Moody's could lower Mauritius

Moody's Investors Service said it put the government of Mauritius' Baa1 local-currency and Baa2 foreign-currency government bond ratings on review for downgrade because of the size and maturity structure of government debt amid rising domestic interest rates.

Moody's also placed on review the Baa1 country ceiling for foreign-currency bonds, the Baa2 country ceiling for foreign-currency bank deposits, the Aa2 local-currency guideline and the local- currency bank deposit ceiling.

"The change in outlook reflects the ongoing increase in the cost of servicing the domestic debt due to the increasing debt stock over the last decade and currently high interest rates," Moody's vice president Sara Bertin said in a written statement. "Mauritius' high debt levels have been exacerbated by the government's low revenue-to-GDP ratio."

"Of particular concern is the increasing cost of servicing the domestic debt, which hampers the fiscal consolidation process despite better growth prospects and rising fiscal revenues," Bertin said. "Over the medium term, we don't expect to see declines in the fiscal deficit, the debt level or inflationary pressures sufficient to alleviate marginally higher credit risk, hence the downward pressure on the ratings."

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