𝐓𝐡𝐞 𝐅𝐢𝐧𝐚𝐧𝐜𝐞 𝐁𝐢𝐥𝐥 𝟐𝟎𝟐𝟔 𝐚𝐧𝐝 𝐭𝐡𝐞 𝐩𝐞𝐧𝐬𝐢𝐨𝐧 𝐦𝐮𝐝𝐝𝐥𝐞

The Prime Minister and Minister of Finance stated in Parliament recently that the removal of the means-testing of the State Age Pension, after being announced in the Budget Speech, implied higher expenditure of about Rs6.2 bn for the fiscal year 2026-27, representing 0.7% of GDP. The budget deficit, including higher pension spending, and exclusive of the uncertain receipt of Chagos rental income of Rs10.6 bn, would thus stand at around Rs48 bn, or 5.7% of GDP, compared to a deficit of Rs41 bn, or 5.4% of GDP in 2025-26.

The Finance Bill 26-27 did not provide any indication of the offsetting measures required to maintain the deficit at its original estimate of 5% of GDP, excluding Chagos revenue, in order to further bring down public debt towards a more sustainable level in relation to GDP. The PM has only announced the setting up of several committees to come up with new revenue and expenditure measures to offset higher pension spending.

It was most unusual and inappropriate Finance Bill where the budgetary exercise is still incomplete, as the estimate of total budgetary revenues and expenditures is yet to be finalized. The budgeted total amount of Rs50.6 bn for BRP and SAP (30.1+20.5) for 2026-27 is under-provided, while the provision for contingency expenditures is only Rs2.5 bn. 𝐀 𝐬𝐮𝐩𝐩𝐥𝐞𝐦𝐞𝐧𝐭𝐚𝐫𝐲 𝐀𝐩𝐩𝐫𝐨𝐩𝐫𝐢𝐚𝐭𝐢𝐨𝐧 𝐁𝐢𝐥𝐥 𝐬𝐡𝐨𝐮𝐥𝐝 𝐡𝐚𝐯𝐞 𝐛𝐞𝐞𝐧 𝐩𝐫𝐞𝐬𝐞𝐧𝐭𝐞𝐝 𝐭𝐨 𝐚𝐝𝐣𝐮𝐬𝐭 𝐭𝐡𝐞 𝐁𝐑𝐏 𝐚𝐧𝐝 𝐒𝐀𝐏 𝐞𝐱𝐩𝐞𝐧𝐝𝐢𝐭𝐮𝐫𝐞𝐬 𝐮𝐩𝐰𝐚𝐫𝐝𝐬 𝐢𝐧 𝐭𝐡𝐞 𝐥𝐢𝐠𝐡𝐭 𝐨𝐟 𝐭𝐡𝐞 𝐚𝐛𝐚𝐧𝐝𝐨𝐧𝐦𝐞𝐧𝐭 𝐨𝐟 𝐭𝐡𝐞 𝐩𝐞𝐧𝐬𝐢𝐨𝐧 𝐦𝐞𝐚𝐧𝐬-𝐭𝐞𝐬𝐭𝐢𝐧𝐠 𝐦𝐞𝐚𝐬𝐮𝐫𝐞.

Despite the sizeable reduction in the fiscal deficit in 25-26 to 5.4%, public sector debt dropped only by about half a percentage point relative to GDP. Without measures to offset the higher expenditure on pensions, public sector debt ratio will remain unchanged at around 88% of GDP in June 27.

The amendments to the National Pensions Act in the Finance Bill are essentially aimed at (1) providing those affected by last year’s pension measure (to raise the pension entitlement age progressively from 60 to 65 years), with an actuarially reduced pension, and (2) providing a choice to all persons reaching the age of 60 to elect to receive a pension in any year between 60 and 70 years of age, at an actuarially determined amount.

Another amendment provides that the SAP may be increased annually as prescribed, to account for cost of living considerations.

The Budget Annex only stated that “the base BRP will be increased by any rate that Govt may grant in the future”. It is only after the budget speech that Govt started including a constant future hypothetical inflation rate of 3.5% annually to gross up SAP entitlement figures, implying that SAP will be automatically indexed on inflation. However, the Finance Bill does not reflect a full Govt commitment to compensate pensioners for inflation, by using the expression “as may be prescribed”.

The Finance Bill also amended the National Pensions Act to provide for the creation of an Independent Pensions Regulatory Authority (IPRA) to be established by Govt upon advice and reporting by a Steering Committee on Pension Reforms. Currently, the pensions services sector is regulated by the Financial Services Commission. IPRA is, however, expected to do much more than regulation. – it “will have the responsibility to develop a strategic vision and national policy for the entire pension system in Mauritius”. The Commission of Experts on Pension Reforms was entrusted with this role – in its own words to “ Propose legally and financially sound recommendations for reform options, enhancing the long-term viability and social protection effectiveness of the pension system, and evaluate the different pension reform options on individuals. employers, and the overall economy’.

It appears that Govt is now transferring the responsibility for the design of pension reforms from the Commission of Experts to IPRA. IPRA should focus on regulatory issues. Govt should assume its responsibility for pension reforms with the help of pension experts and in consultation with all stakeholders.

The Finance Bill makes no reference to the establishment of a National Contributory Retirement Scheme, and a National Pensions and Provident Fund as the successor to the National Pensions Fund. Yet, it constitutes an important second tier of the national pension architecture, as mentioned in the budget. The budget also announces its operation as from July 2027, as a national retirement scheme eventually subsuming the National Savings Fund and the Portable Retirement Gratuity Fund. The absence of any mention of the NPPF in the Finance Bill means pension reform still exhibits a lack of clear direction – it remains vague.

𝗧𝗵𝗲 𝘂𝗻𝗮𝘃𝗼𝗶𝗱𝗮𝗯𝗹𝗲 𝗰𝗼𝗻𝗰𝗹𝘂𝘀𝗶𝗼𝗻 𝗶𝘀 𝘁𝗵𝗮𝘁 𝗚𝗼𝘃𝘁 𝗵𝗮𝘀 𝗳𝗮𝗶𝗹𝗲𝗱 𝘁𝗼 𝗶𝗺𝗽𝗹𝗲𝗺𝗲𝗻𝘁 𝗽𝗲𝗻𝘀𝗶𝗼𝗻 𝗿𝗲𝗳𝗼𝗿𝗺 𝗮𝘀 𝗽𝗿𝗼𝗽𝗼𝘀𝗲𝗱 𝗶𝗻 𝘁𝗵𝗲 𝗯𝘂𝗱𝗴𝗲𝘁. 𝗚𝗼𝘃𝘁 𝘀𝗵𝗼𝘂𝗹𝗱 𝗵𝗮𝘃𝗲 𝗶𝗻𝘀𝘁𝗲𝗮𝗱 𝗮𝗱𝗼𝗽𝘁𝗲𝗱 𝗮 𝗺𝗼𝗿𝗲 𝗰𝗼𝗻𝘀𝘂𝗹𝘁𝗮𝘁𝗶𝘃𝗲, 𝗽𝗵𝗮𝘀𝗲𝗱 𝗮𝗻𝗱 𝗯𝗮𝗹𝗮𝗻𝗰𝗲𝗱 𝗮𝗽𝗽𝗿𝗼𝗮𝗰𝗵. Pension reform is essential for rebalancing the budget, and restoring fiscal space for more capital spending to help the economy grow faster. 𝗕𝘂𝘁 𝗽𝗲𝗻𝘀𝗶𝗼𝗻 𝗺𝗲𝗮𝘀𝘂𝗿𝗲𝘀 𝘀𝗵𝗼𝘂𝗹𝗱 𝗯𝗲 𝗯𝗲𝘁𝘁𝗲𝗿 𝗯𝗮𝗹𝗮𝗻𝗰𝗲𝗱 𝘄𝗶𝘁𝗵 𝗮 𝗿𝗮𝗻𝗴𝗲 𝗼𝗳 𝗿𝗲𝘃𝗲𝗻𝘂𝗲 𝗮𝗻𝗱 𝗲𝘅𝗽𝗲𝗻𝗱𝗶𝘁𝘂𝗿𝗲 𝗼𝗽𝘁𝗶𝗼𝗻𝘀.

𝐓𝐡𝐞 𝐄𝐜𝐨𝐧𝐨𝐦𝐢𝐜 𝐚𝐧𝐝 𝐅𝐢𝐧𝐚𝐧𝐜𝐢𝐚𝐥 𝐌𝐞𝐚𝐬𝐮𝐫𝐞𝐬 𝐁𝐢𝐥𝐥 𝟐𝟎𝟐𝟔 – 𝐁𝐚𝐧𝐤𝐢𝐧𝐠 𝐀𝐜𝐭 𝐀𝐦𝐞𝐧𝐝𝐦𝐞𝐧𝐭𝐬.

Summary : A financial institution will now be required to provide information to the FCC in compliance with an order or notice under the FCC Act 2023, without a Judge’s order.

The amendment to section 64 of the Banking Act now extends the waiver on bank confidentiality to providing customer information to FCC – a law enforcement agency.

Currently, under Section 64, subsection 9, the Chief Executive of the FSC, the Commissioner of Police, the Director-General of the MRA, or any other competent authority in Mauritius or outside Mauritius who requires any information from a financial institution relating to the transactions and accounts of any person, must apply to a Judge in Chambers for an order of disclosure of such transactions and accounts. Section 64, subsection 10, of the Banking Act already allows the Judge to make a disclosure order if the information is required for the discharge of the applicant’s duties, or for any actual or contemplated legal proceedings under numerous offences under the FCC Act. These offences will now be extended by the EcoFin Bill to cover all financial crimes.

It is aberrant that the CP has to apply to a Judge in Chambers for disclosure of customer information, 𝐰𝐡𝐢𝐥𝐞 𝐭𝐡𝐞 𝐅𝐂𝐂 𝐝𝐨𝐞𝐬 𝐧𝐨𝐭 𝐡𝐚𝐯𝐞 𝐭𝐨 𝐚𝐩𝐩𝐥𝐲 𝐭𝐨 𝐚 𝐉𝐮𝐝𝐠𝐞, 𝐚𝐧𝐝 𝐜𝐚𝐧 𝐨𝐛𝐭𝐚𝐢𝐧 𝐜𝐮𝐬𝐭𝐨𝐦𝐞𝐫 𝐢𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧 𝐚𝐮𝐭𝐨𝐦𝐚𝐭𝐢𝐜𝐚𝐥𝐥𝐲 𝐞𝐯𝐞𝐧 𝐟𝐨𝐫 𝐚 𝐦𝐞𝐫𝐞 𝐢𝐧𝐪𝐮𝐢𝐫𝐲 𝐚𝐧𝐝 𝐢𝐧𝐯𝐞𝐬𝐭𝐢𝐠𝐚𝐭𝐢𝐨𝐧. In the knowledge that the FCC has been misused in the past for political ends, the automatic disclosure of information to the FCC, without a Judge’s order, creates a dangerous situation that undermines customer confidentiality and trust in the Mauritian banking and financial system.

Under a proposed second amendment to section 64, the central bank will become a law enforcement agent with new powers to obtain customer information from a financial institution for the purpose of assisting the FCC. 𝐓𝐡𝐞 𝐁𝐚𝐧𝐤 𝐨𝐟 𝐌𝐚𝐮𝐫𝐢𝐭𝐢𝐮𝐬 𝐰𝐚𝐬 𝐚𝐜𝐭𝐢𝐧𝐠 𝐚𝐬 𝐚 𝐆𝐨𝐯𝐞𝐫𝐧𝐦𝐞𝐧𝐭 𝐃𝐞𝐩𝐚𝐫𝐭𝐦𝐞𝐧𝐭 𝐮𝐧𝐝𝐞𝐫 𝐭𝐡𝐞 𝐩𝐫𝐞𝐯𝐢𝐨𝐮𝐬 𝐫𝐞𝐠𝐢𝐦𝐞, 𝐞𝐱𝐞𝐜𝐮𝐭𝐢𝐧𝐠 𝐝𝐢𝐬𝐚𝐬𝐭𝐫𝐨𝐮𝐬 𝐟𝐢𝐧𝐚𝐧𝐜𝐢𝐚𝐥 𝐩𝐨𝐥𝐢𝐜𝐢𝐞𝐬 𝐟𝐨𝐫 𝐭𝐡𝐞 𝐌𝐢𝐧𝐢𝐬𝐭𝐫𝐲 𝐨𝐟 𝐅𝐢𝐧𝐚𝐧𝐜𝐞. 𝐈𝐭 𝐰𝐢𝐥𝐥 𝐧𝐨𝐰 𝐛𝐞 𝐚𝐜𝐭𝐢𝐧𝐠 𝐚𝐬 𝐚 𝐝𝐞𝐩𝐚𝐫𝐭𝐦𝐞𝐧𝐭 𝐨𝐟 𝐭𝐡𝐞 𝐅𝐂𝐂. BoM should amend its powers and functions accordingly!

𝐓𝐡𝐞 𝐄𝐜𝐨𝐅𝐢𝐧 𝐀𝐜𝐭 𝟐𝟎𝟐𝟔 – 𝐅𝐢𝐧𝐚𝐧𝐜𝐢𝐚𝐥 𝐒𝐞𝐫𝐯𝐢𝐜𝐞𝐬 𝐀𝐜𝐭, 𝐅𝐒𝐂 𝐄𝐱𝐭𝐞𝐫𝐧𝐚𝐥 𝐀𝐮𝐝𝐢𝐭

The Economic and Financial Measures Bill 2026 repeals section 85 of the Financial Services Act relating to the Annual Report and Audited accounts of the Financial Services Commission, to replace it by a new section 85 for the preparation and submission of the FSC’s audited financial statements to be laid before the National Assembly, over a longer period.

𝐓𝐡𝐞 𝐫𝐞𝐚𝐬𝐨𝐧 𝐟𝐨𝐫 𝐭𝐡𝐢𝐬 𝐝𝐞𝐥𝐚𝐲𝐞𝐝 𝐬𝐮𝐛𝐦𝐢𝐬𝐬𝐢𝐨𝐧 𝐨𝐟 𝐭𝐡𝐞 𝐀𝐧𝐧𝐮𝐚𝐥 𝐑𝐞𝐩𝐨𝐫𝐭 𝐚𝐧𝐝 𝐚𝐮𝐝𝐢𝐭𝐞𝐝 𝐚𝐜𝐜𝐨𝐮𝐧𝐭𝐬 𝐢𝐬 𝐭𝐨 𝐚𝐜𝐜𝐨𝐦𝐦𝐨𝐝𝐚𝐭𝐞 𝐭𝐡𝐞 𝐃𝐢𝐫𝐞𝐜𝐭𝐨𝐫 𝐨𝐟 𝐀𝐮𝐝𝐢𝐭, 𝐰𝐡𝐨 𝐜𝐚𝐧 𝐧𝐨𝐰 𝐛𝐞 𝐚𝐩𝐩𝐨𝐢𝐧𝐭𝐞𝐝 𝐚𝐬 𝐞𝐱𝐭𝐞𝐫𝐧𝐚𝐥 𝐚𝐮𝐝𝐢𝐭𝐨𝐫 𝐮𝐧𝐝𝐞𝐫 𝐭𝐡𝐞 𝐧𝐞𝐰 𝐬𝐞𝐜𝐭𝐢𝐨𝐧 𝟖𝟓. Until now, under the FSC Charter, the external auditor can only be appointed by the Board by an open, transparent and competitive selection process. Govt is pressuring the FSC Board to accept the appointment of the Director of Audit as external auditor.

𝐓𝐡𝐢𝐬 𝐢𝐬 𝐭𝐨𝐭𝐚𝐥𝐥𝐲 𝐮𝐧𝐚𝐜𝐜𝐞𝐩𝐭𝐚𝐛𝐥𝐞. 𝐓𝐡𝐞 𝐃𝐢𝐫𝐞𝐜𝐭𝐨𝐫 𝐨𝐟 𝐀𝐮𝐝𝐢𝐭 𝐢𝐬 𝐢𝐥𝐥-𝐞𝐪𝐮𝐢𝐩𝐩𝐞𝐝 𝐭𝐨 𝐜𝐨𝐧𝐝𝐮𝐜𝐭 𝐚𝐧 𝐚𝐮𝐝𝐢𝐭 𝐢𝐧 𝐜𝐨𝐧𝐟𝐨𝐫𝐦𝐢𝐭𝐲 𝐰𝐢𝐭𝐡 𝐬𝐭𝐚𝐧𝐝𝐚𝐫𝐝𝐬 𝐚𝐩𝐩𝐥𝐢𝐜𝐚𝐛𝐥𝐞 𝐭𝐨 𝐚 𝐟𝐢𝐧𝐚𝐧𝐜𝐢𝐚𝐥 𝐬𝐞𝐜𝐭𝐨𝐫 𝐫𝐞𝐠𝐮𝐥𝐚𝐭𝐨𝐫𝐲 𝐢𝐧𝐬𝐭𝐢𝐭𝐮𝐭𝐢𝐨𝐧 𝐚𝐧𝐝 𝐛𝐞𝐬𝐭 𝐢𝐧𝐭𝐞𝐫𝐧𝐚𝐭𝐢𝐨𝐧𝐚𝐥 𝐩𝐫𝐚𝐜𝐭𝐢𝐜𝐞𝐬. The Board of the Bank of Mauritius, another financial regulator, selects its external auditor from experienced and well-recognized private audit and accounting firms. Govt is treating the FSC as any other public institution, which is required under the Finance and Audit Act to submit audited accounts to the Accountant General within 10 months of the close of the financial year.

The appointment of the Director of Audit in lieu of an experienced and recognized auditing firm, as has been the practice since the FSC’s creation, will undermine the perception of FSC’s independence. The Economic and Financial Measures Bill 2026 𝐰𝐢𝐭𝐡 𝐚𝐧 𝐞𝐱𝐜𝐞𝐬𝐬𝐢𝐯𝐞 𝐧𝐮𝐦𝐛𝐞𝐫 𝐨𝐟 𝐆𝐨𝐯𝐭 𝐫𝐞𝐩𝐫𝐞𝐬𝐞𝐧𝐭𝐚𝐭𝐢𝐯𝐞𝐬 𝐨𝐧 𝐢𝐭𝐬 𝐁𝐨𝐚𝐫𝐝, 𝐫𝐞𝐩𝐫𝐞𝐬𝐞𝐧𝐭𝐢𝐧𝐠 𝐭𝐡𝐞 𝐌𝐢𝐧𝐢𝐬𝐭𝐫𝐲 𝐨𝐟 𝐅𝐢𝐧𝐚𝐧𝐜𝐞, 𝐭𝐡𝐞 𝐌𝐢𝐧𝐢𝐬𝐭𝐫𝐲 𝐨𝐟 𝐅𝐢𝐧𝐚𝐧𝐜𝐢𝐚𝐥 𝐒𝐞𝐫𝐯𝐢𝐜𝐞𝐬, 𝐭𝐡𝐞 𝐒𝐨𝐥𝐢𝐜𝐢𝐭𝐨𝐫 𝐆𝐞𝐧𝐞𝐫𝐚𝐥 𝐚𝐧𝐝 𝐨𝐭𝐡𝐞𝐫𝐬. In contrast, the BoM does not have a single Govt representative on its Board. In these conditions, it Is not surprising that it has proved difficult to attract a competent and ethical person to fill the position of FSC Chief Executive.