Mauritius received a Baa1 rating from Moody’s Investors Service (“Moody’s”)
Moody’s affirmed the Government of Mauritius’s Baa1 long-term issuer and senior unsecured ratings and maintained the stable outlook on the 27th of March 2018 in New York. According to the report, the affirmation of the Baa1 ratings was supported by two drivers.
The first driver is strong growth and macroeconomic resiliency to shocks, despite its relatively small size. According to Moody’s they expect a real GDP growth of 3.9% in both 2018 and 2019. Contributing factors for this growth includes the government’s Public Investment Program (PIP) that supports urban development and improvement of transportation networks. Growth will also continue to be supported by strong performance in the tourism sector. Moody’s expects the authorities’ proactive economic policies, a key element of the Mauritian economy’s success, to continue to address challenges to important sectors of the economy. The Global Business Companies (GBC) is in the process of adjusting to international efforts against tax avoidance, financial transparency and treaty changes with the amendment in the country’s existing Double Taxation Avoidance Agreement with India. Moody’s recognizes that the capital inflows derived from GBC is important for the balance of payments and its an important source of liquidity for the banking system.
The second driver is expectations for government debt to stabilize at an elevated level. According to Moody’s, Mauritius’s government has debt elevated and above the Baa-rated median with the GDP at 59.4%. Moody’s however expects the government’s debt to decline to around 55% in GDP in 2018 where it is expected to stabilize.
The rationale for the stable outlook from Moody’s is mostly due to the expectation of Moody’s that economic policies will gradually address ongoing challenges. This includes those related to global efforts against tax avoidance, and that government debt will remain broadly stable.
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To read the full report from Moody’s please click HERE.
Source: Moody’s Investors Service
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