Mauritius: Selected Issues

International Monetary Fund

No 2022/224, IMF Staff Country Reports from International Monetary Fund

Abstract: This Selected Issues paper reviews the fiscal rules framework in Mauritius with a focus on the calibration of the debt and budget balance ceilings. The paper concludes that a new medium-term debt anchor could be up to 80 percent of gross domestic product (GDP) compared to the anchor of 60 percent of GDP repealed during the pandemic. Introducing a short-term operational rule based on the overall fiscal deficit ceiling of around 3 percent of GDP would help reduce debt from 99.2 percent of GDP in FY2020/21 to close to the anchor by FY2026/27. The revised debt anchor would better reflect Mauritius’ debt carrying capacity while supporting growth. However, the current level of debt stands well above the proposed anchor. A transition period could be considered during which the deficit would gradually decline from 7.6 percent of GDP in FY2021/22 to 3 percent of GDP in FY2026/27 and beyond. Debt sustainability risks should continue to be assessed on the IMF’s Debt Sustainability Assessment tools regardless of whether the debt anchor has been met.

Keywords: B. financing climate change; monetary policy transmission; climate change expenditure; debt anchor; debt rule; financing gap; Climate finance; Climate change; Debt limits; Central bank policy rate; Global (search for similar items in EconPapers)
Pages: 34
Date: 2022-07-15
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