Mauritius Holds Steady: How Fiscal Fortitude and Tourism Drive Stable Ratings Amid Global Uncertainty

S&P Global Ratings’ recent affirmation of Mauritius’s sovereign credit rating at BBB-/A-3 with a stable outlook underscores a nation navigating global headwinds with disciplined fiscal management and a resilient economy. While challenges loom, the island nation’s ability to balance growth, debt reduction, and external stability positions it as a cautiously optimistic play for investors.

The Pillars of Resilience

S&P’s decision hinges on three core strengths: economic rebound, fiscal discipline, and robust external liquidity.

1. Tourism-Driven Growth

The rebound of Mauritius’s tourism sector has been a linchpin of recovery. After pandemic-induced slumps, visitor arrivals surged, bolstering foreign exchange reserves and GDP growth. With its pristine beaches and eco-tourism offerings——the sector remains a cornerstone of growth. S&P notes that tourism revenue alone accounts for 25% of GDP, making its revival critical to sustaining the primary fiscal surplus.

2. Fiscal Prudence Amid Rising Costs

Mauritius has maintained a disciplined fiscal stance despite rising global interest rates. The government’s focus on reducing public debt—now at 65% of GDP, down from peaks of nearly 70% in 2020—reflects austerity measures and prioritization of debt service. S&P highlights the primary surplus of 3% of GDP as evidence of fiscal resilience, even as debt-servicing costs rise.

3. External Liquidity Shields Against Shocks

Foreign exchange reserves, sufficient to cover over 9 months of imports, and a low external debt-to-export ratio of 15% provide a safety net against external shocks. This liquidity buffer contrasts sharply with peers in sub-Saharan Africa, where currency crises and balance-of-payments strains are more common.

The Clouds on the Horizon

Despite these positives, S&P flags three vulnerabilities that temper optimism:

High Public Debt Stock

At 65% of GDP, public debt remains elevated, limiting fiscal flexibility in the face of future crises. While lower than recent peaks, it still constrains the government’s ability to invest in infrastructure or social programs critical to long-term growth.

Inflation Risks

Global commodity price volatility and domestic wage pressures threaten to erode gains. The Reserve Bank of Mauritius has raised rates to curb inflation, which stood at 6.5% in early 2025—above the central bank’s target range.

Structural Weaknesses

Mauritius’s narrow economic base—reliant on tourism, textiles, and financial services—leaves it vulnerable to sector-specific shocks. Sluggish productivity growth, partly due to an aging workforce and skill mismatches, risks capping potential GDP expansion.

Investment Implications: A Balanced Play

For investors, Mauritius presents a medium-risk opportunity. Its stable rating and external resilience make it attractive for fixed-income investors seeking yield without excessive volatility. However, equity investors should focus on sectors with direct ties to tourism recovery or financial services.

The stable outlook suggests that risks are manageable if the government adheres to fiscal rules and tackles structural reforms. S&P’s affirmation hinges on maintaining the primary surplus and avoiding new debt issuance, even as global interest rates remain elevated.

Conclusion: A Steady Hand in an Unsteady World

Mauritius’s BBB- rating reflects a nation balancing fiscal rigor with economic momentum. With tourism revitalized, debt under control, and ample foreign reserves, it has the tools to weather near-term headwinds. However, its 65% debt-to-GDP ratio and reliance on a narrow economic base mean long-term growth hinges on diversification and productivity gains.

For now, the stable outlook is justified: S&P’s affirmation signals that Mauritius is navigating uncertainty with discipline, but investors must monitor two key metrics—public debt trends and tourism revenue growth—to gauge whether this equilibrium holds. In a world of rating downgrades, Mauritius’s stability stands as a testament to prudent policymaking—a rare commodity indeed.