Mauritius Budget 2025-2026: Between bold innovation and fiscal caution

Presented as a tool for economic transformation, the new national budget lays the groundwork for a model focused on research, digitalisation, and sustainability. The real impact, however, will come down to how effectively these measures are implemented. C&S Secretarial Services takes a closer look at the key takeaways.

A highly anticipated budget

The 2025-2026 National Budget is the first budget presented by the administration elected in December 2024. After a period of uncertainty marked by slow political transition and slow economic recovery, this budget is pivotal. Expectations are high from both business circles and the opposition, with many calling for a clear direction to revitalise the economy and deliver on electoral promises.

For more on recent legal and fiscal changes, see our article on authorised capital in Mauritius.

Last year saw a 4.7% increase in GDP, largely driven by construction, financial services, and tourism. However, challenges persist: inflation remains around 3.8%, unemployment is still hovering at 6%, and public debt has climbed to nearly 90% of GDP. The budget, therefore, needed to strike a delicate balance between stimulating growth and keeping public finances in check.

“Innovative Mauritius”: A bold vision with vague boundaries

The government’s strategy hinges on the concept of an “Innovative Mauritius,” built around four main pillars:

1. Expanding research and development capacity
2. Promoting waste-to-value solutions through a circular economy model
3. Harnessing marine resources via a “Blue Ocean” strategy
4. Strengthening international economic partnerships

While the direction is promising, some analysts have noted a lack of clarity on how these pillars will be implemented. Without specific mechanisms and tracking tools, these ambitions risk remaining abstract. The challenge lies in translating this vision into action, backed by the necessary resources and infrastructure.

Reshaping resource redistribution across the economy

Mauritius’s economy still leans heavily on public administration and manufacturing, sectors that struggle to deliver sustained growth. Meanwhile, high-potential industries like IT and tourism remain underutilised in terms of job creation.

The government aims to shift this balance by boosting employment in high-value-added sectors through labour market reforms and increased digitalisation of public services. Streamlining the work permit process for foreign professionals is also part of the plan.

Experts agree these goals are relevant, but stress that success will depend on execution. A digital, performance-oriented transformation of the public sector is essential.

Fiscal discipline: Cautious adjustments, no drastic moves

With a public deficit exceeding 9% of GDP, the budget acknowledges rising social expenditure, such as pensions and social allowances but proposes a gradual phasing out over the next three to five years. Recurrent spending is expected to grow by 4% in the coming year.

To fund this fragile balance, the government is counting on a 10% increase in tax revenue and a one-time Rs 10 billion injection from the Chagos settlement. Analysts describe this as a fiscally conservative approach: few structural reforms and a postponement of deeper adjustments. In effect, the private sector will bear the brunt of the budgetary realignment.

Taxation: Fair distribution or risk of deterrence ?

New tax measures include an additional levy on high earners and large corporations, a minimum tax in certain sectors, increased taxation on capital gains from non-resident property sales and tweaks to tax structures for international operations.

At the same time, some incentive schemes, like tax benefits under the Smart City Scheme are being phased out. Experts warn that such changes could weaken Mauritius’s appeal as a competitive investment hub. A balanced tax strategy should foster fairness while still encouraging entrepreneurship, especially in emerging industries.

Infrastructure: Ambitious spending, but too state-centric

The budget sets out a hefty Rs 180 billion infrastructure investment plan over five years, focusing on roads and water management. However, private sector participation remains limited despite the fact that public-private partnerships (PPPs) could amplify economic impact.

For example, the Rs 5.4 billion allocated to port development could have had a broader effect if paired with private financing. Experts argue that PPPs could generate greater economic value while easing pressure on public finances.

Overall assessment: A delicate balance with promising yet incomplete measures

Theme	Notable Progress	Challenges
Strategic vision	Strong focus on innovation	Weak link between vision and execution
Labour and administration	Push for digital transformation	Implementation remains complex and slow
Spending discipline	Acknowledgement of budget constraints	High definit persists, no bold reform agenda
Taxation	New redistributive tools	Risk of reduced foreign investment
Infrastructure investment	Clear ambition for development	Limited private sector involvement and openness to PPPs

What could strengthen this budget?

Several action points could boost the effectiveness of this year’s budget:

• Define a clear roadmap for “Innovative Mauritius” with measurable performance indicators
• Accelerate digital transformation in the public sector with tangible tools and timelines
• Rethink the tax model to strike a fair balance between social equity and investor appeal
• Simplify and clarify the work permit process for foreign professionals
• Launch a proactive strategy to bring private investment into infrastructure projects, especially via PPPs

Conclusion: A framework is in place, but the work has only just begun

The 2025-2026 Budget lays out an important vision for reshaping Mauritius’s economic model. It contains strong intentions, particularly in the areas of innovation, tax fairness, and sustainability but execution will be the true test.

Whether this budget marks a turning point or just a cautious transition toward deeper reform remains to be seen. The outcome will depend heavily on political will, institutional efficiency, and strategic governance, especially the ability to bring the private sector on board.

Source:

National Budget 2025 – 2026 – Our Opinion