Subchapters:
- Basic data
- Public finances and the state budget
- Banking system
- Tax System
Basic data
According to cheeroutdoor.com, Mauritius posted economic growth of 4.3% in 2021, overcoming a significant drop of -14.9% in 2020 due to the impact of the COVID-19 pandemic. Economic growth in 2021 was mainly driven by strong domestic demand and reviving external demand from China and India for agricultural and manufacturing products (especially sugar and textiles). Tourism, which is one of the most important contributors to Mauritius’ GDP, is not expected to fully recover until 2022 thanks to the expected easing of the COVID-19 pandemic and related restrictions. Domestic demand is also expected to grow more significantly in the coming years by approximately 3.9% per year, which is related to the increase in minimum wages and total incomes in Mauritius. The government is looking to significantly promote financial services and technology and Mauritius will continue to benefit from its tax haven status. From the point of view of inflation, a slight increase of 3.7% was seen in 2021, in connection with rising global fuel and food prices. The depreciation of the local currency will also support inflationary pressures. Public finances were also negatively affected in 2021 due to the COVID-19 pandemic, and increased spending was directed mainly to the social sphere to support wages, social contributions and health services. The government has also sought to promote the diversification of the economy and make up for lost tourism revenue. In 2022, moderate fiscal consolidation is expected, with the maintenance of the most important social expenditures (support for vulnerable households), support for small and medium-sized enterprises, improvement of health care and further recovery of the economy. The government intends to support infrastructure projects to increase the capacities of ports and airports. The fiscal deficit can reach up to 12% of GDP, with that it should be gradually reduced and financed by potential tax increases and a combination of local and concessional external borrowing. Public debt has worsened during the COVID-19 pandemic, surpassing the 60% of GDP mark in 2021 to reach 76.1% of GDP. The average unemployment rate rose to 9.5% in 2021.
Mauritius continues to maintain its position as the most “business friendly” country in sub-Saharan Africa, and thanks to changes in legislation, Mauritius reached its best ever position in the Doing Business ranking, moving from 20th to 13th out of 190 countries in the world. It ranked among the top 10 countries in the world for indicators of paying taxes and issuing building permits. The Mauritian government aims to build a welfare state and has introduced an income support program (the so-called Marshall Plan against poverty) for 11,000 low income families. In addition, it also introduced other policy measures to help low-income workers in the form of a negative income tax.
| Pointer | 2019 | 2020 | 2021 | 2022 | 2023 |
| GDP growth (%) | 3 | -10.4 | 4.8 | 5.4 | 5.6 |
| GDP/population (USD/PPP) | 23,860.00 | 20,540.00 | 22,190.00 | 24,370.00 | 26 100.0 |
| Inflation (%) | 0.5 | 2.5 | 4 | 6.2 | 4.1 |
| Unemployment (%) | 6,7 | 9.2 | 9.5 | 9.2 | 8.1 |
| Export of goods (billion USD) | 2.2 | 1.7 | 1.9 | 1.9 | 2 |
| Import of goods (billion USD) | 5.3 | 4.1 | 4.3 | 4.6 | 5.1 |
| Trade Balance (Billion USD) | -3.1 | -2.1 | -2.3 | -2.5 | -2.8 |
| Industrial production (% change) | ON | ON | ON | ON | ON |
| Population (millions) | 1.3 | 1.3 | 1.3 | 1.3 | 1.3 |
| Competitiveness | ON | ON | ON | ON | ON |
| OECD export risk | 03.VII | 03.VII | 03.VII | ON | ON |
Source: EIU, OECD, IMD
Public finance and state budget
| Public finance | 2021 |
| State budget balance (% of GDP) | -17.3 |
| Public debt (% of GDP) | 96.2 |
| Current account balance (billion USD) | -1.7 |
| Taxes | 2022 |
| AFTER | 3-15% |
| F.O | 10-15% |
| VAT | 15% |
Public finances were negatively affected in 2021 due to the COVID-19 pandemic, and increased spending was directed mainly to the social sphere to support wages, social contributions and health services. The government has also sought to promote the diversification of the economy and make up for lost tourism revenue. In 2022, moderate fiscal consolidation is expected, with the maintenance of the most important social expenditures (support for vulnerable households), support for small and medium-sized enterprises, improvement of health care and further recovery of the economy. The government intends to support infrastructure projects to increase the capacities of ports and airports. The fiscal deficit reached 17.3% of GDP, with the expectation that it should be gradually reduced and financed by potential tax increases and a combination of local and concessional external borrowing. Public debt deepened during the COVID-19 pandemic, reaching 96 in 2021,
The current account balance again reached a deficit of – USD billion in 2021, which represented a better result than in 2020 thanks to the opening of borders, improved tourism and related services. From the point of view of the trade balance, the deficit continues to persist due to high dependence on imports. Foreign exchange reserves reached USD 590 million at the end of 2021.
Banking system
The banking system is governed by the Banking Act of 1988 and the Bank of Mauritius Act. The field of foreign exchange is governed by the Currency Dealers Act of 1995. The supervisory and management role here is played by the Supervision Department of the Bank of Mauritius.
Despite the inflationary flows, the Mauritian central bank did not change its interest rate and kept it at 1.85%.
There are also a number of insurance and financial institutions operating in Mauritius, which are also trying to penetrate foreign markets, especially in the countries of East and South Africa. Regulation and control of the financial services sector is carried out by the Financial Services Commission (FSC), which also has the task of regulating and controlling the stock market, issuing authorizations to operate for financial, stock exchange and insurance companies. Another institution active in the field of financial services is the Financial Services Promotion Agency (FSPA), which provides support for the financing of trade, production and services.
Overview of the top 5 banks in Mauritius:
1) AfrAsia Bank Limited – This is an international bank that won the Best Banks in Mauritius 2021 ranking
2) Standard Bank (Mauritius) Limited – an international bank that has been operating in Mauritius for 20 years
3) Absa Bank (Mauritius) Limited – a South African bank that provides all banking services in Mauritius
4) Bank of Baroda – Indian international bank providing all banking services
5) Bank One Limited – a Mauritian-Kenyan bank that regularly ranks among the best companies in Mauritius
Other banks in Mauritius can be found on the website of the Central Bank of Mauritius – www.bom.mu
Tax system
Mauritius has one of the lowest tax burdens in the world and applies many exemptions. It is a tax haven.
Tax overview:
- value added tax (VAT) – applies at the rate of 15%;
- income tax – a number of exceptions are applied, for natural persons and employees 10-15%, export companies 3%, other companies 15%;
- solidarity tax – 5%, calculated on income exceeding million rupees (approx. USD 89,073);
- gambling tax – includes tax on lotteries, casinos, bets, etc., usually 2-10%.
In Mauritius, the so-called negative income tax (NIT) was introduced, which, on the other hand, allows Mauritian citizens to receive state support if they have a monthly salary of less than 9900 Mauritian rupees (approx. 251 USD). Due to the COVID-19 pandemic, Mauritius is expected to introduce new taxes or increase existing taxes to increase revenue for the treasury.
An overview of taxes is published on the website of the Tax and Customs Authority – Mauritius Revenue Authority (MRA).
