Government activates contingency measures as Middle East conflict threatens economic stability

GIS – 17 March 2026: The Prime Minister, Dr Navinchandra Ramgoolam, today cautioned that the escalating conflict in the Middle East poses significant risks to Mauritius’ economic stability, while reassuring the population that Government has already activated a comprehensive response framework to safeguard citizens, secure essential supplies and cushion the economy against external shocks. Replying to a Private Notice Question in the National Assembly, the Prime Minister described the situation as a “global turmoil” with potentially “devastating economic repercussions” for small, import-dependent economies such as Mauritius. Dr Ramgoolam underlined that he has been personally monitoring developments since the outbreak of hostilities and has been in continuous contact with both local ministries and international partners to coordinate timely interventions. A key immediate priority, he said, is the safety of Mauritian nationals stranded in the affected regions. Government moved swiftly to facilitate repatriation, engaging international airline operators and mobilising diplomatic missions. Through coordinated efforts involving Mauritius’ missions in Riyadh and Islamabad, as well as its Consulate in Dubai, some 228 Mauritians were assisted via a dedicated hotline. Of these, the majority have already returned home through commercial and special flight arrangements, including additional flights secured on the Dubai–Mauritius route. Dr Ramgoolam pointed out that diplomatic channels were also leveraged to assist Mauritians in more complex situations, including evacuations from Iran and Israel, with support from partner countries. He reaffirmed Mauritius’ call for de-escalation and peaceful dialogue, aligning with positions expressed by major international organisations. With regard to the economic impact, Dr Ramgoolam recalled that Mauritius remains highly exposed due to its reliance on imported fuel and food. He listed out soaring import costs, increased freight and insurance charges, and potential declines in tourism and investment as the main transmission channels of the crisis. According to assessments by the Macroeconomic Coordination Committee, GDP growth for 2026—initially projected at 3.4%—could fall to around 3.2% if the conflict is short-lived, and below 3% in the event of a prolonged crisis. Inflation, initially forecast at 4%, could rise to as high as 6%, driven largely by surging global oil and commodity prices. Tourist arrivals are also expected to drop below earlier projections of 1.45 million, while the current account deficit could widen to around 6% of GDP. Public finances are likewise expected to come under strain, with lower revenues anticipated due to subdued consumption and tourism activity, compounded by a projected Rs 10 billion shortfall linked to delays in the Chagos agreement. The budget deficit, the Prime Minister indicated, could increase by up to 2% of GDP. In a bid to address these challenges, a High-Level Committee chaired by the Financial Secretary has been established, bringing together key public institutions and private sector representatives. The committee, said Dr Ramgoolam, is tasked with closely monitoring developments, coordinating policy responses and identifying both risks and opportunities arising from the crisis. Regular working sessions are being held to support small and medium enterprises, strengthen supply chains, enhance food and energy security, and sustain the tourism sector. On the energy front, the Prime Minister provided detailed assurances regarding fuel availability, noting that Mauritius currently maintains sufficient stocks of petroleum products, including gasoline, diesel and jet fuel, ranging from approximately two to three weeks of supply. Additional shipments are scheduled to arrive in the coming days and weeks to replenish reserves, he added. Despite a sharp rise in global oil prices—from around USD 60 to USD 100 per barrel—Government has so far maintained stable retail prices locally. Contingency plans are also in place, including securing alternative suppliers and exploring Government-to-Government procurement arrangements, notably with India, to reduce reliance on intermediaries and ensure long-term supply security. With regard to liquefied petroleum gas (LPG), used widely for cooking, current stocks stand at about 23 days of supply, with further shipments already scheduled. Authorities have also diversified sourcing channels to minimise exposure to disruptions in the Middle East. Food security remains another central concern, said the Prime Minister. On that score, he indicated that global commodity prices have already risen by up to 3%, compounded by currency fluctuations. In response, Government is maintaining strict price controls on a wide range of essential goods and continues to support consumers through a Rs 10 billion Price Stabilisation Fund, which subsidises key items such as milk powder, edible oil and basic foodstuffs. In the health sector, a buffer stock of medicines sufficient for at least six months has been secured, alongside the establishment of a dedicated committee to monitor nationwide supply levels. Dr Ramgoolam stressed that Government’s approach encompasses short-, medium- and long-term measures aimed not only at managing the immediate crisis but also at strengthening the country’s resilience to external shocks. Targeted interventions by the Bank of Mauritius are helping to stabilise the currency and additional flights by Air Mauritius are being deployed to sustain connectivity and tourism flows, he said. Concluding his statement, the Prime Minister acknowledged that the evolving situation would inevitably affect budgetary forecasts and limit fiscal space. “Government stands ready to respond swiftly and adjust its policy stance so as to preserve macroeconomic stability, sustain growth and protect the purchasing power of Mauritians,” he added.

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