THE NEW TAX BURDEN

Following the advice of the IMF in its document “FISCAL ADJUSTMENT STRATEGY AND MEASURES TO PROTECT LOW-INCOME HOUSEHOLDS” of February 2006, the Ministry of Finance decided to apply some of its recommendations in the reform of our tax system. The IMF, in its standard application in most countries, usually argues in favor of streamlining the tax expenditures or tax concessions. 

Managing capital inflows

The recent IMF policy discussion paper-“Capital Inflows and Balance of Payments Pressures—Tailoring Policy Responses in Emerging Market Economies (EMEs).” prepared by Atish Ghosh, Manuela Goretti, Bikas Joshi, Uma Ramakrishnan, Alun Thomas, and Juan Zalduendo dated  June 2008  raises some of the very issue that we have been discussing recently on the appropriate policy responses to the surge in capital inflows.

It’s all about Competitiveness

Mauritius has been successful in transforming its economy over the past four decades and achieved remarkable progress with sustained economic growth and significant improvement in the standard of living. It outperformed most other countries in the region and middle income and small island states as well. From 1968-2005, per capita GDP growth averaged 3.8% compared to 2.3% for all low and middle income countries.   Annual rates of growth have averaged over 5 per cent and per capita income now exceeds $6,000.

The Rupee’s Zigzag ?

On Tuesday 21 May 08, the Bank of Mauritius (BOM) intervened on the domestic foreign exchange market selling Rs 10 millions of US dollars at Rs 27.75, a move to restrain the rise of the rupee that touched new heights at the beginning of this month on the back of investors betting on continued capital inflows and some speculation that there will be little intervention to check rupee gains. (For the priority of priorities was to allow the rupee to appreciate brusquely to dent inflation.) Before that, on 2 May, the BOM reduced the key Repo Rate by 50 basis points to 8 per cent per annum.

Making Poverty History ?

Now that the show is over, our VIPs have gone back to their daily chores satisfied of their speeches, their deliberations, their exchanges ( skillfully circumventing the Zimbabwean cactus to others’ discontent) , their networking, their small, but however niggardly contribution ,be it on the Aid for Trade agenda ( Two years have gone by since Aid for Trade was launched at the WTO, we are still groping for a clearly accepted definition of what counts as an Aid for Trade initiative, with guidelines for accessing funds and effective monitoring and evaluation mechanisms)

The monetary mix up

The US dollar/Rupee rate nearly broke the psychological level of Rs 25 in the early weeks of this month rising from a peak rate of Rs 33 per dollar in the last quarter of 2006.  Against the Euro, it strengthened nominally by around 7% over the same period whereas vis à vis the pound, the hike in the rate was around 25%.

The welfare state: Status quo or reform ?

  After more than three decades of remarkable progress with sustained economic growth and significant improvement in the standard of living, Mauritius found itself, at crossroads, in the midst of a challenging environment - a new era where the protected environment in which it has been evolving so far is fast withering away. The daunting challenges were:  the phasing out of external trade preferences for its textile and sugar, the entry into the world economy of vast new sources of hard-working and highly motivated cheap labour from economic powerhouses such as China and India;

Appreciation of the rupee: a divisive issue

 Angel Merkel, the German Chancellor rejected French calls for a summit of the eurozone leaders to exchange views about monetary policy , feeling that it to be potentially divisive. Eurozone monetary policy and the resulting strengthening of the Euro is a bone of contention between Paris and Berlin.

Indian diaspora-PIO Meeting

The Indo-Mauritian relationship is a special one. Both culture and history have coalesced to forge singular bonds, assiduously knitted over millenniums, to unfold a unique blend of camaraderie, entente and trust.  These have been consolidated by regular exchanges between our two people and frequent visits of high dignitaries.