The World Bank in Mauritius

Mauritius is an island state of about 1.26 million people (2022) located off the southeast coast of Africa and neighboring the French island of La Réunion. Mauritius is a beacon of economic success in Sub-Saharan Africa, having evolved from a low-income, sugarcane-dependent nation in the 1960s to an upper-middle-income country with a per capita income surpassing $10,000. This remarkable transformation was rooted in a stable democracy and a relatively diversified economy that now includes tourism, manufacturing, fisheries, ICT, and financial services, the latter contributing 40% of GDP. The country's proactive approach to education and infrastructure, as well as its openness to foreign investment, have fostered growth in various sectors, including a burgeoning pharmaceutical industry post-COVID-19. Despite the setback caused by the pandemic, which saw Mauritius’s economy contract sharply and lose its high-income status, the government's robust support program and structural reforms have set the stage for a resilient recovery.

Political Context

Mauritius is one of the oldest democracies in Africa, having held 12 general elections deemed free and fair since the late 1960s. Its political system is dominated by three parties, namely the Militant Socialist Movement (MSM), the Labour Party, and the Mauritian Militant Movement (MMM). Of 12 general elections held so far, MSM has won six, the Labour Party won four, and the MMM won two. Shifting coalitions are a feature of politics in the country. The last general election took place in 2019. A coalition named Alliance Morisien won. The coalition comprises four parties: MSM, Muvman Liberater ML, Alan Ganoo Movement, and Plateforme Militante. The coalition won 42 of the 70 seats in the national parliament and formed the government with Pravind Jugnauth of MSA remaining the prime minister. In Mauritius, the president is the head of state, while the prime minister has full executive powers and heads the government. The next general elections are scheduled for November 2024.

Civil liberties. Mauritius is rated “Free” in the 2023 Freedom House's annual study of political rights and civil liberties worldwide. It performs well on various other political and economic indicators compared to many countries in the region. It is also well placed in the Corruption Perceptions Index, ranked 55 out of 180 countries, up by one place since 2022.

Economic Developments and Forecast

Mauritius has experienced remarkable growth since independence in 1968, briefly reaching high-income country status in 2020. However, the global COVID-19 pandemic hit its economy hard. Despite a successful handling of the public health emergency, the pandemic’s economic impact was severe, and the country’s Gross Domestic Product (GDP) contracted by 14.6% in 2020, causing Mauritius to slide down to upper-middle-income country status. With a gross domestic product of $10,216 per capita (2022), Mauritius’s economy has proven resilient to other global economic shocks, including those stemming from the war in Ukraine, which have affected revenues from tourism arrivals. GDP growth rebounded by a relatively modest 3.5% in 2021 and accelerated to 8.9% in 2022, supported by a strong recovery in tourism. In 2023, real GDP grew by 7%. The twelve-month average headline inflation moderated to 4.5% in June 2024, substantially slower than the 10.5% rate observed a year before, mainly due to lower global commodity prices. Strong GDP growth in the last two years also improved tax revenue and contributed to a lower public debt-to-GDP ratio of about 78%. While the public sector debt appears sustainable, a gradual fiscal consolidation is warranted to stabilize it.

The government has introduced measures to lessen labor and skills shortages and continues to promote the use of renewable energy. Strengthening resilience against climate and energy shocks and building fiscal buffers will be essential to build growth resilience. Investing in human capital and boosting private sector innovation will be crucial to regain and sustain high-income country status.

Last Updated: Oct 17, 2024

Mauritius is one of the first 21 countries represented by a single leader in the International Bank for Reconstruction and Development (IBRD), the International Finance Corporation (IFC), and the Multilateral Investment Guarantee Agency (MIGA). This new joint country representation provides an opportunity to leverage the resources and knowledge of the WB, the IFC and MIGA to deliver development solutions. The World Bank’s partnership strategy in Mauritius aligns with the country's aspiration to achieve high-income status through unlocking the growth potential and strengthening inclusivity and resilience. With initiatives to increase women's workforce participation, address labor shortages, and improve financial services, Mauritius is poised to continue its development journey. The country also committed to sourcing 60% of its energy from renewable sources by 2030, and its success in the sector of high-end agricultural value-added products exemplifies its ability to innovate and adapt. Mauritius's story is a testament to the power of diversification and strategic transformation, offering valuable lessons for other African nations seeking sustainable development.

The World Bank Group's engagement in Mauritius occurs within the context of a Country Partnership Framework (CPF) covering the period from FY24 to FY28. The CPF is aligned with Mauritius’s National Vision 2030 and the Government’s five-year program (2020–24), with a particular focus on accelerating growth, diversifying the economy, generating jobs, increasing the effectiveness of the public sector, and enhancing the country’s resilience. It reflects the WBG’s firm commitment to supporting countries in reducing poverty and boosting shared prosperity while responding to global challenges.

The World Bank recently approved the financing of the Mauritius-Rodrigues Airport Project, the first lending operation in Mauritius in many years. The project will unlock opportunities for inclusive and sustainable growth in Rodrigues, an isolated island and autonomous region of Mauritius.

The World Bank has an active knowledge and advisory portfolio in Mauritius that includes technical assistance on tourism development, renewable energy, insolvency, secured transactions, business reform, and enhancing the Bank of Mauritius's supervisory capacity.

Last Updated: Oct 17, 2024

Most of the World Bank’s support to Mauritius has been provided through knowledge activities, including Technical Assistance funded via its Reimbursable Advisory Services. Recent knowledge products include technical assistance on insolvency, secured transactions, and reforms of the business environment to strengthen creditor recovery and rescue viable but distressed businesses, ultimately contributing to lower credit costs, greater credit availability, and job retention through saved businesses. In addition, a productivity study examined the business environment as individual Mauritian firms experience it. The report scrutinized the experience of businesses in conjunction with concrete outcomes such as productivity and employment, which are directly linked to the economic well-being of the population of Mauritius.

In 2023, the World Bank and the IFC also completed a Country Private Sector Diagnostic, which examines how the country can grow its economy and recover resiliently from COVID-19 by increasing private investments in healthcare, higher education, and renewable energy. The report also highlights how innovation can help diversify into more knowledge-intensive sectors while enabling the country to move toward a more resilient and sustainable growth model.

The World Bank also completed a Public Expenditure Review in 2023. The report highlights the importance of shifting public resources from supporting consumption toward investment to enhance Mauritius’s prospects for green, resilient, and inclusive growth. It also underscores that the transition to a higher-growth path will require a robust competitive environment and sustained investment in human capital and innovation. The 2022 Systematic Country Diagnostic Update also conducted a prioritization exercise and highlighted opportunities for high-impact reforms. The exercise was complemented by a 2023 Public Expenditure Review, which identified opportunities to enhance the impact of fiscal policy on macroeconomic stability and accelerate the transition toward a greener, more resilient, and knowledge-based growth. The recommended reforms are designed to prioritize investment in productive assets—while continuing to meet the social needs of an aging society in a cost-effective manner and strengthening resilience against climate change and other shocks. The report also identified opportunities to leverage Mauritius’s low-carbon growth potential, in line with the focus of its most recent budgets.

Last Updated: Oct 17, 2024

The World Bank maintains regular dialogue with bilateral and other multilateral development partners active in Mauritius.

Last Updated: Oct 17, 2024