Mauritius needs to raise some 225 billion rupees ($7.31 billion) over the next 10 years to finance its public infrastructure development, Finance Minister Pravind Jugnauth said on Thursday.

The minister also criticised banks' reluctance to lend, saying this could have a disastrous effect on the country's capital formation and economic growth.

The amount needed for infrastructure is expected to rise to about 1 trillion rupees once the amount required for private investment is added, Jugnauth told a meeting of listed and unlisted firms on the Indian Ocean island.

"Our country will need to mobilise some 225 billion rupees merely to finance public infrastructure and build a world-class physical fabric," he said.

"If we add to this the amount that the private sector will need to raise for its investments, we will end up with a total of around 1 trillion rupees that will have to be mobilised over the next 10 years."

The minister did not elaborate on the types of projects required, but roads, airports and ports expansion are likely to feature high on the list.

Mauritius's economy is largely driven by tourism, financial services, textiles and sugar.

In August, Mauritius announced a 12 billion rupee package targeting the textile, sugar and tourism industries to help boost a fragile economic recovery.

Jugnauth expressed concern at banks sitting with liquidity rather than lending it out to businesses they consider to be risky.

"When such a situation arises in a bank-dominated system, the implications for capital formation and for economic growth can be disastrous. This has been one of the issues we are having to grapple with as we face the euro zone crisis," he said.

The country has said it plans to significantly revise its growth forecasts downwardly for 2010, 2011 and 2012, due to the impact of the economic situation in UK and the euro zone.

The economy was earlier expected to grow by 4.3 percent this year, 5.3 percent in 2011 and 5.7 percent in 2012.

Jugnauth said the government wanted to foster the development of the secondary market for its debt issues in order to spread business risk more thinly and reduce dependence on bank loans.

The Indian Ocean island's bourse chairman Gaetan Lan said the target was to have 100,000 retail investors by 2013 from 50,000 at present.