Details of a not entirely favourable World Bank report, finalised in April, have now emerged. Following warnings about overall economic policy from the IMF (May 2011, Economic policy), the World Bank has called for changes in the social and economic policies pursued by the coalition government since May 2010. The Country Partnership Strategy Progress Report identifies four major threats to Mauritius's economy. The first is the continuing difficult global environment and the possibility of further exogenous threats. The remaining three threats are all under government control: lack of commitment to the strict reform policies of the previous government; the shift to socially driven polices; and the rising level of public debt.

According to the World Bank, Mauritius lags behind other middle-income countries in its excessively costly and inefficiently targeted welfare system, low public-sector effectiveness and an educational system that does not correspond to the needs of the economy. Its report calls for reform in all three areas and for the government's social and infrastructure investment programmes to be conducted within a responsible overall fiscal policy. It expresses concern that with the rising level of public debt, an economic shock could lead to a downgrading of Mauritius's international credit rating.

This critical report should raise concern in government circles. It will form the basis of discussions with Mauritius's global development partners, particularly the EU, in July. The EU has allocated EUR51m (US$70m) over the period 2008-13 to support the ten-year economic reform programme introduced by the previous government in 2006. Most of this was to be channelled through general budget support. In the light of the World Bank report, the EU may be less willing to provide funding on this delegated basis. It is likely to demand more specific assurances from Mauritius and to hold back payments until policy is amended.