“How to Judge the budget: Father Xmas or investing in the future?”

By Ali Mansoor

Former Financial Secretary of the Government of Mauritius | Former Lead Economist at the World Bank | Former Deputy Director at the International Monetary Fund (IMF).

As Mauritius transitions from upper-middle to high-income status, the budget must be seen not as a giveaway list, but as a strategic tool. A good budget doesn’t pander to sectors or special interests – it strengthens the foundation for long-term, inclusive growth.

This means investing in people, productivity, and resilience while staying fiscally responsible. It’s not about whether we can spend, but how we use our fiscal space to secure the future.

We are at a defining moment. Global uncertainty and technological disruption demand bold reforms. Mauritius needs a budget that drives 7% annual growth – the level needed to double incomes in a decade.

The next budget should be judged not by giveaways, but by its power to deliver lasting progress.

But before all else, the most urgent challenge this budget must address is the looming disruption from artificial intelligence (AI). Within five years, thousands of Mauritian jobs in key export service sectors could be lost to automation. These include call centers, legal and financial process outsourcing, payroll processing, basic accounting, transcription, and data entry. These services – many of which underpin Mauritius’s offshore and ICT sectors – are directly threatened by generative AI tools like ChatGPT, autonomous customer agents, and smart accounting and legal platforms.

Based on international research by the OECD, McKinsey, and PwC, 20% to 40% of jobs in these functions are automatable. Applying a conservative 25% risk factor to an estimated 60,000 jobs in Mauritius’s service export industries suggests the potential loss of 15,000 jobs within the next five years.

However, Mauritius can turn this challenge into opportunity. It can position itself as a regional hub for AI regulation, responsible AI deployment, and sector-specific AI services. We must invest in AI talent, create regulatory sandboxes, and fund transition training and digital infrastructure to ensure our workforce is not left behind.

This article therefore highlights a new reform priority: ‘Harnessing the AI Revolution’ in addition to the other reforms needed to take us to sustained 7 percent growth. This area includes reskilling programs, fiscal incentives for ethical AI use, cloud infrastructure investment, and creating an innovation ecosystem that integrates AI into the finance, education, and health sectors. If done right, these reforms could contribute 0.6% to 1.1% to annual GDP growth over the next decade.

The most urgent challenge this budget must address is the looming disruption from artificial intelligence (AI). 

 

This article outlines a blueprint to move Mauritius forward. It focuses on practical, outcome-driven reforms that leverage our geography, talent, and institutions. These proposals are not the final word – they can and should be improved through national dialogue – but they offer a starting point and a benchmark by which to evaluate the coming budget.

Within five years, thousands of Mauritian jobs in key export service sectors could be lost to automation.

As shown in Table 1, this plan could lift annual growth by 4.0% (under slow implementation) and 8.6% (under full implementation) over the next decade. The following sections detail each reform area, its rationale, implementation strategy, responsible ministries, and estimated contribution to growth. The time for incremental fixes is over. The next budget must be judged not by what it gives away, but by what it builds.

Table 1. Impact of reforms on annual GDP growth over the next decade

1. Harnessing the AI Revolution (0.6 -1.1%)

Mauritius must respond decisively to the AI revolution – not only to protect its economy from disruption, but to claim a competitive position in the global digital economy. The following actions outline a coherent and implementable strategy to mitigate the risks and seize the opportunities that artificial intelligence presents over the next five years.

1.1 Protecting Jobs through Transition Support

• – Establish a National AI Transition Fund to finance large-scale re-skilling and upskilling programs for affected workers in BPO, finance, law, and administration.
• – Partner with accredited global institutions to deliver certified online and hybrid AI-adjacent training in data analysis, customer AI support, prompt engineering, and digital workflows.
• – Provide wage top-ups and social protection for displaced workers undergoing training, similar to the approach used in Singapore and Finland.

1.2 Building a Future-Ready Workforce

• – Revamp the school curriculum to include coding, data literacy, and critical thinking starting from the primary level.
• – Expand vocational and tertiary offerings in AI, machine learning, cloud computing, cybersecurity, and ethical AI.
• – Create scholarship schemes for AI-related postgraduate study, especially in institutions with strong industry connections.

1.3 Creating an AI Innovation Ecosystem

• – Establish an AI Regulatory Sandbox to allow safe testing of AI applications in education, healthcare, and fintech.
• – Offer tax incentives for companies investing in AI R&D and hiring Mauritian AI talent.
• – Create a National AI Research Centre to coordinate public-private-academic partnerships in applied AI projects.

1.4 Attracting Investment in Digital Infrastructure

• – Expand national cloud infrastructure through a PPP model to support AI applications and startups.
• – Ensure affordable and high-speed broadband access nationwide, especially in rural and coastal areas.
• – Introduce sovereign digital bonds to finance AI and digital infrastructure initiatives.

1.5 Positioning Mauritius as a Regional AI Hub

– Host an annual Indian Ocean AI Summit to showcase regional innovation and attract international attention.

2. Diversify the Economic Base (0.6 – 1.2%)

2.1 Position Mauritius as a Business Services Hub for Africa

Mauritius must proactively establish itself as a launchpad for African business services. Through the Ministry of Financial Services and Economic Planning, Mauritius must establish itself as a regional hub by developing African-focused Special Economic Zones, modelled on Shenzhen’s cluster-based innovation. Success requires partnership with the EU and International Financial Institutions funding. These zones would house financial services, legal process outsourcing, and Environmental, Social, and Governance (ESG) advisory firms, and develop into major modern cities that link the African hinterland to the global economy.

In parallel, the Ministry of Tertiary Education, Science and Research will attract world-class universities by offering land grants, co-branded degrees, and dual-accreditation incentives. Educational clusters will provide the talent Mauritius needs while boosting exports of educational services.

2.2 Promote Medical and Health Tourism

The Ministry of Health and Wellness will fast-track international accreditation for hospitals and create a “Mauritius Health Visa” for long-term stays. Hospitals will be incentivized to build joint ventures with Indian, French, and South African specialists to provide high-quality, but affordable care.

2.3 Provide Housing for Global Talent

The Ministry of Housing and Lands will implement mixed-income housing schemes tailored to foreign students, skilled workers, and digital nomads – positioning Mauritius as a globally competitive “Live and Work” destination. In the process, the Ministry will propose a scheme that makes it attractive for owners of unused property to work with Government to offer their property for rent.

3. Justice and Labour Reform (0.2 – 0.5%)

3.1 Modernize Judicial Efficiency

Under the Attorney General and Chief Justice, the judiciary will undergo digital transformation with AI-powered case allocation and e-filing systems. Fast-track commercial courts will resolve business disputes within 90 days, using the model adopted by Dubai.

3.2 Create a Dynamic Labour Market

The Ministry of Labour and Industrial Relations will legislate a modern Employment Code aligned with ILO conventions. This will introduce contract flexibility while embedding core worker protections and upskilling obligations for employers. The key reform will be to protect workers and not jobs by Government guaranteeing that any worker losing their job due to economic restructuring will be provided on the job retraining at Government expense. Moreover, any gap in wages and benefits between the lost job and the new one will be covered by Government.

4. Green and Blue Economy (0.3 – 0.7%)

4.1 Scale Renewable Energy and Aquaculture

The Ministry of Energy and Public Utilities will de-risk private investment in solar, wind, and offshore aquaculture through feed-in tariffs, green bonds, and sovereign guarantees. Government will cover the full capital cost of any household or SME investment in solar energy and the repayment will be on a long-term basis on the electricity bill to ensure that the bill is no more than 90 percent of what it was without the solar power. The Ministry of Environment and Climate Change will establish a Climate Finance Taskforce to access Global Climate and Adaptation Funds, aiming to mobilize MUR 10 billion by 2027. The funds will be allocated based on project proposals from households, Civil Society Organizations and Businesses that have viable projects that build sustainability and resilience. Part of the funding will be used to finance feasibility studies that turn project ideas into projects that can be financed.

5. Modernize Agriculture (0.2 – 0.4%)

5.1 Transition to High-Value, Sustainable Farming

The Ministry of Agro-Industry will shift subsidies away from sugar towards high-tech agriculture – hydroponics, vertical farms, and organic exports. It will support agritech incubators and provide matching grants for climate-smart farming inputs. It will issue Green bonds that can finance feasibility studies for project ideas and provide the financing for viable projects.

6. Strengthen Social Safety Nets (0.1 -0.3%)

6.1 Implement Conditional and Digital Welfare

The Ministry of Social Integration will consolidate fragmented welfare programs into a unified digital conditional cash transfer platform, linked to education, healthcare, and employment metrics. This ensures efficiency, dignity, and fiscal sustainability, and will allow greater poverty reduction and assistance to those most in need with the same budget expenditure. A minimum threshold income per family will be established, and all those below this level will get the necessary transfers to reach the threshold.

6.2 Introduce a National Service and Skills Corps

A National Service Program will be launched targeting 18-24-year-olds, combining civic duty with skill acquisition, addiction recovery, and rehabilitation. The Ministry of Youth and Sports and Social Integration will jointly implement this initiative with local NGOs and grass roots Civil Society Organizations.

6.3 Ensure Affordable Basic Services

Utility subsidies will be refined to support only vulnerable households, identified via the social registry. The Ministry of Health will introduce AI triage and e-health records to reduce wait times and improve service targeting. The Ministry of Education will deploy AI-powered adaptive learning to support remedial education and shift pedagogy from rote to skill-based learning. During the long school vacations, the best teachers in the country will be matched with the students most needing remedial attention to enable them to catch up by the start of the next school year. Teachers will be given a choice of teaching in schools or providing private lessons. To compensate the teachers who are currently doing both, Government will subsidize the earnings of those who chose to teach in school to make sure their income remains the same for a transition period of 5 years. The income reported to the MRA will be used for this purpose. This will ensure that there is no incentive for teachers to use lessons rather than class to teach. It will also ensure that education is really free.

7. Deepen Fiscal and Financial Reform (0.3 -0.6%)

7.1 Ensure Debt Sustainability and Smart Investment

The Ministry of Finance will restructure high-cost debt through buybacks and swaps, targeting a 2-percentage point reduction in interest burden. The Ministry of Infrastructure will prioritize projects with positive economic multipliers and implement a PPP framework with risk-sharing provisions and dispute resolution mechanisms.

7.2 Reform Taxation for Equity and Growth

A phased introduction of a wealth tax on the top 100 property owners and windfall gains from land conversion will improve tax fairness. Simultaneously, income tax will be simplified into a single transparent bracket to support FDI and compliance. State land will be auctioned with a proviso that large landowners and foreigners are not eligible to participate.

7.3 Strengthen Financial Oversight

The Ministry of Financial Services will upgrade AML/CFT systems using AI surveillance, and broaden the financial sector to include green finance, digital assets under regulatory sandboxes, and diaspora bonds. The Ministry will ensure that the FSC adopts time bound standards based on best international practice to process requests. It will review AML/CFT regulations to focus on where real risks lie and reduce the burden of compliance on individuals and SMEs where there is little risk.

8. Boost Export Competitiveness and Regional Integration (0.4 -0.8%)

8.1 Negotiate Smart Trade Deals

The Ministry of Foreign Affairs and Trade will push for reciprocal liberalization under AfCFTA and COMESA, particularly in digital and professional services. Mauritius will also lead in establishing a network of African Trade Hubs supported by Export Credit Agencies.

8.2 Build Export Infrastructure

Modernization of Port Louis harbour and expansion of air cargo facilities will proceed under a concessional PPP model. The aim is to slash logistics costs by 20% by 2028 and to make Port Louis the premier port in the Western Indian Ocean.

8.3 Offer Export Incentives

The Ministry of Finance will expand export credit insurance, support ISO/SA8000 certifications, and introduce a “Compliance for Export” program targeting SMEs.

9. Support SMEs and Startups (0.3 – 0.6%)

9.1 Simplify Regulation and Access to Finance

A national SME One-Stop-Shop Portal will digitize business registration, licensing, tax compliance, and support programs. The Ministry of Industry will unify fragmented financing schemes and introduce a partial Credit Guarantee Fund to unlock private lending. The Ministry will also offer SMEs support at Government expense to develop business plans based on export expansion. The Development Bank of Mauritius will provide venture capital to firms with credible export expansion plans and link continued support to meeting export targets.  The share of profits going to Government over a 10-year period will be set to make the scheme self-financing.9.2 Improve Market Access
The government will subsidize SME participation in international expos and digital marketplaces. Priority will be given to women-led enterprises, tech startups, and green businesses.

10. Build Human Capital for the Future (0.5 – 1.0%)

10.1 Revamp Education and Scholarships

School curricula will be overhauled to embed coding, AI, data literacy, climate science, and ethics. Scholarships will be refocused on strategic postgraduate areas not available locally to support a Mauritius Knowledge Hub.

10.2 Promote Vocational Training and Sandwich Courses

A public-private Apprenticeship Agency will coordinate sandwich programs combining academic learning and paid internships. Partnerships with international institutions can be facilitated with ILO support to ensure global relevance.

10.3 Invest in Innovation and Research

Dedicated innovation hubs will be co-located with universities and SEZs. Research grants will target AI, fintech, green tech, medical devices, and agritech – linked to commercialization metrics.

11. Enhance Climate Resilience (0.2 -0.5%)

11.1 Build Resilient Infrastructure

The Ministry of Infrastructure will co-design coastal protection with local communities. Smart water grids and treated wastewater reuse (as in Singapore’s NEWater model) will be expanded for agriculture and hospitality use.

11.2 Offer Green Incentives

Concessional finance will be provided for solar, EVs, and building retrofits. A Green Transition Fund will be seeded with both domestic resources and concessional climate finance.

11.3 Embed Sustainability in Local Governance

The Ministry of Local Government will run Green Village competitions and support local composting, recycling, and climate awareness campaigns. Local Governments at village council and town council level will be given the authority to raise their own property taxes within bands set by the national Government. This will enable councils that desire to do so to expand their revenue base to provide a wider range and higher quality service.

12. Transform Tourism (0.2% -0.5%)

12.1 Diversify Tourism Offerings

Beyond beach tourism, the Ministry of Tourism will prioritize wellness, ecotourism, digital nomads, silver haired travellers and adventure travel. Public-private packages will integrate medical, hiking, diving, and cultural circuits. Specific actions as proposed in the World Bank blueprint on Tourism will be implemented. An app will be developed for tourists to shop for all service providers registered with the Tourism Authority.

12.2 Expand Digital Marketing and Local Benefits

A new digital campaign will target Gen Z and millennial travellers via social media influencers. Tourism revenues will be shared with communities through destination-specific levies.

12.3 Promote Mauritian Heritage

Walking tours and digital trails will showcase the multicultural history of Mauritius, curated jointly by the Ministry of Tourism and Arts and Culture.

13. Improve Public Sector Performance (0.3 – 0.5%)

13.1 Accelerate E-Governance

All ministries will digitize frontline services through a unified government portal. Blockchain will be piloted for land records and procurement.

13.2 Build Civil Service Capacity

The Civil Service College will retrain civil servants in digital skills, service excellence, and crisis response.

13.3 Embed Performance Management

Each ministry will sign an annual performance contract with KPIs linked to delivery, efficiency, and innovation. A Delivery Unit under the Prime Minister will track reforms.

13.4 Prepare for Future Shocks

A permanent Crisis Preparedness Unit will be established with scenario planning teams for climate, health, and economic crises.

Conclusion

Some may argue Mauritius lacks the fiscal space or capacity for such bold reforms. But this phased plan prioritizes catalytic interventions that unlock private and concessional finance. Experience shows early wins and national renewal can overcome resistance.

By focusing on inclusive growth, competitiveness, and resilience, this blueprint offers a path to a high-income future. The next budget should be judged not by giveaways, but by its power to deliver lasting progress. Specifically, it can be assessed against the benchmark in this article. Which of the proposed reforms is it supporting, which reforms are better and which ones are missing? Finally, what do the reforms the budget proposes do to boost economic growth, and by how much?

Footnotes

1. International Monetary Fund, World Economic Outlook, April 2025. https://www.imf.org/en/Publications/WEO/Issues/2025/04/22/world-economic-outlook-april-2025.
2. World Bank, Doing Business 2020. https://documents1.worldbank.org/curated/en/688761571934946384/pdf/Doing-Business-2020-Comparing-Business-Regulation-in-190-Economies.pdf.
3. Dahhou et al., ‘Renewable Energy, Green Finance, and Economic Growth in Morocco,’ International Journal of Energy Economics and Policy 15, no. 3 (2025). https://www.econjournals.com/index.php/ijeep/article/download/18522/8733/43659.
4. FAO, ‘The Role of Technology – World Agriculture: Towards 2015/2030.’ https://www.fao.org/4/y3557e/y3557e09.htm.
5. Mendes et al., ‘The Macroeconomic Effects of Cash Transfers: Evidence from Brazil,’ FRB San Francisco Working Paper 2024-02. https://www.frbsf.org/wp-content/uploads/wp2024-02.pdf.
6. IMF, ‘Quantifying the Revenue Yields from Tax Administration Reforms,’ WP/23/231. https://www.imf.org/-/media/Files/Publications/WP/2023/English/wpiea2023231-print-pdf.ashx.
7. UNCTAD, ‘Africa’s Free Trade Area Can Deliver Inclusive Economic Growth.’ https://unctad.org/es/isar/news/africas-free-trade-area-can-deliver-considerable-inclusive-economic-growth-continent.
8. African Development Bank, African Economic Outlook 2024. https://www.afdb.org/sites/default/files/documents/publications/african_economic_outlook_aeo_2024_0.pdf.
9. OECD, OECD-FAO Agricultural Outlook 2021-2030. https://www.oecd.org/en/publications/2021/07/oecd-fao-agricultural-outlook-2021-2030_31d65f37.html.
10. UNEP, ‘Tackling Climate Crisis Will Increase Economic Growth.’ https://www.theguardian.com/environment/2025/mar/26/tackling-climate-crisis-will-increase-economic-growth-oecd-research-finds.
11. UNCTAD, Economic Development in Africa Report 2023. https://unctad.org/system/files/official-document/aldcafrica2023_en.pdf.
12. World Bank, ‘Improving the Efficiency of Courts Can Boost a Country’s Economic Development.’ https://blogs.worldbank.org/en/governance/improving-the-efficiency-of-courts-can-boost-a-country-s-economi.

Annex: Methodology used to generate the growth estimates

Benchmarking Against Other Countries:
For each reform area, I looked at case studies and empirical research from comparable economies (e.g., Singapore, Rwanda, Ireland, UAE) that implemented similar interventions. These case studies often report GDP impacts or sectoral growth boosts following specific reforms.