In June 2025, the International Monetary Fund published its annual assessment of Mauritius' economic health. The document—dry, technical, 60 pages of macroeconomic analysis—contains a damning diagnosis that has been quietly buried by a government nine months into power after a historic electoral landslide.

The IMF upgraded Mauritius from "medium" to "high" sovereign risk. Public debt stands at 88% of GDP. Pension spending consumes 7.8% of GDP and is rising. The central bank printed Rs 81 billion to capitalize a state investment corporation whose returns remain undisclosed. Import dependency locks in currency depreciation as a hidden tax on households. Real estate speculation drives growth while creating financial instability.

This is the story the IMF told in cautious diplomatic language. This is what it means in plain terms.

The Rs 81 billion question

Between 2020 and 2024, the Bank of Mauritius created Rs 81 billion through monetary financing—effectively printing money—to capitalize the Mauritius Investment Corporation (MIC). The stated purpose: rescue companies affected by COVID-19 and support strategic sectors.

The IMF's June 2025 report notes: "Quasi-fiscal risks from the government-owned MIC...remain a source of concern given the lack of transparency on its operations and returns."

Translation: We don't know where Rs 81 billion went, who received it, on what terms, or whether taxpayers will ever see returns.

No comprehensive audit has been published. No list of recipients. No repayment schedules. No parliamentary oversight with investigative powers. The MIC operates as a black box containing 11% of GDP in public money.

Local media reported the MIC spent Rs 4.5 billion purchasing 185 hectares from Omnicane for the Mon-Trésor Smart City project—a transaction described as "generous" and a "jackpot" for the seller. Whether this represents strategic investment or politically connected wealth transfer remains unknown without transparency.

The IMF cannot say "the central bank printed money for connected bailouts." Its mandate is technical assessment, not political characterization. But the numbers speak: Rs 81 billion created through monetary financing, insufficient disclosed returns, rising quasi-fiscal risks, and zero accountability nine months into a new administration that campaigned against corruption.

The pension mathematics

Mauritius operates a universal Basic Retirement Pension (BRP) of Rs 13,500 per month for citizens aged 60 and above—no means testing, no contribution requirement. In 2015, BRP spending was 3.8% of GDP. By 2024: 7.8% of GDP. The IMF projects this rising above 10% of GDP by 2030 without reform.

The Jugnauth government (2017-2024) nearly doubled the pension while knowing the fiscal math was unsustainable. Why? Because pensioners vote, and universal pensions buy electoral loyalty across all income brackets.

The Ramgoolam government's June 2025 budget response: raise the eligibility age to 65 over five years, introduce means-testing for new applicants only. These measures are politically cautious—they avoid confronting current beneficiaries—and fiscally insufficient. The IMF notes achieving the government's debt target would require "unrealistic" fiscal consolidation.

No government will touch existing pensions. The 240,000 current recipients represent swing voters in a country of 1.3 million. So pension costs will continue rising until crisis forces adjustment or demographics bankrupt the state.

Currency depreciation as hidden tax

The Mauritian rupee has depreciated approximately 15% against the US dollar between 2023 and mid-2025 (from Rs 42/USD to Rs 47/USD). The IMF expects continued gradual depreciation due to persistent current account deficits and foreign reserve pressures.

For an import-dependent economy, currency depreciation is a hidden tax. Mauritius imports 80% of food consumed, 100% of petroleum products, and the majority of pharmaceuticals, construction materials, and consumer goods. When the rupee depreciates 10%, import prices rise approximately 7.8%.

A 160g can of chunked tuna cost Rs 64 in July 2025. Assuming baseline rupee depreciation to Rs 50/USD by December 2026, the same can will cost approximately Rs 73—a 13.5% increase.

For a middle-income household earning Rs 38,100/month (median wage), if wages rise 2.5% annually but prices rise 9-10% due to cumulative currency depreciation, real purchasing power declines 9.5% over 18 months. This means working nearly 50 additional days per year just to maintain the same consumption basket.

The pensioner squeeze

For pensioners on fixed BRP (Rs 13,500/month, no automatic inflation indexation), the impact is more severe. A typical pensioner spends approximately Rs 8,800/month (65% of budget) on import-dependent categories: food, medicines, utilities.

December 2026 projection: Import-driven cost increase of Rs 1,190/month creates an annual shortfall of Rs 14,280. Real pension value erodes to Rs 11,840 equivalent—a 12.3% decline in 18 months.

Coping mechanisms are predictable and documented from previous depreciation episodes: reduce protein intake, skip medications, cut utilities, depend on family transfers, draw down savings if any exist. For pensioners without family support, this is choosing between food and medicine.

The government will likely respond with temporary subsidies on rice and flour during politically sensitive periods, blame "global factors," and possibly provide a one-off supplement (Rs 2,000-3,000) to defuse protests. What won't happen: structural intervention to break import cartels or policies to strengthen rupee fundamentals.

The import cartel structure

Market concentration in essential commodity imports exceeds 85% in key categories. A handful of companies control exclusive distribution agreements for rice, flour, cooking oil, petroleum products, pharmaceuticals, and construction materials.

When the rupee depreciates, these importers exploit the opportunity to expand margins beyond mechanical pass-through. Historical evidence from 2008-2010, 2015-2017, and 2020-2022 depreciation episodes shows importers raising prices 12-15% when currency depreciates 10%, citing "exchange rate volatility" and "hedging costs."

With no domestic alternatives and no competitive entry (distribution agreements create barriers), consumers have no choice. The Competition Commission has conducted no investigation into import market concentration. The Ramgoolam government has announced no cartel-breaking initiatives.

Why? Because import monopolies fund political campaigns, provide patronage networks, and enrich connected families regardless of which party holds power.

The November 2024 electoral earthquake that changed nothing

On 10 November 2024, voters delivered a historic verdict: the Alliance du Changement won 60 of 62 directly elected seats, securing 62.6% of the popular vote. The Jugnauth government was annihilated—0 seats, 27.8% vote share.

Three factors dominated: cost of living, corruption allegations, and the wiretapping scandal.

In October 2024, leaked audio recordings allegedly obtained through illegal surveillance exposed conversations between politicians, police officials, and journalists. One recording allegedly captured the Police Commissioner asking a forensic doctor to alter a death-in-custody report. On 31 October—ten days before the election—the government ordered a social media blackout. It was lifted after 24 hours following condemnation, but the damage was done.

Political scientist Dr. Roukaya Kasenally observed: "Mauritius lost its status as a liberal democracy under Jugnauth and has become an electoral autocracy."

Voters responded with the most decisive rejection in Mauritius' electoral history.

Nine months into the Ramgoolam administration, what has changed? MIC audit? No. Import cartel investigation? No. Land or wealth taxes on speculation? No. Food security strategy to reduce import dependency? No. Governance reforms on surveillance or whistleblower protection? No.

The June 2025 budget raised BRP eligibility age (addressing fiscal pressure without confronting current beneficiaries), eliminated selected tax exemptions (easy targets), and maintained existing structures. This is symptom management, not reform.

Both Pravind Jugnauth and Navin Ramgoolam are sons of former Prime Ministers. Ramgoolam previously served as PM from 1995-2000 and 2005-2014. In 2016, police found $6.3 million in cash during a raid on his residence; money laundering charges remain in court as of October 2025.

The November 2024 election represented rotation within a dynastic elite that has governed Mauritius since independence—not transformation of the governance model itself.

The debt trajectory: Three scenarios

The government targets reducing debt from 88% of GDP to 75% by June 2031. The IMF calls this "unrealistic" without sustained primary surpluses of 1.5-2% of GDP annually—a level Mauritius has not achieved since before 2008.

Scenario 1: Muddle Through (60% probability)

Partial reforms without confronting structural issues. Debt peaks at 92-95% GDP by 2029-2030. Growth 2.8-3.2% annually, below potential. Youth emigration accelerates to 2,200-2,500/year. Real wages stagnate. Rupee continues depreciating. No crisis, but slow decline in competitiveness and living standards.

Scenario 2: Crisis & Intervention (25% probability)

External shock within 24 months (FATF re-greylisting, tourism collapse, bank failure, rating downgrade to junk) triggers fiscal emergency. IMF Stand-By Arrangement with harsh conditionality. Debt spikes to 105-110% GDP. Forced pension cuts, subsidy elimination, wage freezes. Protests, capital flight, brain drain acceleration. Painful but potentially transformative—IMF conditionality could break some cartels and enforce transparency. 3-4 years of austerity, then slow recovery.

Scenario 3: Voluntary Transformation (15% probability)

Political mobilization (youth movement, civil society coalition) forces accountability before crisis. MIC audit leads to clawbacks and prosecutions. Land/wealth taxes fund sustainable pensions. Import cartels broken. Transparent institutions, productive investment. Debt stabilizes at 85-88% by 2027, declines to 78-80% by 2031. Growth accelerates to 4.5-5%. Mauritius becomes regional model for governance.

The credibility countdown

Mauritius markets itself as a stable, well-governed international financial center. Several deadlines will test this claim:

Mauritius has approximately 18 months to demonstrate credible reform before external assessments accumulate into crisis. After that, the choice between muddle-through and crisis is made by events, not policy.

The August 2025 resignation of Bank of Mauritius Second Deputy Governor Gérard Sanspeur—alleging political interference and pressure to favor specific banking licenses—raised fresh governance questions. The ongoing Ramgoolam court case creates reputational risk. Without MIC transparency and institutional credibility, Mauritius risks the confidence its financial sector requires.

What the IMF cannot say

The IMF's mandate is macroeconomic assessment, not political characterization. It can document high debt, unsustainable pensions, and quasi-fiscal risks. It can recommend fiscal consolidation and governance improvements.

But it cannot state that the central bank printed money for connected bailouts. It cannot say pension expansion was vote-buying. It cannot characterize the economy as a rent-extraction mechanism benefiting political elites through import monopolies, land speculation, and state contracts.

Countries implement IMF recommendations selectively—adopting measures that preserve elite interests while imposing costs on ordinary citizens. Reform requires political will, which emerges from crisis or popular mobilization, not technical reports.

The choice before Mauritius

The dodo—Mauritius' national symbol—became extinct not from catastrophe but from systematic predation in an environment offering no escape. The island's economy faces a similar trajectory: not from external shocks but from internal extraction.

The November 2024 election proved Mauritians can remove governments. The test now is whether they can transform the governance model itself—or accept another cycle of dynastic rotation while the window for voluntary reform closes.

The IMF has provided the diagnosis. Transparency advocates have demanded accountability. Local media has documented contradictions. The electorate delivered an overwhelming mandate for change.

What remains absent is political will to confront structural extraction—because genuine reform threatens the import monopolies, land speculation, and financing networks that enrich the governing class regardless of which dynasty holds office.

The clock is ticking. November 2025 budget. December 2025 pension cohort. Q1 2026 ESAAMLG review. June 2026 IMF assessment. By mid-2026, the trajectory will be locked in.

The choice is Mauritius'.

Methodology: This analysis is based on IMF Article IV Staff Reports (June 2024, June 2025), Bank of Mauritius annual reports (2020–2024), government budget statements (2019–2025), Statistics Mauritius data, and reporting by L'Express, Le Mauricien, Le Matinal, News Moris, The Conversation, and international outlets (2020–2025). All monetary figures in Mauritian Rupees unless noted. No interviews were conducted; all information derives from publicly available documents.