By Vishal Bhidu
Washington, DC – June 18, 2025: As part of the Article IV Consultation for Mauritius, the Executive Board of the International Monetary Fund (IMF) has completed its country mission, where it remarked that the economy remains resilient with a favorable growth outlook. The real GDP growth stood at 4.7 percent in 2024 as compared to 5 percent in 2023, attributed to services, construction, and tourism sectors, among others. Gross foreign reserves shot up to US$8.5 billion by end-2024, covering almost 12 months of imports. The Mission has advocated the need to address fiscal and structural challenges, in particular high public debt, significant public investment needs, low productivity, and an ageing society.
The IMF has observed that the growth outlook remains favorable with real GDP growth poised to soften at 3.4 percent, on the back of a weakening external demand, easing of tourism activity and drought, while inflation projection will average 3.6 percent, which remains within the Bank of Mauritius target over the medium term. On the other hand, the headline inflation spanning across a 12-month average declined to 2.5 percent in March 2025 in relation to 7 percent in 2023, supported by the easing of international food and energy prices, and the lowering of fuel excise duties.
The external current account deficit’s forecast will be reduced to 4.7 percent of GDP in 2025 on account of lower oil prices, with exports touted to witness modest growth amid a slowdown in global demand, and is anticipated to increase in 2026 due to subdued exports while seeing a gradual decline thereafter. While the primary fiscal deficit, excluding grants for FY24/25, is expected to worsen by 3.4 ppt of GDP about FY23/24, to account for 6.5 percent of GDP, attributed to higher compensation of employees, social benefits, and grants and transfers.
Risks to the outlook are on the downside, arising from high global uncertainty, highlighting the importance of addressing fiscal and external imbalances to increase the resilience of the economy. It advocates pension reforms as inimical to supporting fiscal sustainability in the context of an ageing population, while bolstering public financial management, including streamlining ESFs, will support fiscal consolidation, transparency, and good governance.
The Bank of Mauritius (BoM), the report observed, should gradually phase out the ownership of MIC while buttressing the implementation of the monetary policy framework by resuming the uncapped issuance of 7-Day BOM bills (at the key policy rate). The IMF Article IV Mission reads: “The Ministry of Finance and BOM are encouraged to strengthen the commitment on their mutual agreement for BOM independence where Mauritius should continue to rely on exchange rate flexibility and FX purchases when opportunities arise, and in line with the monetary policy framework, to help further build foreign reserves buffers to ensure ability to respond to large external shocks.”
The Mission remarked that the country’s external position at the end of 2024 is assessed as weaker than the level implied by fundamentals and desirable policies, advocating structural reforms to foster external competitiveness in a bid to slash external imbalances. It also calls for steady progress to strengthen the AML/CFT framework to be sustained, encompassing provisions pertaining to non-resident and cross-border activity, while a need for financial sector risks to be closely monitored, including the real estate sector.
The mission was led by Mariana Colacelli who commented: “The implementation of the monetary policy framework should be strengthened. Conserving foreign reserves will enhance the resilience of the economy in the face of external shocks. We support the authorities’ plans to gradually phase out the BOM’s ownership of the Mauritius Investment Corporation.”
“Continued monitoring of macro-financial risks, including those associated with global business companies operating in the Mauritius International Financial Center and the real estate sector, will maintain financial stability,” she underlined.
