Mauritius: Selected Issues

This Selected Issues paper assesses the extent to which Mauritius can recalibrate its fiscal policy to restore fiscal sustainability while protecting the poor and the vulnerable. The paper takes stock of the evolution of poverty and inequality in recent years. It also discusses potential options to reform social transfers and tax exemptions while safeguarding poverty objectives. With currently limited fiscal space to support long-term growth, Mauritius aims to rebuilding policy buffers through fiscal consolidation while preserving the recent gains in social and poverty indicators. Analysis based on the 2023 household survey data suggests that there is room to make savings on social expenditure and increase tax revenue. Policies to achieve this may include better targeting of social benefits and reforming the value-added tax and personal income tax through streamlining of exemptions and allowances and reducing the tax payment threshold. It should be possible to implement these measures while continuing to protect the poor and the vulnerable.