“Mauritius at a Crossroads: Growth, Inclusion, and Vision for 2026”

By Ali Mansoor | Former Financial Secretary of the Government of Mauritius, Former Lead Economist at the World Bank and Assistant Director at the International Monetary Fund (IMF)

• Ambitions must be backed by clear mechanisms for implementation, robust indicators, and accountable public-sector ownership.
• Stimulating export-driven growth is non-negotiable.

As Mauritius enters 2026, the nation’s economic trajectory reflects both progress and urgent unfinished business. The post-COVID rebound has given way to a transition phase — one in which the choices we make today will shape our prosperity for years to come.

At the end of 2025, our economy maintained positive growth, with international institutions estimating real GDP expansion of around 3.2 %, a deceleration compared with the stronger performance of 2023–2024. Inflation stabilized at a lower-than-expected level, signalling relative success in containing price pressures. Yet these figures mask deeper pressures on living standards and emerging structural challenges.

While stability is welcome, it must not be mistaken for momentum. The lessons of the past year are clear: consolidating post-pandemic gains must go hand-in-hand with restoring fiscal space and stimulating inclusive economic growth, not merely tightening belts. Alarmingly, the latest budget favoured austerity over growth, leading to unintended consequences. Wage adjustments discussed in tripartite consultations effectively offset inflation for only the lowest-paid 20 % of workers. For the remaining 80 % of the active workforce — especially the middle class — real incomes are set to decline in 2026 as prices rise faster than wages. This outcome is neither equitable nor sustainable.

A growth-first orientation across fiscal policy is urgently needed. The 2026 Budget must prioritise restoring purchasing power and reigniting economic activity, focusing public resources on high-impact, growth-oriented investments rather than across-the-board cuts accompanied by increased taxation.

Vision 2050 — More Than a Symbol

The launch of the Vision 2050 National Consultations in December 2025 was a bold and necessary initiative. Beyond ceremony, these consultations hold the potential to reshape decision-making — but only if they are genuinely integrated into policy processes. Structured, participatory engagement can strengthen public policy by drawing on the insights of the private sector, civil society, and younger generations. Yet ambitions must be backed by clear mechanisms for implementation, robust indicators, and accountable public-sector ownership.

The consultations should prioritise practical actions that drive export-led growth, revitalise the social protection system within existing budgets, and address the demographic shifts ahead. With an ageing population, social support must be more efficient and better targeted.

At the heart of these discussions must be a sober reckoning with artificial intelligence (AI). AI’s rapid adoption globally threatens jobs in traditional services — sectors where Mauritius has historically been competitive. We cannot simply identify these risks; we must proactively invest in training, innovation, and new employment opportunities tied to AI and advanced technologies.

Foundations of a Forward-Looking Growth Strategy

For Mauritius to prosper sustainably, the following priorities should emerge from Vision 2050 and guide policymaking in 2026 and beyond:

1. Focused Growth Agenda

Stimulating export-driven growth is non-negotiable. We must broaden our economic base beyond tourism to include digital services, financial intermediation, logistics, the green and blue economy, and other competitive niches. Export diversification will enhance resilience to external shocks and reduce our dependence on any single market or industry.

2. Social Protection Reform

Mauritius deserves a social safety net that protects all citizens effectively — not just the most vulnerable. With the same resources, a reformed social protection system can deliver better outcomes if support mechanisms are modernised and calibrated to 21st-century realities. It is particularly urgent to address the unfairness that the middle class faces: under the current system the only way for the middle class to retire without financial pressure is by having an employer with a generous private pension or by sacrificing to save a lot during working years. This is unfair and unsustainable with an ageing population.

3. Preparing for an Ageing Population

With life expectancy rising, adapting our social services and labour policies for an ageing workforce is imperative. Encouraging lifelong learning and employment opportunities for older workers will turn longevity into an asset rather than a liability.

4. AI and the Future of Work

AI will reshape global labour markets. Our strategy cannot be defensive alone; Mauritius must embrace AI as a driver of productivity, incentivise its adoption across sectors, and build capacity so that AI creates new opportunities instead of eliminating existing ones.

5. Currency and Foreign Exchange Innovation

In a context of limited foreign exchange, innovative policies — such as enabling companies to pay dividends in foreign currency — can help retain and invest hard-earned earnings within the economy and alleviate pressures on the exchange market. However, the cause of the shortage must also be urgently tackled: exports need to grow faster than imports.

6. Transparent and Inclusive Implementation

Policies are only as effective as their execution. Clear indicators, transparent reporting, and accountability mechanisms are essential to ensure reforms translate into real-world outcomes.

“Mauritius’ public debt ratio — approaching 90 % of GDP in 2025 — rightly calls for fiscal prudence. But restraint must not become a pretext for underinvestment.”

Public Finances and the Growth Imperative

Mauritius’ public debt ratio — approaching 90 % of GDP in 2025 — rightly calls for fiscal prudence. But restraint must not become a pretext for underinvestment. There is room to manoeuvre if fiscal policy shifts away from austerity towards spending efficiency and growth stimulus.

The next Budget should:

1. Target projects with high economic returns;
2. Implement structural reforms that broaden revenue without increasing tax rates; and
3. Enhance spending effectiveness and efficiency.

Comparative experience offers perspective. Countries such as Spain, Ireland, Singapore, South Korea, and Taiwan have sustained growth rates above 6 % long after reaching high-income status. With the right mix of policies, there is no reason Mauritius cannot aim for a similar trajectory.

At a 3.4 % growth rate, stabilising debt at 89 % of GDP would demand a decade of austerity — reducing annual borrowing by Rs 2-3 billion each year. At a 3 % growth pace, stabilisation would require even deeper cuts of Rs 4 billion annually. In contrast, a 6 % growth path would lower the debt ratio to around 77 % of GDP over time while enabling annual borrowing of Rs 52 billion to fund pensions, social programmes, and strategic investments without raising taxes.

Balancing Market Confidence and Strategic Investment

Agencies like Moody’s highlight the need for credible fiscal management — and rightly so. But relying exclusively on rating agency assessments as justification for political inaction limits our strategic options. We must strike a balance that preserves market confidence without sacrificing the structural reforms that underpin robust, inclusive growth. Achieving sustained 6 % growth should be the North Star of our economic strategy.

Sectoral Drivers of Growth in 2026

The Bank of Mauritius’ projection of near-3 % growth in 2026 underscores both potential and caution. Several sectors could drive stronger expansion:

• AI and digital transformation as sources of productivity and innovative services;
• High-value manufacturing, including precision components, medical devices, and aerospace supplies;
• Talent and investment attraction, positioning Mauritius as a regional hub for Africa;
• Educational excellence, anchored by world-class institutions that build skills for the future;
• Medical tourism and advanced healthcare services;
• Reimagined tourism, with higher value and niche segments;
• Fintech and digital services, powered by local innovation;
• Green and climate-resilient investments, such as energy efficiency and the blue economy.

However, risks remain: a lack of vision and will to implement deep reforms; bureaucratic inertia; political partisanship that trumps merit; weak transparency and governance; global market volatility; subdued private investment sentiment; credit constraints; and currency pressures.

Inflation and Cost of Living Dynamics

Inflation in 2025 averaged a moderate 3.7 %, helped by declining global energy and food prices and prudent monetary policy. For sustainable stability in 2026, monetary discipline remains crucial, as does strengthening domestic production to reduce import sensitivity.

But inflationary risks persist: exchange rate swings if exports continue to lag imports; renewed international commodity price pressures; wage growth outpacing productivity; and global supply chain disruptions.

Exchange Rate and Foreign Exchange Challenges

Despite high foreign exchange market turnover in 2025, businesses continue to report currency shortages. This paradox stems from a mismatch between supply and demand, with informal constraints limiting bank access to foreign exchange. The result: higher import costs, supply delays, and reduced investment appetite in activities requiring hard currency.

A lasting solution calls for letting the rupee find its true market value while anchoring economic policy in export-led growth.

Institutions, Governance, and Leadership

Political and institutional instability in 2025 — including leadership resignations at key institutions and tensions at the highest levels — can undermine reform continuity and investor confidence. Strong, stable governance is essential to implement economic strategy effectively.

This demands transparent hiring and promotion based on competence, not patronage; independent boards free of political interference; clear performance expectations; and accountability systems that reward results.

Social Policy and Retirement Reform

The decision to raise the retirement age to 65 aligns with demographic realities and improves pension system sustainability. Yet, this change must be paired with active labour market policies to promote lifelong learning and employability for older workers.

It also highlights deeper issues: middle-income Mauritians cannot retire with dignity without generous private pensions or significant personal savings. The shift in retirement age should be part of broader pension reform that ensures retirees can maintain at least half of their pre-retirement income.

Looking Ahead: Investment, Standards of Living, and Global Positioning

Looking forward, Mauritius must judge itself not by the protection of the most vulnerable alone but by how it supports the middle class and small businesses — the backbone of any modern, progressive society. Austerity, higher taxes, and increased costs on SMEs do the opposite.

Growth-centred economic policy, coupled with pension reform and an inclusive safety net, will foster both investment and stronger living standards.

Internationally, Mauritius benefits from a growing share of services exports — offering insulation against U.S. tariff pressures and deglobalisation trends. Our strong ties with China, Europe, and India, and membership in key African organisations, position us to become a pivotal hub in the evolving global economy.

Even if U.S. engagement wanes, Mauritius stands to gain within a multipolar world anchored on Africa, Europe, China, and India. “Friends to all, enemies to none” should be more than a slogan — it must be the cornerstone of our economic diplomacy.

A Call for Bold Leadership: The Ramgoolam Initiative

It is time for visionary leadership. A Ramgoolam Initiative — led by the Prime Minister at the international level — can attract investment and support to position Mauritius as a premier African business hub.

This strategy would:

• Establish Mauritius as a major economic gateway for Africa, with income levels approaching those of Singapore and Dubai;
• Present a credible, pragmatic African development model rooted in good governance, open markets, and integration into global value chains;
• Leverage shifting geopolitics to make Mauritius a strategic bridge between Africa, Europe, India, and China;
• Create “Lighthouses of Good Governance” — autonomous, pro-business special economic zones that generate jobs, investment, and stability.
• Implement this vision in phases with willing African partners, anchoring Mauritius as a leader in a new model of development.

Conclusion

Mauritius stands at a crossroads. The path ahead demands confidence, courage, and clarity of purpose. Economic policy must shift from cautious consolidation to decisive growth and inclusion. Our vision must be anchored in collaborative reform, export-led expansion, social protection for all, and intelligent adaptation to global technological change.

The choices we make in 2026 — in budgeting, consultation, strategy, and leadership — will determine whether Mauritius thrives as a resilient, prosperous nation in the decades to come.