Mauritius and Risk of Debt Crises: Evidence from Dynamic Stochastic Model and Arima Forecast

The paper employs dynamic stochastic approach and autoregressive integrated moving average (ARIMA)
model to investigate the external debt status of Mauritius, following recent weak export performances and
insinuation of debt crises. The study establishes that, Mauritius was free of debt crisis over the years till
mid-2000s when the debt crises began to set in and escalated since 2009 till date. The paper also found
that debt increase will persist till 2022, before it will stabilize and remain steady above the optimal size
require for economic probity. The study therefore suggests economic overhauling of management
strategies as against the current palliative measures introduced by the government.