The economic outlook for Mauritius has been maintained on the negative Baa2 rating, we learned on Friday from the latest report from the rating agency Moody’s Investors Service.
Moody’s also estimates that the fiscal deficit will be around 4.5% of GDP while the budget deficit should oscillate around 4% of GDP.
Economists at the US agency argue that stronger economic output should support increased government revenue and reduced pandemic-related spending. At the same time, this should lead to an improvement in the budget deficit.
“The main risk to Mauritius’ fiscal path is the possibility of further support to state-owned enterprises. This would increase net borrowing requirements and the debt burden, or the potential disposal of public assets, which would the debt burden more than implied by the government’s net borrowing requirement,” the report read.
Moody’s warns that a continued deterioration in debt metrics might lead to a downgrade in the next rating. It should be noted that the negative Baa2 rating has been assigned to Mauritius since April 2020, i.e. following the first wave of positive cases of COVID-19 on the island republic in the south-west of the Indian Ocean.
As a reminder, bonds rated Baa are subject to moderate credit risk. They are considered to be of medium quality likely to exhibit speculative characteristics. Modifier 2 indicates an intermediate ranking.
