By Shruti Menon Seeboo
Mauritius’ Finance Minister, Renganaden Padayachy, outlined the government’s vision for the upcoming fiscal year in his budget speech 2024-2025 on June 7, 2024. The speech emphasised a three-pronged approach – fostering economic dynamism, building a sustainable and inclusive society, and laying the groundwork for a resilient future.
Strong Economic Performance Paves the Way
The Minister highlighted Mauritius’ recent economic achievements. Household income has witnessed a remarkable increase of over 51.1% since 2017, coupled with a significant decline in the proportion of low-income households. The economy has been on a positive trajectory, with a robust GDP growth of 7% in 2023, following an exceptional 8-9% growth in the previous year. This momentum is further fueled by record-breaking foreign direct investment inflows reaching 37 billion rupees in 2023, exceeding the previous year’s record. Total investment surged by 30.9% in 2023, driven by increased private investment of 20.3% and public investment of 7.5%. Exports of goods and services increased by 30.8 billion rupees in 2023, reaching 347 billion rupees.
Social Progress Remains at the Forefront
The government’s commitment to social progress continues to be a priority. The unemployment rate has dipped to a 25-year low of 6.1%, down from 6.8% in 2022. Public sector debt has been successfully reduced by 7.2 percentage points, standing at 78% of GDP at the year’s end. Headline inflation has also shown a positive trend, decreasing from 10.8% in 2022 to 7% in 2023.
Fostering Economic Dynamism: A Cornerstone
The budget outlines a three-pillar strategy to propel economic growth further. The first pillar focuses on fostering economic dynamism by enhancing the ease of doing business to attract higher investment levels. It also aims to revitalize the labor market for increased productivity and competitiveness, alongside strengthening sectoral development for a more diversified economic structure. The government has set an ambitious target of achieving a MUR 1 trillion economy by 2030.
Key Measures to Enhance the Business Environment
The budget proposes a range of initiatives to improve the business environment. The Minister said, “In 2024, the objective is to reach an investment rate of 25 percent and FDI inflows of Rs 40 billion. First, portability of bank accounts will become a reality this year. Second, the information centre of the Companies and Business Registration Department will be operational on a 24/7 basis. Third, the number of licenses on the National E-licensing system will be increased from 26 to 35, starting with applications for clinical trials and fishing licenses. The EDB will work with various authorities to double the number of licenses delivered electronically within the next 3 years. Fourth, a Tax Arrears Settlement Scheme and a Contribution Arrears Settlement Scheme will be implemented up to June 2025, with a full waiver of penalties. Fifth, the FSC will streamline its licenses and permits to ensure they are granted within 10 working days, subject to all requirements being met. Sixth, the MACCS e-bunkering service will be operational on a 24/7 basis. Seventh, to ease the resolution of commercial disputes, the framework for alternative dispute resolution will be modernised. Eighth, Government Gazettes and legislations will be made available electronically by December 2024. Finally, a new Consulate in Réunion Island and an embassy in Japan will be opened to facilitate economic and trade relations.”
Boosting Labor Market Participation, building a Sustainable and Inclusive Future
The budget acknowledges the critical role of a skilled and vibrant workforce. Unemployment rate fell from 10.4 percent in the fourth quarter of 2020 to 6.1 percent in the fourth quarter of 2023. The lowest figure since 1996. Padayachy noted that due to the measures taken last year, women participation in the labour force has increased from 43 to 48 percent.
He said, “We will continue with the Prime à l’Emploi Scheme for unemployed women irrespective of age. Persons with disabilities will be further supported to integrate the workplace through an increase in the period of placement from 6 months to one year. Moreover, to increase the participation of women and disabled in the labour force, the Prime à l’Emploi will be made available to those willing to work on a part-time basis. We will contribute a sum of Rs 7,500 monthly to their salaries for 20 hours of work.”
For the economy to sustain higher levels of growth, Mauritius will continue to open up to foreign talents. Padayachy explained, “We need to make the process seamless for businesses. The threshold for Occupation Permits for professionals will be reduced from Rs 30,000 to Rs 22,500. Professionals with a minimum of 10 years’ experience will receive a temporary Occupation Permit of 3 months allowing them to work pending approval.”
On that note, to speed up recruitment of foreign workers:
(a) The Agricultural Workers (Job Contractors’) Regulations will be amended to provide more flexibility for recruitment in the agricultural sector;
(b)Quotas on foreign labour will be removed in the manufacturing, jewellery, freeport and ICT/BPO sectors;
(c) The maximum timeframe to deliver or renew a Work Permit will be set at 3 weeks; and
(d) The maximum renewal period for the manufacturing sector is being prolonged to 10 years.
Finally, non-citizens holding a Retired Residence Permit will be allowed to work without an additional Work or Occupation Permit.
Government Remains Steadfast in Supporting SMEs, Entrepreneurs, and Innovators
Next, the Government will continue to promote entrepreneurship for a diversified, resilient and competitive economy by: –
(a) Paying the full salary compensation of up to Rs 2,000 for SMEs up to December 2024;
(b) Providing a 10 percent rebate on DBM rental for SMEs in productive sectors for two years;
(c) Writing off loans which will become outstanding for more than 20 years as at June 2025 and loans of deceased micro entrepreneurs at DBM;
(d) Increasing the maximum yearly refund to Rs 500,000 under the Participation in International Fairs SME Refund Scheme; and
(e) Waiving 50 percent of rental arrears of over 5 years at DBM if settled by June 2025.
Financial support will also be provided for a period of 3 years for barcoding by SMEs, cooperatives and small farmers. To empower cooperatives to grow strongly: –
(a) A scheme will be introduced to provide 50 percent of the digitalisation cost up to a maximum of Rs 100,000;
(b) Cooperatives will benefit from DBM and IFCM schemes; and
(c) Cooperatives will receive interest on accounts held in public banks.
Manufacturing Muscles Through Challenges: Mauritius Records Double-Digit Growth Despite Headwinds
The manufacturing sector has been one of the most resilient sectors of the Mauritian economy, despite the pandemic, the war in Ukraine, increase in freight prices, and labour shortages.
The sector has recorded for the second consecutive year, a double-digit growth. Last year, it grew by 12.9 percent, after a growth of 10.4 percent in 2022. Exports of goods have exceeded Rs 100 billion in both 2022 and 2023.
The Minister said, “Our aim is to reach Rs 150 billion of exports of goods annually. We will provide a comprehensive set of measures to support our industrial base and boost our export industry.”
To boost the production and consumption of goods produced locally, Government will:-
(a) Introduce an “Industrie du Futur” programme for 100 SMEs over a period of 3 years to enable them to digitalise their operations; and
(b) Facilitate the development of a distribution network of 10 retail outlets and mini-stores across the island for Made in Moris products.
Furthermore, the investment tax credit of 15 percent over 3 years will henceforth include AI and patents. Padayachy highighted, “It is equally essential for us to engage in a sustainable
transformation of the export industry. We have to diversify our exports, improve our export
competitiveness, and explore new market segments and destinations. A critical aspect of our textile industry is its competitiveness. Government will provide a support on the wage bill of the textile industry by compensating the increase in minimum wage and the salary compensation of 2024.”
Government will introduce Export Manufacturing Regulations under the Economic Development Board Act, which will, inter-alia:-
(a) Define an export manufacturing enterprise as having a minimum of 30 percent of export turnover;
(b) Set-up an export promotion fund with a seed capital of Rs 50 million; and
(c) Provide for a public-private sector Export Development Council to devise export strategies including identification of products and markets.
The Africa Warehousing Scheme has successfully enabled an increase in exports ten-fold to reach Rs 475 million in less than 3 years. The minister notes, “We are thus prolonging the scheme up to 2027 and expanding it to Kenya. To continue facilitating exports, the Freight Rebate, the Trade Promotion and Marketing, and the Export Credit Guarantee Schemes are being renewed for an additional year. Moreover, first time exporters with a turnover of less than Rs 20 million will benefit from an increased refund of 40 percent for a period of one year under the Freight Rebate Scheme. The Trade Promotion and Marketing Scheme will now include New Zealand. To accelerate the decarbonisation of the industrial sector, the Carbon Neutral Loan Scheme will henceforth include the cost of batteries. Finally, we will extend the DBM Wage Support Scheme over a period of 7 years up to 2031.”
Financial Services Lead Growth Surge: Industry Poised for Expansion
The financial services sector is the first contributor with a growth of 4.4 percent in 2023. To maintain the momentum and further expand the sector: –
(a) Payment Intermediary Services (PIS) Licence Holders will now benefit from the Partial Exemption Regime;
(b) The Fund and Asset Manager Certificate will be reviewed to include at least 2 qualified officers;
(c) The Funds Regime will be reviewed to enhance the attractiveness of the jurisdiction;
(d) The blueprint for the financial services sector will be reviewed in light of new opportunities, challenges and threats;
(e) A blueprint for the development of Mauritius as a Fintech Hub in the region will be devised with the assistance of the United Nations Economic Commission for Africa; and
(f) The centralised e-KYC will be extended to the global business sector.
Furthermore, to consolidate the position of the Mauritius International Financial Centre, Government will: –
(a) Introduce a 10-year expert Occupation Permit to attract foreign talents in wealth management, family office, virtual assets and virtual tokens; and
(b) Explore the signature of a Strategic Partnership Agreement (SPA) with India and African countries;
Padayachy stated, “We will further engage into discussions with the Indian authorities for the development of our financial sector. Moreover, a new framework for the secondary trading of government bonds will be established on the Stock Exchange of Mauritius. To encourage the adoption of digital payments in Mauritius, the Bank of Mauritius will remove the fees associated with the use of the MAUCAS platform.”
Tourism Surpasses Expectations: 94% Recovery, Higher Earnings Reported
According to the United Nations, the tourism industry in Mauritius has recovered at 94 percent of pre-pandemic levels compared to the global average of 88 percent. This shows that the measures taken by Government since the pandemic have borne its fruits. Indeed, tourism earnings in 2023 were 36 percent higher than in 2019, reaching Rs 86 billion. The country is attracting higher spenders and longer stay tourists. The Minister said, “Our objective for 2024 is to reach 1.4 million tourist arrivals and Rs 100 billion of tourism receipts.”
To support the promotion and marketing of the Mauritius destination: –
(a) The Promotion and Destination Marketing budget of MTPA is being increased by 20 percent to reach Rs 600 million;
(b) The grant provided to SMEs for projects undertaken by small hotels associations is being increased to Rs 800,000; and
(c) The amount under the Participation in International Fairs SME Refund Scheme is being increased to Rs 275,000.
To facilitate the utilisation of pleasure crafts by tourists and the public, jetties will be constructed at Trou d’Eau Douce and Black River. The Minister added, “With a view to enhancing travelers’ experience, Government will fast track the implementation of the e-Gate and the e-Passport. We will continue to foster sustainable tourism development to make Mauritius a Green-Certified Destination by 2030. Last year, Bel Ombre Village achieved a significant milestone by earning a place in the esteemed Green Destination Top 100 Stories list. This year, the Tourism Authority will engage in the accredited certification process of Bel Ombre on the Global Sustainable Tourism Council to be completed by December 2025. Furthermore, the newly refurbished Cotton Bay Hotel in Rodrigues will open next month.”
Government Invests in ICT/BPO Growth
The ICT/BPO sector is a dynamic and resilient industry which catalyse innovation and growth in the economy. The sector has grown consistently at an average annual rate of over 4 percent. Last year, it has registered a growth of 4.5 percent. To accelerate the development of this economic pillar, Government will introduce: –
(a) A refund of 25 percent under the ‘Small Business Digital Champion Scheme’ on investment of a minimum of Rs 500,000 in new technologies and equipment;
(b) A virtual platform to showcase Mauritian IT services; and
(c) An enhanced margin of preference of 50 percent for local service companies.
Moreover, a 5-year blueprint for the Digital Industry will be devised.
The development and spread of Artificial Intelligence across the world offer vast opportunities for Mauritius. the Minister said, “It will enable us to improve our global competitiveness and productivity. We will launch a national ‘A.I-for-ALL’ campaign to encourage the use of AI tools in schools, universities, businesses and for the public at large. Moreover, training courses involving AI will be eligible to an increased refund of 90 percent. Finally, to accelerate the transition towards renewable energy, the CEB will launch an ICT Sector Carbon Neutral Scheme with excess electricity exported at Rs 4.20 per kWh.”
The budget outturn and economic outlook
The total expenditure will amount to Rs 237.3 billion and total revenue is estimated at Rs 210.5 billion. The overall budget deficit as at end of June 2025 is expected to further decrease to 3.4 percent, from 3.9 percent in June 2024 and 4.8 percent in June 2023.
Government debt will decline from 69.8 percent of GDP in June 2023 to 65.4 percent of GDP in June of this year and further to 63 percent of GDP by end June 2025. Public sector debt is expected to decline from 80.2 percent of GDP in June 2023 to 74.5 percent of GDP by June 2024 and further to 71.1 percent of GDP by June 2025.
Interest to revenue ratio will fall below 10 percent, to 9,84 percent. Padayachy stated, “The GDP growth will be of 6.5 percent this year, and our measures will enable us to sustain an average growth rate of over 5 percent in the medium term. This year, we have achieved our objective to bring down public sector debt to less than the statutory level of 80 percent of GDP. By June 2025, we will be largely below that statutory level and closer to our medium-term goal of 60 percent of GDP.”
In his concluding note, the Finance Minister noted that this Budget is a covenant of trust with the population. “It is about investing in a better tomorrow for each and everyone. With the measures unveiled, it is about investing in our tomorrow. 320,000 employees and self-employed will receive higher monthly CSG Income Allowances. 310,000 of our elderly, disabled and widows will have higher pension benefits today. 110,000 individuals will have a Revenu Minimum Garanti of Rs 20,000 monthly.100,000 youth aged 18 to 25 will benefit from a free monthly mobile data package. 80,000 families having children aged 3 to 10 years will benefit from a School Allowance of Rs 2,000 monthly. 50,000 households will have a minimum of Rs 20,000 monthly thanks to the Equal Chance Allowance of Rs 2,000 monthly. 36,000 families with children of up to 3 years will receive a higher Child Allowance of Rs 2,500 monthly. 20,000 SRM beneficiaries will benefit from a monthly minimum income support of Rs 1,500. 12,000 mothers will receive a monthly maternity allowance of Rs 2,000. 5,000 disabled children will receive an additional monthly allowance of Rs 3,000.”
He explained that through this Budget, the Government is creating more opportunities for those who have been deprived of it. He said, “As Jean Tirole puts it “l’économie est au service du bien commun”. We care for our people.”
