Post-budget 2011 – The Monetary Policy Stance

At its last meeting which was held in September 2010, the Monetary Policy Committee (MPC) of the Bank of Mauritius unanimously decided to cut the Key Repo Rate by 100 basis points to 4.75 per cent. The main arguments put forward were that with inflation remaining subdued in the domestic market and given the weakening growth prospects in the country’s main export markets, substantial monetary easing was necessary to give further support to the ongoing economic restructuring and provide the opportunity for embarking on a major drive to improve productivity and national competitiveness.

Budget 2011: Dismantling the TINA Policies

    We were among the ones who did not applaud when the TINAs (There Is No Alternative), moulded by the infamous “triple shocks”, ushered in their new socio-economic model that promised us a new phase of sustained, broad-based growth and full employment but ultimately failed to deliver on our economic, social and environmental goals.

Labour Market Flexibility: Soft and Hard Constraints

In the context of the debate going on the issue of the Tripartite National Forum, the chief editor of l’expressgratified us with a beautiful piece titled “Réformiste” on the reform of the labour market and the issue of flexibility

Creative Accounting and the Special Funds

Budget 2011 also meets the commitment to remove some of the opacities about the Special Funds and integrate all these funds that were proliferating all over the place into the budget for better expenditure coordination, accountability and transparency.

Why the Economic Restructuring and Competitiveness Programme (ERCP) ?

Despite attempts to cleverly pepper the ERCP with the jargon of the earlier Stimulus Packages, it still does demarcate itself from those earlier Packages in that it anchors the growth dynamics in more solid stuff in both the short- as well as medium-to-long-term, and the restructuring strategies and productivity enhancement measures easily fall in line. The Stimulus Package had been criticized for not showing any clear intention to resolve the current structural imbalance in the economy, which is so dependent on the Euro market and selective capital inflows.

Titbits : Another WB report, Reforms & Audit report

Another WB report: Investing Across Borders 2010

‘Investing Across Borders 2010’, another report by the World Bank Group that warns us on overly restrictive and obsolete laws which can be an impediment to foreign direct investment by creating additional costs to investment. Again our scores are excellent. Of the 33 sectors covered by the ‘Investing Across Sectors’ indicators, 32 are fully open to foreign capital participation in Mauritius.

Titbits : Cost of credit, Public debt and PBB

Cost of credit

     There seems to be a sudden awakening on the question of the cost of credit, may be because of the comments in the WB report – Investment Climate Assessment Mauritius 2009 -- that “the cost of borrowing in Mauritius, as measured by average interest rates, is high by comparative country standards.

Fragile Times – The Monetary Policy Stance

The Monetary Policy Committee (MPC) of the Bank of Mauritius unanimously decided to leave the key Repo Rate unchanged at 5.75 per cent per annum at its meeting of the 22nd June. Caught between rising inflationary expectations and excess liquidity accompanied by the prospect of slackening growth, the MPC thought it preferable to stay on the sideline for the moment quite unsure about inflation and growth outlook.

A More Proactive Competitive Strategy for SMEs

According to the Central Statistical Office (CSO), which conducts a census of small establishments employing less than 10 persons every five years, the contribution of the small units to value added is only 20% in 2007 compared to 18% in 2002. The structure of the Small and Medium Enterprises’ contribution to the economy has remained more or less the same.

Dismantling & Redesigning the TINA Policies

     Whatever little debate there was during the recent election, it centred mostly on the TINA (There Is No Alternative) policies; there was near unanimity against the neo-liberal and purely theoretical policies – the blind adherence to the Washington Consensus -- that were tried on the populace. The entire Mauritian political spectrum, including our Party Malin and popular sentiment unsettled by TINA policies (with the exception of the TINA stooges in the press that have over the last five years tried to build the TINAs and their friends as the most brilliant and super competent economists that ever walked on Mauritian soil) had expressed their discontent in various ways.

Competitiveness not an option anymore !!!

A proper assessment of our external competitiveness with respect to our major trading partners by examining a variety of indicators will shed some light over some of the present policy implications of dealing with an appreciating rupee. What is meant by the competitiveness of an economy?The concepts of competitiveness are the short-run versus long-run view of competitiveness and price versus non-price measures of competitiveness. The commonly used measures of competitiveness are multilateral or nominal effective exchange rate (NEER), real exchange rates and real effective exchange rate (REER). In the long run, competitiveness reflects the ability of an economy to improve living standards.

The Propertied Oligarchy: Their Veto Power

As no man is a prophet in his own land, the tapping of external sources may be more useful in driving our point that our local politics continue to be influenced by the moves of the old propertied oligarchy. (preferable to railing against the double standards of a partisan media.) The recent report of the BTI 2010 — Mauritius Country Report. Gütersloh: Bertelsmann Stiftung, 2009 shares our views that “ .... democratic institutions have not succeeded in breaking up the veto power of the old propertied white oligarchy or in bringing it under democratic control. Democracy, a cornerstone of Mauritian national identity, ends on the sugar cane plantation, at the bank and at the factory gate. Under the surface of ethnic and cultural pluralism, the economic dominance of the Franco-Mauritian upper class is still effective. "

New Issues and challenges

Le gratin of the public sector -always free for free lectures especially if there are from foreign experts - were all there in the front seats avidly imbibing those glimpses of insights on the need to reassess our strategies towards Asia which is gradually imposing itself as the “true engine of global growth”. The lecture of Professor Dan Quah of LSE did touch a chord.

Finance and Planning – Together or Apart?

Now that the need for a Planning Commission is being felt to achieve a proper cohesion in our vision, strategies and implementation capacities, the issue of the demerging of the planning division from MOFEE is again topical. With more reliance placed on government intervention than on markets, a new, specific and separate role for the planning Ministry/Commission,

Corporate Social Responsibility (CSR): more of a mess

In these very columns we had said it before that to give a semblance of correcting the private sector bias, a 2% tax was levied on the book profit of the corporate sector to be credited to a fund. We had said at that time that this policy, announced as a watershed in creating a CSR approach that is both voluntary and statutory with the prescribing requirements, is a mere ‘tick the box” approach ;

Titbits : A Question of Alliance!!!; The World Bank’s Doing Business Report; Worrying Trends ;Inflationary Pressures; A Question of Principles.

These days, it is not only our political class, but also the private sector, that seems to be less focused on issues that matter and more on the means needed to regain power or absolute power.

Titbits: Identity Politics; The EPZ sector: still fumbling; Zone d’Education Prioritaire (ZEP): Have we passed? ; Financial Times (FT): Lotto and Household Debt

Identity Politics

Today as the millennium heads towards its adolescence, it will be worthwhile to mark a pause and think hard on the Vicar-General criticism, in the context of his New Year’s message, of the “ rodère ek donère boute” syndrome present in our system. Should we be surprised that our whole system has degenerated to nothing but rodères boutes. Have we not tolerated, even encouraged them?