IMF Article IV - Mauritius 2026: Snapshot

Adil Aboobakar, CFA
May 16
3 min read

Updated: May 17

What an Article IV actually is.

Every year, the IMF conducts a bilateral review of each member country's economy under Article IV of its Articles of Agreement. The findings are the closest thing to an independent, authoritative audit of a country's macroeconomic health. For Mauritius, this is the most credible external assessment available - more rigorous than any local commentary.

What the 2026 mission found was not alarming. But it was pointed.

The headline picture.

Growth slowed to 3.2% in 2025 and is projected to decelerate further to 2.8% in 2026 - a direct consequence of the Middle East war and its effect on tourism. Public debt stands at approximately 88% of GDP, above the statutory ceiling of 80% and elevated for the fourth consecutive year. Inflation, which had eased to around 2.5% in early 2026, is expected to rise again as global fuel and food prices climb. The Bank of Mauritius held its policy rate at 4.5% in February 2026 - a stance the IMF described as broadly appropriate.

Against that backdrop, foreign reserves reached US$10.3 billion at end-2025, covering approximately 13 months of imports. That is a meaningful buffer, and the IMF's overall tone is cautionary rather than alarmed. Mauritius is not in crisis. It is in a tightening cycle, managing real but manageable risks.

What this means for valuation.

Discount rate. Public debt at 88% of GDP, a widening current account deficit, and inflation expected to re-accelerate all put upward pressure on Mauritius's country risk premium. A higher country risk premium means a higher discount rate. That compresses valuations - all else equal. A business valued twelve months ago was valued under materially different macro assumptions. That number needs revisiting.

Tourism-exposed businesses. The IMF has explicitly named tourism as the primary channel of Middle East war spillover. Any business whose revenues correlate with tourist arrivals - directly or indirectly - needs its projections stress-tested against a 2.8% growth scenario, not the more optimistic pre-war baseline. Hotels, retail, transport, and real estate in tourist-facing locations are all in scope.

Financial services. The BOM independence issue is material for the financial services sector. If monetary policy credibility is questioned, the cost of capital for financial institutions rises and sector valuation multiples compress. The IMF's public call for legislative reform of the Bank of Mauritius Act is unusual. It is a signal that this issue is not resolved, and the market will price that uncertainty into financial services valuations until it is.

Real estate. Three consecutive IMF missions have flagged real estate exposure as a monitored risk. Combined with the government's 2025 budget measures - registration duty on foreign property acquisitions of 10% and removing Smart City fiscal incentives - the direction of travel for real estate valuations is under genuine pressure.

The positive. Foreign reserves at US$10.3 billion are a buffer. Mauritius has earned its macro credibility through difficult reforms, and the IMF's 2026 recognition of Mauritius as the first African nation to achieve SDDS Plus status - the IMF's highest data transparency standard - is a meaningful signal of institutional strength.

The picture is not uniform.

Selective, well-supported valuations will hold.

Underpinned assumptions will not.