“Most Mauritians are less concerned with political drama than with the economic reality they face every day”

Interview: Sameer Sharma, Economist & Financial Risk Manager

‘The priority should not be electoral reform — which has been debated for decades and can wait — but deep economic reforms’

* ‘You cannot simply raise the retirement age from 60 to 65 overnight — reform must be phased in over 5–10 years and built on consultation’

* ‘Without a break from the current appointment culture and patronage politics, the government risks losing the momentum it gained from its supermajority’

One year after the 2024 general elections, Mauritius finds itself at a crossroads. The Alliance du Changement swept into power on promises of renewal and structural reform, armed with a supermajority that, in theory, should have enabled bold, decisive action. Yet the realities of governing a fragile economy, dealing with entrenched interests, and rebuilding weakened institutions have proven far more complex. In this interview, with the Mauritius Times, Sameer Sharma, economist, investment analyst and financial risk manager cuts through political narratives to examine whether the government has truly begun the rupture it promised — or whether Mauritius risks another cycle of incrementalism.

Mauritius Times: The new government, led by the Alliance du Changement (AdC), secured a supermajority in the 2024 general elections. One year down the line, how effectively would you say the government is leveraging this significant parliamentary majority to implement its ambitious electoral manifesto and advance key reforms?

Sameer Sharma: The Alliance du Changement entered office with a commanding parliamentary majority, which in theory should have given it the political capital to push through difficult but necessary reforms. Yet, one year later, the record is mixed at best.

When the government first came in, it commissioned a “State of the Economy” report. The findings were sobering, though not surprising to most observers. The report highlighted:

* Institutional decay across key governance structures.

* Distorted national accounts, with figures that had been massaged to present a rosier picture than reality.

* A debt-driven consumer economy, heavily reliant on borrowing to finance imported goods rather than productivity gains.

* A fragilized central bank, whose independence and credibility had been eroded.

* Overvalued and illiquid Mauritius Investment Corporation assets with major potential losses in the tens of billions should these assets ever be marked to market.

* Dysfunctional state-owned enterprises, burdened with weak balance sheets and chronic inefficiencies.

* A currency under pressure, with the rupee showing structural weakness against the US dollar and other major currencies.

In short, the report spoke of the obvious: Mauritius was facing systemic weaknesses that had been accumulating for years. Fast forward a year, however, and the government’s ability to leverage its majority has been underwhelming. Beyond some unpopular pension reforms and an almost obsessive focus on credit ratings from Moody’s — ratings that matter less in a country that does not issue Eurobonds and instead relies mainly on concessional financing from multilateral institutions (though a handful of banks’ Global Business Company (GBC) deposits would still be impacted) — progress has been limited.

Yes, the government has tried to stabilize prices of essential commodities, and it has introduced public pension adjustments. But the deeper structural challenges remain untouched:
The pension system — both public and private — is a ticking time bomb, with low investment returns and unsustainable promises. Local markets are underdeveloped, strategic asset allocation frameworks are primitive, and contributions are too low to compensate for the funding gaps.
The central bank remains constrained, lacking credibility. Its image remains tarnished by recent scandals. Core inflation and producer price inflation are still high. The rupee-dollar exchange market is broken, illiquid and the official spot rate operates below equilibrium with offshore rates trading well above the official spot price and given large supply demand mismatches at the official price. There is no such thing as FX stability without liquidity. Furthermore, there has been a lot of pressure from obvious quarters to avoid any independent forensic audit of MIC assets and nor have we so far revalued these assets properly.

Many in Statistics Mauritius and in the Ministry of Finance who helped to cook the books are still there. Incidentally there are still some obvious statistical discrepancies in our national accounts.
There has been no serious move toward privatization of loss-making state-owned companies. Politicians still believe that they know how to run companies and play patronage politics despite more than three decades of poor results.
The private sector remains very concentrated, and their lobby groups continue to have significant influence over policy making, with entrenched oligopolies stifling competition and innovation. Small and medium enterprises (SMEs) are struggling while large conglomerates continue to benefit from the windfall of a weaker currency and badly structured bailouts.

In essence, the government has not used its supermajority to push through the bold reforms Mauritius desperately needs. Instead, it has focused on short-term optics — price stabilization, ratings agency appeasement — while leaving the structural rot largely intact. The gap between the ambitious electoral manifesto and the actual policy delivery is stark, and one year in, the window of opportunity is already narrowing.

* The restoration of democratic freedoms stands out as a major, undeniable positive development, even if its impact has been tempered by significant negatives, including controversial strategic appointments and the slow pace of implementing major manifesto reforms. To what extent do you think these have eroded the government’s initial political capital, and how might this impact their ability to pass challenging, but necessary, non-reform legislation in the coming years?

The restoration of democratic freedoms is undeniably a positive achievement. It has rebalanced the political space and given citizens greater confidence in their ability to voice dissent and hold leaders accountable. But this gain has been offset by the persistence of old habits in governance — particularly in the way strategic appointments are made.

A year ago, Mauritius operated under what many described as a “monarch-and-advisors” model, where a small circle of decision-makers claimed near-divine authority in selecting technocrats. One year later, the setup sadly remains largely unchanged. The absence of proper due diligence and recruitment frameworks has led to questionable appointments, including the nomination of individuals with no prior management experience or promotion history to lead major institutions. This undermines credibility and signals that appointments are still driven by patronage, lobbying, and the preferences of a narrow elite rather than merit and institutional needs.

This dynamic erodes political capital in two ways: it diminishes public trust as citizens see little difference between the old and new regimes when it comes to governance culture, diluting the promise of change by the continuation of patronage politics; and it harms institutional credibility, as key institutions risk being weakened further when leadership is based on loyalty rather than competence, which makes reform implementation slower and less effective.

The broader economic consequence is equally concerning. As long as the state continues to manage a large portfolio of dysfunctional companies that should have been privatized, the patronage game will persist. These enterprises become vehicles for political reward rather than engines of growth. The result is a mediocre growth trajectory — hovering below potential — when Mauritius could realistically achieve 4% to 4.5% growth if bold structural reforms were pursued.

Looking ahead, this erosion of political capital will constrain the government’s ability to pass challenging but necessary legislation. Pension reform, central bank independence, privatization, and market liberalization all require political courage and credibility. Without a break from the current appointment culture and patronage politics, the government risks losing the momentum it gained from its supermajority. The danger is that it becomes trapped in short-term optics and incrementalism, rather than using its mandate to deliver transformative change.

* As regards the controversial pension reform initiative, the government has left it to a specialist committee to work out a more palatable proposal for old-age pensioners, but the decision will ultimately have to be a political one. What do you think could be a more just and politically feasible solution?

You cannot simply raise the retirement age from 60 to 65 overnight — reform must be phased in over 5–10 years and built on consultation. A fairer, more sustainable approach to securing the pension system would combine several key elements.

A necessary step is shared responsibility, requiring large firms that benefited from mispriced MIC assets and oligopolistic rents to face windfall profit taxes, while the government must concurrently commit to serious cost-cutting internally.
Furthermore, restructuring and privatization is essential: selling or restructuring dysfunctional state-owned companies would raise necessary funds and is far more just than placing the entire burden on pensioners. This move would also benefit the economy by killing off the system of political patronage and improving overall productivity and innovation.

The transition requires a funded system transition, whereby contributions are shifted into a new Retirement Fund that absorbs the National Pension Fund (NPF) assets. This new fund must operate with higher contributions and stronger governance. To manage these assets effectively, an investment strategy based on liability driven investing (LDI) is needed, involving more international diversification for pension funds and the launching of a modern LDI framework that combines Strategic Asset Allocation and Tactical Asset Allocation, all under professional oversight.
Mauritius urgently needs an independent manager of all public assets, as the current amateurism is costing billions, contributing to the negative funding gap of the NPF. Finally, this must be supported by capital market deepening: strengthening local markets, modernizing the way investments are managed, diversifying into alternatives, and modernizing asset allocation to effectively capture liquidity premia.

In short, pension reform must be phased, fair, and anchored in structural reforms and professional asset management — not simply “screwing pensioners” while leaving state inefficiencies untouched.

* On the other hand, to what extent does it seem that key institutions — such as the Bank of Mauritius (BoM), the anti-corruption bodies (like the FCC), or the Independent Broadcasting Authority (IBA) — have demonstrated political independence post-transition?

Institutional independence remains work in progress.
The Bank of Mauritius is the clearest example. One year after transition and firings along the way, it has still not commissioned a proper forensic audit of MIC assets by a reputable international firm. Instead, we had references to the World Bank or IFC doing “quick audits” — but these are not forensic auditors with expertise in valuing illiquid frontier-market assets. The fact that the former MIC Board has not been held accountable for missteps only reinforces the perception of a clueless FCC.

The deeper issue is structural: politicians and private sector lobby groups continue to exert influence over key policy decisions. Asset valuations on the BoM balance sheet remain inflated, even though everyone knows actual disposal prices would be far lower. Without transparency and external validation, credibility is eroded.

More broadly, weak governance practices undermine independence:
– recruitment processes are opaque, with nominees consistently tied to political patrons.
– the use of three-year contracts ensures that appointees remain beholden to politicians, and
– the absence of performance-linked Key Performance Indicators (KPIs) means that accountability is absent.

This pattern extends beyond BoM, FCC, and IBA — even the judicial system remains slow and inefficient, further weakening institutional trust. Until Mauritius embraces merit-based recruitment and performance-linked accountability, independence will remain more rhetoric than reality.

* A first — or rather a repeat of 1982-83 — is the publicly aired disagreement voiced by DPM Paul Bérenger over what he calls controversial appointments, the slow pace of reform, and above all the delay in electoral reform. Electoral reform has been debated for decades, and its politicisation has become yet another point of tension within the ADC. If internal disagreements within the ADC crystallize, that can hardly be good news for the governing alliance, can it?

Frankly, most Mauritians are less concerned with political drama than with the economic reality they face every day.

While the government and BoM highlight headline inflation at 4.1%, core inflation and producer prices have been running above 6% for most of the year — a clear sign of persistent cost-push pressures. At the same time, real growth is tepid at 3.2%, leaving households squeezed and businesses cautious. In that context, the priority should not be electoral reform — which has been debated for decades and can wait — but deep economic reforms that restore confidence, unlock growth, and generate optimism.

Without structural reforms to pensions, state-owned enterprises, capital markets, and a crucial revamping of the competitive landscape and governance, which are far more urgent, Mauritius will continue to stagnate, regardless of how electoral reform debates play out inside the ADC.
One could argue that political financing reform is the only exception here, deeming it equally important as economic reforms. This is because the practice of political financing by businesses and powerful lobby groups is widely recognized as a significant driver of corruption. Consequently, implementing such reforms would greatly erode the influence of these powerful lobby groups.

* Public trust has been eroded by recurring corruption allegations, especially in relation to questionable practices during the previous government’s tenure. There are now innuendoes about new players in the game. What is your view on the effectiveness of the current legal and institutional framework (like the proposed new crime agency) in tackling high-level corruption and ensuring impunity is addressed?

Mauritius has become adept at writing laws with loopholes that look good on paper but fail in practice. We then create costly new institutions at taxpayers’ expense, which mainly serve as vehicles for politicians to nominate more people and extend patronage networks. This cycle does little to reduce corruption.

When these loophole-ridden laws are combined with a slow, overly procedural judiciary, the result is predictable: impunity persists. The proposed crime agency risks becoming yet another layer of bureaucracy unless the fundamentals change.

The real solution is not more agencies, but less political intrusion.

If we want to reduce corruption, we must stop giving politicians control over state-owned companies, licenses, and discretionary approvals. Instead, the state should focus on creating a competitive, fair environment where the private sector can thrive, which effectively reduces the importance of politicians in everyday economic life.

The more “toys” politicians have to play with — whether companies, boards, or licences — the more corruption will remain entrenched. What Mauritius needs is a dynamic private sector, more economic freedom, and fewer opportunities to bribe for advantage. Only then will public trust begin to recover.

* What do the latest statistics tell us about the state of the economy – both locally and globally – and the direction in which we are heading? Are there areas where the current government has fallen short — missed opportunities that could have helped bolster economic performance?

Globally, the situation can be summarized as follows:

Growth recession, not crash: I expect a near-term “growth recession” globally — below-potential growth with sticky core inflation — followed by a rebound led by technology and capex led by the US, rather than a hard landing or bubble burst.
AI and capex tailwinds: The expected recovery is supported by sustained AI-related investment and responsive policy adjustments to market conditions.
2026 reacceleration risk-balanced: We are likely going to see a reacceleration into 2026, but there are concentration risks, and we should expect a K-shaped outcome across consumers and equity markets.

As pertains to Mauritius, an analysis of the current economic data and projected future direction suggests that:
Growth is subdued: Official projections point to roughly 3.1–3.2% real GDP growth for 2025, with modest momentum into 2026 — driven mainly by tourism and services while construction and manufacturing remain weak.
Inflation optics vs reality: CPI eased to 4.1% YoY in October 2025, but core inflation remains elevated at 6.6%, consistent with ongoing cost push pressures; the policy rate is on hold at 4.50% and will not change for a while given that the transmission mechanism itself is broken and given cost push vs demand pull factors.
External balances strained: Trade deficits remain large; current account deficits have not narrowed enough and persisted through mid-2025, underscoring external vulnerabilities and the need for FX market rebalancing.
Labour market soft spots: Unemployment may appear low, but job creation is tepid and concentrated, aligning with concerns about weak public sector spending and constrained competition.
Tourism resilient but narrow: Arrivals and earnings have held up, yet over-reliance on tourism and services limits diversification and productivity gains.
Two-Tiered Private Sector: Conglomerates and large banks are doing well but SMEs are struggling with debt and mounting cost pressures.

* Beyond the immediate responsibility of overseeing the affairs of the state, what three to five critical long-term strategic areas should the Prime Minister and Minister of Finance prioritize to align with his party’s “rupture” agenda — focusing not on day-to-day governance?

To truly deliver on a rupture agenda and move beyond short-term fixes, the government must focus on comprehensive structural transformation. The most urgent priorities should be centred on five key areas.

The first priority is ensuring pension and fiscal sustainability. This necessitates a phased reform of the pension system, including the creation of a funded Retirement Fund, managed through professional asset management. Concurrently, major steps must be taken toward privatisation, restructuring, and free market reforms. This means reducing the state’s footprint in inefficient State-Owned Enterprises (SOEs), restructuring them and raising funds via listings, which will, in turn, cut patronage politics. This must be complemented by a thorough revamping of the competitive landscape of Mauritius to promote free and fair competition.

Next, the focus should shift to capital market deepening by modernizing both fixed income and equity markets and further developing alternative forms of financing to increase economic resilience. This effort must be supported by an initiative for skilled immigration openness to attract essential talent, offset demographic decline, boost innovation, and strengthen competitiveness. Critically, this immigration strategy should happen in parallel with major education reforms aimed at dramatically improving the human capital base.

Finally, the government must restore institutional credibility. This requires implementing merit-based recruitment, instituting performance-linked accountability, and guaranteeing stronger independence for key bodies like the Bank of Mauritius (BoM), the Fair Competition Commission (FCC), and Statistics Mauritius. Significant judicial reforms focused on efficiency are also essential so that justice delayed is no longer viewed as justice denied.

Mauritius Times ePaper Friday 28 November 2025