PREVIEW
War of words on corruption embarrasses Britain as it pays $11.7bn on new military lease in Diego Garcia
Complaining about inheriting a battered and debt-ridden economy, Prime Minister Navinchandra Ramgoolam is planning radical new tax incentives to attract more foreign capital and get wealthy investors to set up family offices on the island to expand its key financial services sector. Officials in Port Louis are worried that the island is losing its status as a gateway to Africa and an offshore financial centre to states such as the United Arab Emirates.
Ramgoolam’s government also has to cut a hefty budget deficit and debt burden left by the former government. After a decade in opposition, Ramgoolam returned to power last November and has been lambasting the record of former premier Pravind Jugnauth (Dispatches, 12/11/24, A change of the dynastic guard). He has sacked the central bank governor and treasury officials.
Yet associates of Jugnauth say that Ramgoolam has yet to answer questions about his conduct when he was in government a decade ago. Claims of financial impropriety under both governments could embarrass Britain which is due to pay Mauritius at least £9 billion (US$11.7bn) for leasing the island of Diego Garcia for a British-United States air base in the Indian Ocean. Earlier this year, Ramgoolam’s officials said the lease may cost much more but appears to have revised its demands.
Last December, Ramgoolam accused Jugnauth of practising ‘voodoo economics’, after commissioning an audit into the state of public finances. He cut the economic growth forecast for 2024 from 6.5% to 5.1% and reported that the Jugnauth government had wrongly claimed that the budget deficit for 2023/24 was 3.9% rather than 5.7%.
Mauritius’ public debt burden was revised: officials reported it was 83% of GDP in June 2024 rather than the 77% of GDP claimed by Jugnauth. The government has issued an arrest warrant for former finance minister Renganaden Padayachy.
Junior finance minister Dhaneshwar Damry has said that the government wants to ‘tap into the ultra-wealthy segment,’ as part of its plans to cut its deficit and debt burden.
‘We are going to continue to focus on real estate as a priority sector but there will also be other priority sectors,’ he added. These are likely to include financial services, with the government hoping to turn Mauritius into a transactions hub. Data from the Mauritian central bank shows that the property sector accounted for 70% of inflows of foreign-direct investment in the nine months of 2024.
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