Mauritius Budget 2021 – 2022

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2020 was a very difficult year for the whole world, and Mauritius was no exception. The first local Covid-19 cases were registered in March 2020 which prompted a total lockdown for about 10 weeks. This hard and painful lockdown was successful at stopping the spread of the virus and for about 8 months Mauritius remained Covid-free, or Covid-safe. During this period, businesses were able to operate but, with the imposition of draconian measures on arriving passengers, certain sectors such as the tourism sector were badly hit. The country unfortunately witnessed a new outbreak in March 2021 and as a result, a second lockdown, though with less stringent restrictions compared to the first, was imposed for 7 weeks.

In the aftermath of these two lockdowns and their adverse effects on the economy, The Honourable Dr Renganaden Padayachy, Minister of Finance, Economic Planning and Development presented his second Budget for the fiscal year 2021/22 on Friday 11th June 2021. With a contraction in GDP estimated at 14.9% for 2020-21, the Government has had to dig deep into the state’s coffers to assist employees, self-employed persons and businesses affected by the lockdowns and reduced commercial activity.  The Minister’s room for manoeuvre was expected to be extremely limited and it was feared that an increase in certain tax rates and /or the introduction of new taxes were unavoidable.

Rather than focusing on a balanced Budget and decreasing public debt, the 2021/22 Budget surprisingly saw the Minister opting for a no tax budget and announcing a plethora of measures intended to boost the economy. As such, the Minister outlined three main pillars on which his budget would rely on, namely: “Giving an Exceptional Boost to Investment; Shaping A New Economic Architecture and Restoring Confidence.” In line with his previous budget, the Minister announced an extensive list of upcoming infrastructure projects all around the island.

Recognising that all the announced measures would only work if the economy is allowed to operate, the Minister reiterated the Government’s aim of vaccinating a majority of the population and reaching herd immunity.  Motorists will thus be required to foot the bill of acquiring the required vaccines by paying an extra Rs 2 more per litre of petrol. The decision to reopen our borders to vaccinated tourists as from the 15th July 2021 remained the most cheered move but, similar to all countries, the uncertainties surrounding international travel remain.

The business community was pleased to hear the various measures to attract foreign investors and talent through the occupation permit system, improvements of the ease of doing business and tax incentives for certain sectors. However, the increase in public debt, although ‘’understandable’’ in the Covid-19 era, is a major concern.