Budget 2026-27: Prime Minister Dismisses Any Potential Relief for the Population
What should we expect for the 2026-27 budget? The Prime Minister's statements suggest complex choices in a tense economic context marked by inflation, debt, and ongoing global uncertainty.
With just a few months before the presentation of the 2026-27 budget, the signals from Prime Minister Navin Ramgoolam confirm that this will be a challenging process. On March 22, following a tribute to Guy Rozemont, he summarized the budget equation with one question: "How can we relieve the population when we are facing difficulties?" This statement continues his previous remarks and outlines the framework of a constrained budget.
Just days earlier, on March 17, the government leader had presented the structural vulnerabilities of the Mauritian economy in Parliament. As a small, open economy that is a net importer of energy and food, Mauritius remains exposed to external shocks. The ongoing conflict in the Middle East exacerbates this situation, particularly through rising import costs.
Three main channels have been identified. First, the increase in energy and food bills directly pressures prices and the cost of living. Second, the rise in transportation and insurance costs makes imports more expensive. Lastly, the indirect effects on foreign direct investment and tourism—two pillars of the economy—may be affected by international uncertainty.
Economic projections have already been revised. Before the conflict, GDP growth for 2026 was estimated at 3.4%. It could now settle around 3.2% with a quick resolution. In a prolonged scenario, it could dip below 3%. Meanwhile, inflation, initially projected at 4%, could reach 6% depending on the fluctuations in oil and raw material prices.
The balance of payments is also expected to face pressures. The current account deficit, estimated at 4.8% of GDP in a baseline scenario, could rise to about 6%. These indicators reflect a deterioration in the macroeconomic context, limiting budgetary maneuvering.
According to economist Bhavish Jugurnath, the war is not the sole explanation for these challenges. He emphasizes that the volatility of oil prices will have repercussions across several sectors, from transport to electricity and imported raw materials. "At this stage, we cannot measure its extent," he states, while anticipating increased imported inflation in the coming months.
He believes that even without the conflict, the budget would not have been directed towards expansionary measures. He recalls that several initiatives from the 2025-26 budget are still being implemented, particularly in investment, blue economy, agriculture, and the financial sector. The focus would then have been on long-term strategy in line with the 2050 vision, involving the creation of new sectors and the transformation of existing ones.
In the current context, the approach should be different. The government may need to review certain costs and adjust prices. The goal, according to Bhavish Jugurnath, will be to contain inflation, manage interest rates, and preserve the tourism sector. He suggests a budget primarily aimed at limiting economic impacts.
Economist Manisha Dookhony, on the other hand, highlights the level of public debt, which hovers around 90% of GDP. She reminds us that loans have been contracted to finance several projects, while expectations existed for an agreement on the Chagos, potentially bringing around Rs 10 billion to support public finances.
She also notes that growth primarily relies on the financial sector and tourism despite recent disruptions. Other sectors struggle to take over. In this context, she points out a discrepancy between political announcements and their implementation.
