世界银行-毛里求斯公共支出审查-从韧性到绩效：现代化财政政策以促进疫情后毛里求斯的增长（英）-2023-129页_2mb

Mauritius Public Expenditure Review Summary

Core Content

This report, From Resilience to Performance: Modernizing Fiscal Policies to Boost Mauritius's Growth Post-pandemic, evaluates the current fiscal and public financial management (PFM) frameworks in Mauritius and proposes reforms to strengthen macroeconomic stability, enhance economic growth, and improve equity and efficiency in public spending, particularly in education and private sector development.

Main Views and Key Findings

1. Fiscal Policy Modernization

• Historical Context:
  Mauritius has experienced rapid development over the past 50 years, transforming from a low-income country to an upper-middle-income country and international financial center. However, recent years have seen a decline in economic dynamism.

• Post-pandemic Opportunity:
  The government has the chance to revise its fiscal policies to improve macroeconomic stability and resilience. Expansionary spending over the past decade has weakened fiscal discipline and hindered growth.

• Fiscal Challenges:

  • Public spending is below that of structural and aspirational peers, but consistently higher than revenues, leading to persistent fiscal deficits and rising debt.
  • Social protection spending has increased significantly, now accounting for over 26% of total public expenditure, with basic retirement pensions making up more than half of this.
  • The pandemic exacerbated fiscal imbalances by increasing social benefits and undermining debt dynamics, resulting in two sovereign risk rating downgrades.

• Reform Priorities:

  • Increase revenue mobilization and streamline tax expenditures to maintain current spending levels.
  • Enhance allocative and technical efficiency of public spending to maximize returns from a limited fiscal envelope.
  • Monitor contingent liabilities to manage fiscal risk and improve decision-making.
  • Improve PFM performance through better budget planning, execution, and adherence to fiscal rules.
  • Support green and resilient growth aligned with recent budgetary priorities.

2. Education Sector Review

• Education System Overview:

  • The education system is well-structured, with a significant role played by the private sector.
  • Universal coverage in preschool and primary education is achieved, but challenges persist at secondary and tertiary levels.

• Performance and Equity:

  • Learning outcomes are high compared to the region but fall short of national aspirations.
  • Education outcomes are highly unequal across different socioeconomic groups and regions.

• Inefficiencies:

  • Allocative inefficiency in spending across education levels.
  • High dropout rates in secondary education.
  • Low pupil-teacher ratios driven by demographic changes, leading to higher unit costs.
  • Inconsistent performance in public vs. private education institutions.

• Policy Options:

  • Improve the efficiency of public education spending.
  • Address inequities in access and outcomes.
  • Align education investment with long-term economic and social goals.

3. Private Sector Development

• Impact of the Pandemic:

  • The pandemic disrupted private sector development programs, necessitating emergency support measures such as the Plan de Soutien and Plan de Reliance.
  • These measures aimed to support firms and workers, revive traditional sectors, and incentivize new economic activities.

• Current Programs:

  • State support programs are directed toward various sectors and firm sizes.
  • They use a range of instruments, including subsidies, tax incentives, and direct support.
  • The government needs to align these programs with international best practices to enhance their effectiveness.

• Innovation and Productivity:

  • Mauritius invests in both incremental and radical innovation, but lags behind peer countries in terms of innovation output and R&D investment.
  • The country needs to strengthen its national innovation systems to support a transition to a knowledge-based economy.

• Key Messages:

  • Enhance the contribution of private sector development programs to national policy objectives.
  • Improve targeting and efficiency of support measures.
  • Foster inclusive growth and resilience through better fiscal and PFM reforms.

4. Public Financial Management (PFM) Framework

• Strengths and Gaps:

  • Mauritius has a strong PFM framework in Africa, but it is incomplete compared to high-income countries (HICs).
  • Institutional framework is sound, but important gaps remain in implementation and monitoring.

• Budget System Challenges:

  • Expenditure rigidity limits reallocation of resources.
  • Volatility and uneven execution across spending categories.
  • Adherence to formal budget processes and fiscal rules is essential for restoring fiscal discipline.

• Reform Recommendations:

  • Implement additional PFM reforms to improve transparency, accountability, and efficiency.
  • Strengthen monitoring and evaluation mechanisms.
  • Enhance budget execution and alignment with policy priorities.

5. Conclusion and Recommendations

• Fiscal Reforms:

  • Realign revenues and expenditures to address fiscal imbalances.
  • Increase social contributions to support social benefits sustainably.
  • Implement revenue-neutral reforms, such as the Contribution Sociale Généralisée (CSG), to improve equity and efficiency.

• Tax System Reforms:

  • Reduce excessive tax incentives and improve tax neutrality and efficiency.
  • Streamline personal income tax exemptions and consider a single low tax rate for all capital income.
  • Scale back VAT exemptions and zero-ratings to increase revenue without raising tax rates.

• PFM and Budgeting:

  • Strengthen budgetary processes and fiscal rules.
  • Improve expenditure flexibility and execution efficiency.

• Green and Resilient Growth:

  • Leverage low-carbon growth potential to align with recent budgetary priorities.
  • Support renewable energy and green recovery as new drivers of economic growth.

• Education and Innovation:

  • Improve efficiency and equity in education spending.
  • Enhance innovation systems and R&D investment to support a knowledge-based economy.

Key Figures and Data Highlights

• Social Contributions vs. Social Benefits:

  • Social contributions in Mauritius cover only 14-17% of social benefits, significantly below comparator groups.
  • The CSG is proposed as a revenue-neutral measure to increase social contributions.

• Tax Composition:

  • Indirect taxes account for the bulk of tax revenue.
  • Direct taxes are underdeveloped, and tax incentives often undermine tax base and equity.

• Education Expenditure:

  • Public education spending is below that of structural and aspirational peers.
  • Learning outcomes are high in the region but low for national aspirations.

• PFM Performance:

  • Budget execution is volatile and uneven.
  • Reforms are needed to improve transparency, accountability, and efficiency.

References and Annexes

• The report includes annexes with detailed data on social contributions, tax structures, education outcomes, and PFM frameworks.
• Peer countries and comparators are used for benchmarking and analysis.
• Behavioral science insights are suggested to improve tax compliance and revenue administration.

Final Note

Mauritius has the potential to restore its high-income status and transition to a knowledge-based, green, and resilient economy through well-designed fiscal reforms, improved PFM, and enhanced education and innovation systems. The report emphasizes the need for targeted and efficient public spending, sustainable revenue mobilization, and inclusive growth strategies.