After the lukewarm reception that the Budget obtained
from the majority in the National Assembly compared to last year’s hurrahs and
thumping that accompanied the more juicier bits, it needed something quite
original to cheer up spirits. To some extent, this was provided by the PM’s
intervention. He tried to put on a brave face given the rough road ahead; but
he did distance himself somewhat from the dole outs of the Additional Stimulus Package
to big business without meaningful conditionalities, aware that despite all his
efforts this budget cannot win support among Labour’s rank and file and the
public that is increasingly disenchanted with the TINA ( There Is No Alternative)
policies.
The higher sprits were however short-lived; though they were all prepared for some of the usual criticism about the pro-private sector bias of the budget- a budget that would not be able to dig us out of the present mess- they were served with something different, a clinical examination of the underlying figures of the budget deficit of 3.3 % in FY 07/08 and 4.4% in FY 2008/09. It has been years since the National Assembly has witnessed such a brilliant dissection of the Budget that lay bare its “tricky tricks” which has escaped most of our top economists and columnists, more eager to please and be politically correct than to analyse and debate.
But he laboured
in, building up his case gradually but surely; showing that he does not live in
the world of should- He is more anchored in the realities of the day, he points to the widening income
inequality that was shrugged off when economic times were good but have become
intolerable in the slowdown . The gaps between rich and poor have exacerbated. To
the argument that the salaries of employees have not been cut, as elsewhere, it
is worth adding that elsewhere prices have been falling drastically while here
we are still stuck with an abnormally high inflation rate and low salary compensations
such that employees have been continuously losing in both nominal and real
terms. The successive budgets have
amassed huge revenues by fleecing the population and generated unacceptable
inequalities. These have not succeeded in diversifying the economy or finding other
motors for the economy and developing other pillars that would have rendered it
more resilient to external shocks. They have, however, attracted massive
resources into real estate activities whose contribution to the economy is
questioned. That is why, he argues, government needs to rebalance the
relationship between state and markets to create a fairer more equal
distribution of the fiscal space. The fiscal space generated over the past
three years, Pravind Jugnauth maintains, is being wasted to provide
transitional support to the private sector ; It is only providing temporary
reprieve to enterprises without any guarantee that these firms will in future
be able to stand on their own. These firms have not committed themselves to any
restructuring plan , digne de ce nom. There are very little measures to improve
the competitiveness of labour and capital in both the short and long term. A
more visionary leadership would have implemented an emergency response while
laying the ground for long-term measures.
The higher sprits were however short-lived; though they were all prepared for some of the usual criticism about the pro-private sector bias of the budget- a budget that would not be able to dig us out of the present mess- they were served with something different, a clinical examination of the underlying figures of the budget deficit of 3.3 % in FY 07/08 and 4.4% in FY 2008/09. It has been years since the National Assembly has witnessed such a brilliant dissection of the Budget that lay bare its “tricky tricks” which has escaped most of our top economists and columnists, more eager to please and be politically correct than to analyse and debate.
Pravind Jugnauth did not charge in blindly thus
spoiling all his ammunitions to win over his audience; he came in leisurely
from far and quite adroitly he provided some baits for them to chew for some
while and to throw them off guard; that the budget just looks one way – a
gamble on the private sector; that it is
not an astute balancing of the middle
class and lower class demands ; that by espousing TINA policies the
governing party had lost the language of generosity, kindness and community and
has allowed big business to do what they want; that this budget cuts little ice
with the common citizen. That was more of a starter, the politician speaking out
sounding somewhat like Jack Bizlall “ Dans les
faits le gouvernement est entrain de faire des dons au capitalisme mauricien. Ce
qui explique l’opacité; Ceux qui se
réclament du travaillisme vont bien sur protester. Le Sithanisme
n’est pas une tendance du travaillisme.
C’est la présence du capitalisme au sein du gouvernement.” They thought that it was the usual stuff that they had
heard umpteen times.
It is not the
superficial conditions due diligence or the non-payment of dividends during the period of bail-out
that will ensure that taxpayers money are being properly utilized to preserve
jobs and ensure the long term viability of the enterprises. Are we serious when
we say that a productivity consultant and accounting firms were approached at a
reduced rate of Rs4,000 per hour to support the MTSP due diligence process? And
Government ends up approving millions of Rupees for RS Denim and RS Fashion
while acknowledging that it is not sure of recouping our money !!! And if the
MOF is not happy at all about RS Denim, how can we taxpayers be happy at all
about a company that is being enquired upon for alleged malpractices and which
has a debt of Rs 800,000 million . This gives the impression that the individual enterprises are feathering their
nests with cash and that government is thrown money aux petits copains to prop
them up . It is just a transfer of wealth from the public purse to the private
sector with absolutely no influence over what they do.
I missed much
of the other parts of his intervention. It was rather the careful and painstaking
marshalling of tiny pieces of figures and facts that galvanised my attention. I
had a feeling that it was his essential menu for the day and like the torero after the various
phases of distracting, angering and other manoeuvres, it was time to conclude
with a final blow to the trickster. I had the impression that he had rehearsed
the scene before for he was so deft at it, building up the tempo at his ease
like a music maestro till he zeroed in on the target ; that was the crescendo,
le coup de grace that demolished the Budget and its cheerers. They tried to
keep a straight face, keep the appearances but sometimes beneath the pleasantry
and the smirks, you could see the old guard bristling and hear them grinding
their teeth sounding like ice cracking as Pravind Jugnauth uncovered
unhurriedly, one piece at a time, the whole set of tricky tricks –the voodoo
accounting-that dates back to the 07/08 budget. Having won
over a hushed audience, he could even afford to be magnanimous by conceding to
the Speaker that his disclosure was aimed at the tricks rather than the
trickster whose barbs could do little to cover the damage already done.
As they say, the
devil is in the detail. I went back home to check out the whole mathematics of
it and it did stand up to close scrutiny. Let us examine how he goes about
uncovering what lie behind the figures. His first salvo is that we have a
spending problem, not a revenue problem;
He is out to
show that the low capital expenditure has been so dismal as from the first
budget. He produces the figures of the actual capital expenditure and Net Lending
for the 2007/08 Budget , it is Rs 13,102 million, representing 5.3% of GDP. The
Rs 13,102 figure includes the amount allocated to the six funds not expenditure
incurred. There is also the investment in equity – Rs 1,240-which has to be
excluded from this total. If we remove these items, the true Budget Deficit for
2007/08 is -1.2% .
Fund (Rs million)
|
2007/08
|
2008/09(revised)
|
Food Security Fund
|
1000
|
50
|
Human Resource, Knowledge and Arts
Development Fund
|
1000
|
50
|
Local Infrastructure Fund
|
130
|
550
|
Manufacturing
Adjustment and SME Development Fund
|
-
|
1500
|
(Recovery
Account) o/w Rs500,000 in equity
|
1000
|
|
RDA-LTA
|
500
|
|
Maurice Ile Durable Fund
|
1000
|
|
Social Housing Development Fund
|
500
|
1200
|
Total (Rs million)
|
3630
|
4850
|
And
for the Budget 2008/09 revised, the same colorable accounting devices have been
used and it all kinds of gimmicks have been used to hide the true figures from
the population. We note that in the Revised Estimates for budget 2008/09, a
total amount of Rs 4,850 billion has been added to the funds and these are
accounted in Capital expenditure and Net Lending; and these have not been done
in total transparency; the details of actual expenditure of these funds have
not been published; Out of Rs 4,850 billion included in Capital expenditure and
Net lending, only about Rs 1 billion had been spent and if we adjust
the Figures accordingly (removing the net equity purchases of Rs 976) , we have
a new Capital expenditure and Net lending figure of Rs 6,891 only 2.7 % of GDP,
compared to their revised estimates of Rs 11,767. If we also exclude the front
loading of the VRS, (the transfers for the accompanying measures for the Sugar
sector-the VRS and other measures planned for 2011 has been frontloaded to
2008/09.) That is, an amount of Rs 850,000.the budget deficit works out to be
only 2.4 %.
As
% of GDP
|
2007/08
|
2008/09(revised)
|
Capital Expenditure + Net
Lending
|
5.3
|
4.3
|
Budget deficit
|
-3.3
|
-4.4
|
Without
Colourable Accounting
|
||
New
Capital Expenditure + Net L ending
|
3.1
|
2.7
|
NEW
Budget deficit
|
-1.2
|
-2.4
|
Why
such a subterfuge ? “With such little capital investment of 2.9%
of GDP ( compared to 4.4 % of GDP of the previous government) and sector reforms to generate productivity
improvements, in agriculture, industry, public utilities, health, education,
etc., it does not prepare us enough for the downturn in the world economy and
significantly undermine the medium to long-term growth prospects.” The the huge programme announced
for the forthcoming months will meet the same fate as in previous budgets- a
challenge to administer for bids and contracts will invariably take time. The most
likely effect is that it will start
working after the current recession ends;
the stimulus package is simply cut out with little to no impact on the
current economic situation
Are we having affair with amateurs managing taxpayers
money ? For those that had some doubts
about the recent Audit report on the Ministry of Finance, these comments of
M.V reaffirm that the Ministry is indeed
ineffective as well as inefficient - « un des ministères les plus impotents est
précisément celui des Finances, dont la mise en œuvre du ASP a été
catastrophique. Et pourtant ce ministère prétend
assumer la direction des opérations d'un projet de plus grande envergure sans
un seul gestionnaire professionnel au sein de son personnel. Les lacunes
les plus graves de ce ministère, comme de la fonction publique en général, sont
1) un cruel manque de leadership a tous les niveaux ; 2) l'absence de
professionnalisme dans la gestion et 3) aucune déontologie axée sur
l'efficience et les résultats»
