The primary flaws and gaps in Mauritius’s PFM system include:
𝗜𝗻𝗲𝗳𝗳𝗲𝗰𝘁𝗶𝘃𝗲 𝗗𝗲𝗯𝘁 𝗖𝗲𝗶𝗹𝗶𝗻𝗴: The statutory debt ceiling, originally set at 60% of GDP, has been repeatedly breached and subsequently raised to 80%. Public debt has continued to climb, reaching roughly 88.5% of GDP in the 2024/2025 financial year
𝗢𝘃𝗲𝗿𝗹𝘆 𝗢𝗽𝘁𝗶𝗺𝗶𝘀𝘁𝗶𝗰 𝗙𝗼𝗿𝗲𝗰𝗮𝘀𝘁𝗶𝗻𝗴 𝗮𝗻𝗱 𝗗𝗮𝘁𝗮 𝗠𝗮𝗻𝗶𝗽𝘂𝗹𝗮𝘁𝗶𝗼𝗻: The Medium Term Fiscal Framework (MTFF) has been undermined by overly optimistic macroeconomic, fiscal forecasts and data manipulation, leading to substantial differences between budget projections and actual outcomes.
𝗟𝗮𝗰𝗸 𝗼𝗳 𝗔𝗰𝗰𝗼𝘂𝗻𝘁𝗮𝗯𝗶𝗹𝗶𝘁𝘆 𝗮𝗻𝗱 𝗶𝗻𝗱𝗲𝗽𝗲𝗻𝗱𝗲𝗻𝘁 𝗢𝘃𝗲𝗿𝘀𝗶𝗴𝗵𝘁: There is limited reporting during the financial year and an absence of an early strategic budgeting phase. Additionally, the framework lacks independent monitoring to enforce compliance and corrective actions when targets are missed.
𝗢𝗳𝗳-𝗕𝘂𝗱𝗴𝗲𝘁 𝗥𝗶𝘀𝗸𝘀: The MTFF does not adequately capture or manage risks from state-owned enterprises, special funds, and extra-budgetary entities, which can further undermine public finances.
𝗟𝗶𝗺𝗶𝘁𝗲𝗱 𝗜𝗻𝘀𝘁𝗶𝘁𝘂𝘁𝗶𝗼𝗻𝗮𝗹 𝗖𝗮𝗽𝗮𝗰𝗶𝘁𝘆: MoFED is struggling to successfully maintain a sophisticated macro-fiscal forecasting model, advanced budgeting, risk management and enforcing complex MTFF constraints.
Five years back, the Country Economic Memorandum “Through the eye of a perfect storm ” had also drawn out our attention to these weaknesses:
---Excessive focus on short term measures has led to an overabundance of isolated initiatives with limited analytical foundations and lack of coherence, while the increasing use of off-budget instruments creates challenges for the effectiveness of the budget and MTFF for fiscal management. The reliance on off-budget vehicles and the Central Bank for fiscal activity has undermined the effectiveness of the budgetary process and medium-term fiscal framework to manage and control expenditure. Fiscal risk is increasingly hard to ascertain, as contingent liabilities arise from the operations of SPVs, weakening of the Central Bank’s balance sheet, and its exposure to significant commercial risk.
---At the implementation stage, performance-based monitoring and evaluation (M&E) are often nascent or non-existent. The government has made efforts to develop its monitoring function, focusing largely on financial monitoring, output monitoring of budget measures, and some monitoring in social sectors. However, the key missing link is the results-based monitoring of outcomes and rigorous evaluation of policy implementation that would create the ability to learn from implementation pitfalls and adjust course where needed.
---Strengthening the key function of the budget and MTFF to plan and monitor public finances in a transparent manner will be critical for the government’s ability to manage the fiscal consolidation efforts ahead and make more efficient use of public resources .
While these systemic gaps persist, MoFED and its Junior Minister seem to be satisfied with the status quo- business as usual .
There are enormous challenges ahead, the Ministry will be needing a full-fledged Minister to transform an ineffective MoFED which has not achieved much in terms of “deliverology” so far, with most of its technicians reduced to glorified finance officers mainly carrying out day-to-day administrative work and routine fire-fighting. Indeed , the latest IMF’s Technical Assistance Report : “𝗗𝗲𝘀𝗶𝗴𝗻 𝗢𝗽𝘁𝗶𝗼𝗻𝘀 𝗳𝗼𝗿 𝗙𝗶𝘀𝗰𝗮𝗹 𝗥𝗲𝘀𝗽𝗼𝗻𝘀𝗶𝗯𝗶𝗹𝗶𝘁𝘆 𝗟𝗲𝗴𝗶𝘀𝗹𝗮𝘁𝗶𝗼𝗻 𝗮𝗻𝗱 𝗦𝘂𝗽𝗽𝗼𝗿𝘁𝗶𝗻𝗴 𝗙𝗶𝘀𝗰𝗮𝗹 𝗜𝗻𝘀𝘁𝗶𝘁𝘂𝘁𝗶𝗼𝗻𝘀” is a wake up call for MoFED and leaves little room for passive complacency.
𝗧𝗵𝗲 "𝗪𝗮𝗸𝗲 𝗨𝗽" 𝗥𝗲𝗾𝘂𝗶𝗿𝗲𝗺𝗲𝗻𝘁: The IMF team has officially presented design options for Fiscal Responsibility Legislation (FRL). By publishing these explicit design options for the FRL, the IMF has shifted the goalposts. The ministry can no longer treat structural upgrades and transformations as a "prospect for the future"; they are now an immediate requirement for a really effective , delivering MoFED , thus restoring its credibility- no longer relying on inflated growth assumptions to justify high spending.
Please Find below the "Summary of Recommendations”
