Mauritius raised taxes on profitable banks and phone companies today to contain the Indian Ocean island's budget deficit during the global economic downturn, according to Reuters. Unveiling a six-month budget to realign the country's financial year with the calendar year, Finance Minister Ramakrishna Sithanen said Mauritius faced its most challenging economic outlook for decades and needed a fiscal boost. Sithanen predicted the country's budget deficit would rise to 4.8 percent of gross domestic product by the end of 2009 and reach 5 percent next year. This compares with an estimated 3.9 percent for the 12 months to end-June, but is below the 5.5 percent level he considers "unsustainable". "This higher than trend deficit is due to the imperative of an expansionary fiscal policy to stimulate the economy and ride out the storm while preparing for recovery," he told parliament. Mauritius has been one of Africa's most stable and prosperous economies over the past few years. Once reliant on sugar and textiles, it has diversified into tourism, banking, IT and business outsourcing, partly thanks to a raft of reforms introduced by Sithanen. But the global slowdown is hitting the key tourism and textiles sectors and Sithanen predicted growth would slow to 2-2.2 percent this year -- down from the above 5 percent growth rates enjoyed since 2006.
