By Richard Lough PORT LOUIS (Reuters) - Mauritius will unveil a budget on Friday which looks to bolster the Indian Ocean island's economy and save jobs while reining in spending as the global economic downturn squeezes tax receipts. Analysts say Finance Minister Ramakrishna Sithanen's six-month budget -- the island is aligning its financial year with the calendar year -- comes against an unprecedented backdrop of worldwide economic gloom and uncertainty. Traditionally one of Africa's most stable and prosperous economies, Mauritius' growth is expected to slow to 2.5 percent this year from 5.1 percent in 2008, official figures forecast. "The ramifications of the lacklustre external context on Mauritius are increasingly pervading through crumpled demand for exports of goods and services, decelerating private capital flows and the dampening impact of economic uncertainty on activity levels," said the Mauritius Commercial Bank (MCB) in its May report. MCB, the largest firm and most traded stock in Mauritius, said withering external demand had stung the palm-fringed island's tourism and textiles sectors the most. Last week, Sithanen said his priority would be to safeguard employment levels, adding the budget would build upon last December's $310 million stimulus package. NEW TAXES? However, he warned the budget deficit could balloon to 7 percent for the six months to December 31 if he resisted redressing the balance between taxation and spending. A deficit beyond 5.5 percent would be unsustainable, he said. "I won't be surprised if the finance minister comes up with some new taxes. How else will he compensate for the fall in revenues?" said Eric Ng, managing director of economic consulting group PluriConseil. The finance minister has pledged not to increase value-added tax beyond the current 15 percent rate. However, he hinted he could broaden the range of goods and services it applies to. Sithanen, who has overseen three years of sustained growth, soaring foreign investment and falling unemployment, has warned the nation of 1.3 million people more jobs will be lost in the coming six months. MCB forecasts unemployment to reach 7.9 percent this year after falling to 7.2 percent from 8.5 percent last year. However, experts say Mauritius's roughly $9 billion economy has proved more resilient than many in the region. Once reliant on sugar and textiles, Mauritius has diversified into tourism, banking, IT and business outsourcing. "Output will be mainly slowed down by anticipated major contractions of the textile and tourism sectors, although being somewhat shored up by other sectors, noticeably financial and business services and the communications sector," MCB said. Private sector players also say this budget must correct government failings to deliver funds from December's stimulus package and green-light infrastructure programmes. "The implementation of the stimulus package has to be broadened and accelerated," said Raj Makoond, director of the Joint Economic Council, a grouping of the main business organisations. | 
