Budget Brief 2026-2027

Dr Navinchandra Ramgoolam, Prime Minister and Minister of Finance presented the 2026/27 Budget to the National Assembly on Friday 19 June 2026, his second since his government returned to power in 2024. The Budget Speech was presented amid a complex global economic landscape marked by geopolitical uncertainty, particularly the war in the Middle East which has had rollover effects on energy prices, travel, shipping and global inflation in general. As an island state relying heavily on tourism and imports, the effects have been immediately felt, with the population faced with rising food, fuel and electricity prices as well as a higher key rate of interest.

In line with its theme “The future depends on what we do in the present”, the 2026/27 Budget advocates for fiscal discipline, reduction of public debt and consolidation of the reforms that started last year while ensuring that there is no slow down in the economy. With GDP growth currently at 3.2%, it is now forecasted that the ratio of public sector debt to GDP will decrease from 88% to 80% by 2029. The highlight of this year’s Budget is the furtherance of the pension reform, which started last year. Whilst State Age Pension has so far been universal, it will henceforth be means tested. This measure may prove to be controversial, and it will undoubtedly lead to vivid debates by civil society and potential public push back and political resistance.

From a fiscal perspective, the population and businesses alike will be relieved that Value Added Tax is not going up. Last year’s lowering of the VAT registration threshold to Rs 3 million was already a measure that brought substantial revenue to the coffers of the Government. In so far as personal tax is concerned, the Fair Share Contribution,  which was introduced last year for a period of 3 years, is being scrapped and replaced (potentially indefinitely) by a tax band of 35% which will apply on annual chargeable income above Rs 12 million. From a corporate tax perspective, Corporate Climate Responsibility levy will no longer be offset by foreign tax credits. The application of QDMTT,  a domestic minimum tax applicable on large multinational groups, has unfortunately not been delayed or scrapped.

Overall, this year’s Budget is again a conservative one. It’s success hinges on the Government’s ability to boost its service deliverables,  where public and private sectors collaborate to continuously upgrade business models, push boundaries, and capture higher value. All in a fair environment, where the population’s rights and purchasing power are and are seen to be preserved.

We wish you a pleasant reading.