Budget Highlights 2022 - 2023
After the GDP knockdown of 2020, the Mauritian economy rebounded in 2021 with a GDP growth rate of 4.8% amidst structural hurdles:
(i) the closure of the Mauritian borders from certain African countries including tourism contributor South Africa due to Omicron rapid spread,
(ii) the inclusion of Mauritius in a “rouge ecarlate” travel ban by the French authorities early December 2021,
(iii) the removal of Mauritius from the FATF grey list late October 2021 but remained on the European black list of high-risk third countries until 7th January 2022.
When we thought the worst was behind us, Russia invaded Ukraine causing seismic repercussions around the world: humanitarian crisis and an unparalleled spike in fuel, food and commodity prices. To exacerbate matters, China locked down certain cities due to the spread of Covid-19, decreased production and weighed on supply chain disruptions.
In these challenging environment, Dr The Honourable Renganaden Padayachy, Minister of Finance, Economic Planning & Development, presented on the 7th June 2022 his third Budget entitled ‘With the People, For the People’ delivered around 3 main drivers:
- Increase of basic retirement pensions by at least Rs1,000
- Lowering of income tax rate between 10 to 12.5% threshold
- Direct monthly income support of Rs1,000
- Increase of petrol & travelling allowance by 10% capped at Rs2,000
- Income tax thresholds increased for personal, dependent, medical insurance, pension contribution & child pursuing tertiary education.
- Abolishment of municipal tax
Inclusive development & sustainability
- Bolstering a food security cluster through a ‘farm to table’ via construction of agro & fruit processing plants
- 25% increase in onion, potatoes, garlic and bean seeds subsidies.
- Providing minimum guaranteed prices for onions, potatoes and beans.
- Initiatives to encourage a return to plantation of abandoned lands through low cost of financing.
Investing in people
- No duty on hybrid and electric cars
- Green Transformation package to foster renewable energy production
- Partnership with private promoters to embark on renewable energy production of 140 MW
- Encouragement of large scaled solar-powered projects
- Reach 60% of total energy production through renewable energy by 2030
On the public investment side, construction retain its recurrent dominant nature with a number of large-scale road decongestion projects announced including strategic flyovers in a number of key traffic areas around Mauritius; renovation & building of new healthcare units; furthering the sewerage and wastewater implementation programme.
The surprise of all those initiatives came through a “no worst” for the taxpayer; especially for the conglomerates & banking sector (left unscathed), which were reporting post Covid-19 gleaming profitability levels and could have been special levied. We expect the stock market to react positively on tomorrow’s session.
On an endnote, Government adopted a disciplined approach in this year’s challenging environment by maintaining budget deficit to 4% of GDP & debt to GDP in fiscal year 2022 to 87.4% (to fall to 78% in FY 2023). The fiscal leeway is aided by CSG’s 8% contribution to total revenue and an economy forecasted to grow by 8.5% in FY2023. On a sour note, we felt the Textile sector (facing skilled labour shortage) and the Fintech hub were orphaned in terms of accompanying measures, which would have made this Budget an astounding all-rounder.
Download the budget brief