The Minister of Finance Dr Renganaden Padayachy has the tough task of presenting the budget this Friday 11 June. It will be focused on putting our economy back on a track of solid and sustainable growth, while trying to balance expenditure and budgetary revenues to reduce the country’s debts.
Due to the Covid-19 pandemic, the Mauritian’s economy has taken a severe hit. It has technically been in recession since the second quarter of 2020. According to Statistics Mauritius, the Gross Domestic Product contracted 15.2% last year, due to unprecedented decline in the tourism, manufacturing, international trade, construction, and transport sectors.
Economic indicators are in the red.
Likewise, the weakening of consumption and investment spending has been remarkable. Indeed, consumer spending fell by 14.2% last year, and investment spending fell to 26.6% on an annual basis.
The unemployment rate remains another area of concern. An annual increase of 2.5percentage points, the unemployment rate is estimated at 9.2% in 2020, representing 52,200 unemployed people. The inflation rate for May was 2.4%. The current trade deficit, also on the rise, due to shortages of tourist income, was around 13% of GDP last year.
During his budget presentation last year, Dr Renganaden Padayachy clarified that the negative impact of Covid-19 on public finances had been significant, thus reducing the budget deficit to 13.3 percent of GDP (if we ignore the “exceptional grant” of the Bank of Mauritius of 60 billion rupees).
According to a report of the World Bank titled “Mauritius: through the eye of a perfect storm – coming back stronger from the Covid crisis“, four crucial challenges face the Mauritian economy. The first is economic recovery by boosting productive private investment. Next, we must establish greater competitiveness in export markets. In addition, everything has to be done to maintain adequate social inclusion while ensuring sound management of public finances.
