Mr Deputy Speaker, Sir, I wish to inform the House regarding the factual financial situation of the Municipal Council of Vacoas-Phoenix, with specific reference to the current budget deficit, the status of the pension fund for council employees and the underlying reasons for these deficits. With regard to part (a) of the question, Mr Deputy Speaker, Sir, for the Financial Year 2024-2025, the Municipal Council of Vacoas-Phoenix submitted an estimated expenditure of Rs598.6 m. to the Ministry of Finance. The budget estimate was based on the following three financial components – (i) an expected internal revenue of Rs84.5 m.; (ii) anticipated efficiency gain of Rs65 m., and last (iii) requested grant-in-aid of Rs449 m. from the Ministry of Finance. While the full grant-in-aid was approved by the Ministry of Finance, it is regrettable to note that the projected efficiency gain, as estimated by the ministry, did not materialise. Furthermore, the actual internal revenue collected by the council amounted to Rs75.7 m., regarding a 7% decrease compared to the previous year. This shortfall is mainly due to the overestimated revenue forecast by the Ministry of Finance. Following the mid-term budget review conducted by my ministry, as it is for all local authorities, it was confirmed that total actual expenditure has now increased to Rs664 m., representing an increase of 18% compared to the previous financial year. Consequently, a revised budget deficit now stands at Rs139.2 m. The main factors contributing to this budget deficit include – • the payment of the 14th month salary, as legally required;

69 • salary increase due to the implementation of revised wage relativity structure and national minimum wage policy; • a general increase in the cost of goods and services due to inflation, and last • the unbudgeted recruitment of 63 additional workers in September-October 2024, comprising 17 General Workers, 16 Handy Workers, and 30 Refuse Collectors. It is to be noted that while the Ministry of Finance granted clearance for these recruitments in December 2024, no additional financial support was provided. The council was instructed to absorb the resulting expenditure through the anticipated efficiency gain which, as stated, failed to materialise. Concerning part (b) of the question, Mr Deputy Speaker, Sir, in addition to the budget deficit, the pension fund for the employees of the Municipal Council, administered by SICOM Ltd, is also facing a significant deficit. In accordance with Section 5 of the Statutory Bodies Pension Funds Act, SICOM Ltd carries out actuarial valuation for the council’s pension fund at intervals not exceeding 5 years. The latest valuation, as of 31 December 2022 and submitted to the council on 11 August 2023, identified a deficit of Rs348.3 m. SICOM Ltd has informed that the main reasons for this deficit in the pension fund are – (i) revised financial assumptions to better reflect anticipated economic and demographic trends; (ii) lower investment returns than expected; (iii) increase in salary and pension costs over the reviewed period, and (iv) the failure to implement earlier recommendations for timely cash injections into the fund has significantly contributed to the worsening of the deficit. To address that shortfall, SICOM Ltd has recommended that the council should increase the pension contribution rate to 24.05% and to undertake one of the following structured cash injection plan, either – (a) five annual instalments of Rs81.6 m. or; (b) seven annual instalments of Rs61.3 m. or, (c) ten annual instalments of Rs46.2 m. In alignment with these recommendations, the council has effectively increased its contribution rate to 24.05% as from November 2023. Furthermore, a formal request was

70 addressed to the Ministry of Finance on 12 October 2023, seeking the support for the necessary cash injection. Regrettably, no response has been received to date. Now, regarding part (c) of the question, Mr Deputy Speaker, Sir, this situation is not isolated to the Municipal Council of Vacoas-Phoenix only. Similar pension fund deficit and financial constraints are being experienced across all the 12 Municipal and District Councils. These structural financial challenges are the direct result of poor planning and mismanagement by the previous government which diverted significant national resources, amounting to several billions of rupees to the Mauritius Investment Corporation (MIC) while failing to allocate sufficient funds to local authorities and their statutory obligations. As a result, local authorities have been placed in a financial benevolent position and are increasingly unable to fulfil their core mandate of delivering essential public services to the citizens.

Next question, again in the absence of hon. Dr. Ms Thannoo, the question will be proceeded as a written answer. So, the hon. Third Member for Mahebourg and Plaine Magnien! MAHEBOURG – HARRY LATOUR STADIUM – RENOVATION WORKS – CONTRACT DETAILS