Government is firmly committed to bringing the public sector debt to Gross Domestic Product (GDP) ratio down to 60% by the end of June 2021. The strategy, to bring down the public sector debt to a more sustainable level is multi-pronged and is spelt out in Budget 2019-2020.
This reply was given, today, by the Prime Minister, Minister of Home Affairs, External Communications and National Development Unit, Minister of Finance and Economic Development, Mr Pravind Kumar Jugnauth, at the National Assembly, to a Parliamentary Question pertaining to the measures being taken to stop the increasing trend with regard to the public sector debt as a ratio of GDP.
The Prime Minister highlighted that the first strategy is to boost economic growth and expand GDP at a faster pace leading to a reduction in the debt ratio. For the past three years, he said, the GDP growth rates have been higher at 3.8% compared to a low rate of 3.4% in 2013. For 2019, Statistics Mauritius has forecasted a GDP growth rate of 3.9%, he added.
He emphasised that Government is providing the necessary support to productive sectors to overcome the challenges with a view to sustain growth momentum. Accordingly, he stated that in the sugar sector, planters will be paid Rs 25,000 per tonne of sugar for the first 60 tonnes of sugar accruing to them, which will be more than double the price that they would otherwise have obtained.
With regard to the manufacturing sector, Prime Minister Jugnauth spoke of extending the 'Support for Trade Promotion and Marketing Scheme' for another year to improve competitiveness of exporters. To this end, he indicated that the Economic Development Board will set up small industrial and business zones across the island.
As for the tourism sector, he elaborated that the Mauritius Tourism Promotion Authority will redynamise the Shanghai and Kenya routes as well as reinforce the visibility of the Mauritius destination in traditional markets. A Passenger Cruise Terminal Building is being built to promote cruise tourism and significant investments are being made to diversify and improve the tourism product, he added.
Speaking about the financial services sector, the Prime Minister pointed out that Mauritius is now fully compliant with the standards of the OECD on transparency and exchange of information for tax purposes. He spoke of the tremendous progress made towards complying with the FATF recommendations on AML/CFT. The financial services sector, he stated, is now attracting more and more investors in Fintech while also highlighting on further diversifying the product base of the international financial centre.
The second strategy, he underlined, is to keep the budget deficit at a low and sustainable level. He emphasised that the budget deficit will stay around the 3 % benchmark and added that on the revenue side, buoyancy in revenue collection is being ensured. He referred to the solidarity levy on high income earners introduced in the financial year 2017/2018 and stated that the Voluntary Disclosure of Income Scheme and the Arrears Payment Scheme are being extended for another year.
With respect to tax administration, the Prime Minister put forward that the Mauritius Revenue Authority is harnessing the advancement in technology to facilitate and enhance compliance behaviour amongst the taxpayers' community.
As regards expenditure, he stressed that the objective is to do more with less and improve the quality of spending by containing recurrent expenditure, therefore making every effort to eliminate wastage and unproductive expenditure.
To this end, the Prime Minister mentioned that a Committee has been set up under the Ministry of Justice, Human Rights and Institutional Reforms to examine the Reports of the Director of Audit and propose measures to address the weaknesses and shortcomings. In addition, the budget for mission expenses has been significantly reduced from Rs 160 million last year to Rs 120 million this financial year, he said.
Moreover, he pointed out that limited resources are being used judiciously by right prioritising of investment projects. To reduce the burden of debt on Government, he indicated, greater private sector participation is being encouraged in public sector infrastructure and other projects.
Referring to the third strategy, the Prime Minister stated that it is to restructure public enterprises so that they are less dependent on the budget. On this score, he underlined that following a financial restructuring exercise, the Development Bank of Mauritius Ltd has been able to turn around its financial situation and is now operating on sound financial footing. Similarly, he added, after the merger of the different institutions into the Landscope (Mauritius) Ltd, the operational cost has been reduced by 24 %.
The fourth strategy, he highlighted, is the early repayment of expensive external debt. He emphasised that some 97.8 % of the Rs 18 billion foreign debt that we are prepaying were borrowed by the former Government. With the prepayment of the foreign debt, he said, the country will be saved of some Rs 400 million of interest payments yearly.
Prime Minister Jugnauth highlighted that the aim is to achieve total adherence to the golden rule in public finance, which is, borrowing only to finance investment expenditure, thus ensuring the sustainability of public finance and bring public sector debt below 60 % of GDP in the years to come.