Mauritius-Budget and Public Finance

Whereas successive governments have differed on questions such as social welfare spending, labor policy, and privatization, they have maintained remarkable unanimity in passing budgets and promulgating policies aimed at strengthening the national economy. Faced with growing budget deficits in the late 1970s, for example, Mauritius implemented a Structural Adjustment Program in 1979-80 drawn up principally by the IMF and the World Bank. The program has been relatively successful; budget deficits fell from 12.6 percent of GDP in 1981-82 to below 2 percent of GDP in the early 1990s. (Deficits during fiscal years 1988-89 and 1989-90 rose above 30 percent of GDP, however, in large part because of increases in government salaries.) In May 1991, Mauritius paid all its debt to the IMF ahead of schedule, a rare accomplishment for a developing country.

Revenues during fiscal year 1991-92 amounted to MR10.9 million; government estimates showed 90 percent coming from tax revenues and 10 percent from non-tax revenues and grants. Expenditures for the year amounted to MauR11.8 billion, of which MauR2.6 billion went to public debt service; MauR1 billion to social security; MauR1.5 billion to education, arts, and culture; and MauR778 million to health. (Country Profile 28)) In 1993 the government was set to reform the tax system in order to widen the tax base and reduce evasion.

The budget for the fiscal year (FY--see Glossary) 1994-95 came to MauR17.8 billion, of which MauR1.3 billion was designated for foreign and domestic debt repayment. Revenue was estimated at MauR15 billion, of which MauR2.7 billion came from direct taxes, MauR9.6 billion from indirect taxes, MauR1.5 billion or 2.2 percent of gross national product (GNP--see Glossary) from a budget deficit, and the remainder from foreign support and miscellaneous sources. The budget contained some new provisions to encourage investment and savings; it abolished foreign currency controls and eliminated the tax on sugar products. Budgetary appropriations in 1994-95 included MauR2.4 billion for education (almost double the 1991-92 amount), MauR208 million to train middle management (compared with MauR90 million the previous year), MauR138 million for industry, and MauR327 million to build 2,000 houses for low-income families. The FY 1993-94 budget had stressed health, allocating MauR1.2 billion to this area and MauR552 million for road construction, as well as appropriations for lengthening by 780 meters the runway at Sir Seewoosagur Rangoolam International Airport and providing 75,000 new telephone lines.

These budgetary appropriations fell within the broader framework of the 1992-94 development plan, released in April 1993. The plan emphasized the role of the private sector and of the free market as opposed to public sector bodies and state controls. The plan aimed at an overall annual growth rate of 6 percent: 4.9 percent in agriculture, 10.5 percent in construction, 7.7 percent in the EPZ, 6.5 percent in financial and business services, 9 percent in tourism, and 9.5 percent in utilities (electricity, gas, and water). Specific plan allocations were the following: agriculture MauR1.85 billion, airport MauR1.28 billion, education MauR1.02 billion, environment MauR1.89 billion, health MauR602 million, housing MauR7.86 billion, industry MauR219 million, roads MauR1.39 billion, Rodrigues and other islands MauR658 million, social services MauR124 million, telecommunications MauR866 million, tourism MauR257 million, water MauR951 million, and youth and sports MauR152 million.

Data as of August 1994