Prudent, proactive fiscal policy
A hallmark of economic management in Mauritius in recent decades has been prudent fiscal policy,
which has helped both maintain macroeconomic stability and contribute to growth. Fiscal policy in
Mauritius has focused on ensuring that spending remains linked to the resource availability. While there
have been fiscal imbalances, there is no history of the government borrowing from the central bank or
from aid agencies. The strong growth in the 1980s led to a decrease in recourse to foreign financing. The
budget deficit which was at 3 percent in 1983, turned into a budget surplus by 1987, as current
expenditures shrank from 26 percent of GDP to 21 percent in 1987 while government revenues
remained flat, around 24 percent over the same period. On the expenditure side, the government
withdrew from subsidies on food items and kept the wage bill under control during that period.