Delay in Ratification of the Treaty - Chagos: How the Government Plans to Cover the Rs 10 Billion Gap

In response to several parliamentary questions regarding the delay in ratifying the treaty concerning the Chagos Archipelago, Prime Minister and Minister of Finance, Navin Ramgoolam, outlined the immediate economic consequences and the measures being considered to address an estimated shortfall of Rs 10 billion.

The head of government reminded that "on May 22, 2025, Mauritius and the United Kingdom signed an agreement regarding the Chagos Archipelago," under which "the United Kingdom recognizes Mauritius's sovereignty over the entire Chagos Archipelago, including Diego Garcia." However, this agreement "must be ratified by both Mauritius and the United Kingdom to come into effect," and as it stands, "no payments can be made."

The Prime Minister clarified that the process is stalled on the British side, as the bill titled "Diego Garcia Military Base and British Indian Ocean Territory Bill" has not yet been passed by the British Parliament.

Economically, Navin Ramgoolam indicated that the 2025-2026 Budget had incorporated, "based on the assumption that the treaty would be ratified," a revenue of Rs 10 billion. Consequently, "due to the delay in ratifying the Chagos treaty, there will be a shortfall of Rs 10 billion during this fiscal year."

He added that "all else being equal, the budget deficit will increase by the same amount, equivalent to 1.3% of GDP," which will also result in "an increase in public sector debt by the same percentage."

Furthermore, this delay will also impact external balances. The Prime Minister emphasized that "the delay in ratifying the treaty will lead to a decrease in incoming payments in the balance of payments by a corresponding amount, placing additional pressure on the foreign exchange market."

Limiting Investments and Reducing Waste

In light of this situation, the government has undertaken a series of measures to mitigate the effects of this shortfall. The Ministry of Finance is taking action by "tightening control over recurrent expenditures and reducing waste."

The executive also plans to "reprioritize investment projects by implementing those with high impact and promoting growth, while postponing those of lower priority." Additionally, there will be stricter oversight of public bodies, aiming to "improve efficiency and contain budget transfers."

Finally, the government intends to "optimize existing cash balances across the public sector to limit reliance on new borrowing."

The Prime Minister expressed hope that "the Chagos treaty will be ratified as soon as possible so that the agreement can come into force and its provisions can be fully implemented.",