt in a single year.
Fiscal Consolidation, Not Austerity
The Budget is deliberately framed around fiscal consolidation rather than austerity, anchored on four guiding principles: responsibility, solidarity, economic efficiency and social justice. The Mauritian economy showed clear signs of improvement in 2025. Headline inflation fell to 3.7%, unemployment eased to 5.7%, gross official foreign currency reserves reached USD 10.3 billion, tourism earnings reached a record Rs 103 billion (USD 2.2 billion), and the economy grew by 3.2%. The financial services sector expanded by 5%. For the year ahead, the Prime Minister projects a budget deficit of 3.7%. Public-sector debt is expected to ease from 87.8% of GDP to 85.5% by June 2027, with a stated ambition to bring it below 80% by 2029. The Government also wants to lead by example through savings at the top. Members of Parliament will now be entitled to only one duty-free car per mandate, rather than one every three years. For the most senior officeholders – including the President, Vice-President, Prime Minister and Deputy Prime Minister – multiple non -contributory state pensions are being ended. The emoluments of the serving President and Vice-President, and the pensions of their predecessors, will also become fully taxable. The message is deliberate: it signals solidarity with the nation as the country holds its course on fiscal discipline.
Building a Future-Ready Economy
At the heart of the Budget is the ambition to build a future-ready economy. The growth strategy spans several pillars, beginning with leveraging AI and digitisation, which the Prime Minister places at the front of the agenda. Over the coming year, Government intends to enable or train 50,000 Mauritians in practical AI. Mauritius’s participation in Google’s subsea-cable initiative is also expected to strengthen the island’s digital connectivity with South Africa, India and Singapore. The remaining pillars complete an investment-led growth agenda:
- Start-ups and SMEs: a dedicated Start-Up Act and a ten-year income-tax holiday for qualifying start-ups.
- Economic space: a new high-tech Special Economic Zone and an ambition to double goods exports to USD 3 billion within five years.
- Existing sectors: modernisation of manufacturing, agriculture and tourism through new legislation and a sustainability-led tourism blueprint.
- Blue economy: investment in oceanic research, aquaculture and fisheries as a long-term growth frontier.
- Port development: an Island Container Terminal — a USD 1 billion project under a Government-to-Government arrangement with India — forming part of a wider masterplan to position Mauritius as a premier regional port.
Taken together, these pillars signal a clear intent: to move Mauritius from a consumption-driven model towards a production-led, export oriented and technology-enabled economy, while supporting sustainable tourism and strengthening the country’s visibility abroad. First impressions matter when entering a country, and with that in mind, a new e-Visa system and biometric e-gates at the airport should replace long immigration queues with a faster, scanner-based process.
Financial Services: Wealth Management and Extension of PER
For the financial services sector, the standout measure is the introduction of a Private Wealth Management Licence. The policy direction is clear: Mauritius wants to become a genuine home for wealth managers and family offices. The Partial Exemption Regime (PER) has also been widened, so that income derived by investment advisers and asset managers from dealing in loans, mortgage-backed assets and invoice financing can now benefit from the 80% partial exemption.
Equally significant are the proposed AI assistant at the Financial Services Commission and the AI powered tools on the national licensing platform. These should help deliver the faster turnaround times that the sector has long identified as a competitive necessity.
Safeguarding the Reputation: Compliance and the ESAAMLG Review
Beneath the growth narrative, the Budget also stays the course on the compliance agenda that underpins the entire Mauritius International Financial Centre as it prepares for the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG) mutual evaluation due in 2027.
The National Contributory Retirement Scheme
Another encouraging move is the rebuilding of the country’s pension architecture. The old National Pension Fund will be replaced by the National Pension and Provident Fund (NPPF), designed to support the payment of a decent retirement pension. The reintroduction of the NPPF carries an additional benefit that the financial sector would welcome. As members’ contributions build year after year, the NPPF could become a large and steadily growing pool of long-term Mauritian savings. If properly managed, these funds could flow back into the domestic economy and bolster liquidity on the Stock Exchange of Mauritius. A national pension fund of real scale could breathe new life into the capital market – supporting local listed companies, adding depth and liquidity, and providing the patient long-term capital needed to finance the country’s growth ambitions. In other words, a reform designed to protect pensioners could also help finance Mauritius’ future.
Concluding Remarks
Among the most consequential of these reforms is the rebuilding of the pension architecture, which confronts one of the State’s heaviest fiscal burdens directly. The basic retirement pension alone already absorbs nearly 25% of recurrent government spending, and an ageing population will only deepen that pressure in the years ahead – making the move to the NPPF as much a fiscal necessity as a social one. This is, above all, a Budget of continuity. It is one that consolidates the discipline of the past year and sets a clear course away from a consumption-driven economy towards one built on efficiency, production, exports and technology.
