We saw it coming. And the chickens have finally come home to roost. We were given some preliminary warnings that the whole structure at Ministry of Finance and Economic Development (MOFED) was not just dysfunctional but nonfunctioning but we kept hoping that it will be able to reform itself to see better days. But the recent piece of breaking news about the falsification of documents by junior officers of the Ministry appears to be the last straw that is revealing the cracks in the system- nothing but the result of a long culture of arrogance , Me-knows-everything and poor management.
It is yet another one of those inadmissible blunders that was amassing into such a whole heap of mismanagement that it was inevitable that it would soon burst out in the open spilling all over the place sparing very few. What is at issue at the ministry of Finance is not the accumulation of blunders and unprofessional behavior; it is the strikingly inept management of the Ministry that has been allowed to carry on unchecked for years. The Ministry suffers from the gaffes that are made by political appointees, ardent proponents of the TINA (There is no alternative) policies-people who believe that, no matter what they do, they will get away unscathed.
Some time back , Mr Mohamed Vayid in an interview to one newspaper had warned us that It is yet another one of those inadmissible blunders that was amassing into such a whole heap of mismanagement that it was inevitable that it would soon burst out in the open spilling all over the place sparing very few. What is at issue at the ministry of Finance is not the accumulation of blunders and unprofessional behavior; it is the strikingly inept management of the Ministry that has been allowed to carry on unchecked for years. The Ministry suffers from the gaffes that are made by political appointees, ardent proponents of the TINA (There is no alternative) policies-people who believe that, no matter what they do, they will get away unscathed.
« Le problème c’est que le Secrétaire financier (FS) n’a aucun parcours comme manager de haut niveau. Il ne connaît pas les rouages du management moderne. …... Il récidive en décidant la centralisation de tous les départements concernant la gestion de l’eau, des eaux usées, de l’irrigation, alors que ces services ont un ministre de tutelle….. Une catastrophe au ralenti, annoncée avec candeur. Sa circulaire concernant des postes à pourvoir sous le « Service to Mauritius Programme » est un étonnant exemple de carence intellectuelle que seul un bureaucrate impénitent aurait pu produire. Sa tentative avortée d’usurper les pouvoirs du Secrétaire au Cabinet en ce qui concerne le traitement des fonctionnaires n’est rien moins qu’une OPA sur la fonction publique. Mais le comble, c’est l’attaque oblique sur les pouvoirs de la PSC, qui sont délégués ex-cathedra aux différents ministères, sans l’assentiment de la PSC, qui est pourtant protégée par la Constitution. Vous avez dit continuité ? Si continuité il y a, c’est dans les incohérences et les bourdes du budget. »
And in another article Mr Vayid reiterates in relation to the TINAs that “Sans oublier une tentative, heureusement avortée, de mainmise sur la fonction publique. Il avait fait du ministère des Finances un super ministère, n'ayant de compte à rendre à personne.” It is this lack of accountability that has contributed to a series of one-man shows, unilateral decisions, economic policy failures and blunders that reflect a lack of understanding of the dire realities of public policies and administration. They have started by flouting the rules and regulations and procedures of the PSC and the Civil Service. Protégés, who were quite junior and inexperienced officers, were promoted to position of authority and those who were not toeing the line were transferred. Ad-hoc allowances, selections to Boards and overseas missions were given to protégés of the inner circle without any transparent selection criteria; these went against the procedures and best practice in other departments and institutions. Special Budget allowances, which had earned the reprimand of the Director of Audit, were distributed generously to protégés -to the extent of Rs 100,000-for budget work which is one of the main duties of the officers of the Ministry while other officers of the Civil Service were being denied their hard-earned overtime .
We then had a plethora of experts under Capacity Building and Service to Mauritius that were costing more than Rs 50 million per year. (with a maximum salary for local recruits of Rs 200,000 per month all inclusive and up to US$10,000 monthly for international recruits.) The biggest joke at the Ministry that was making the rounds during that time was that, given the wave of recruitment of consultants in different areas of “ expertise”, including Office Administration and Management of Financial Secretary’s Office, the office attendants, especially those serving tea, will have to be assisted by an international consultant soon. This was the new style of management at the MOFED during a period of crisis when the whole civil service was being told that the exceptional economic conditions called for exceptional measures. Or was there something more machiavellic on the agenda !!!. Do you recall who wrote these lines !!! “ Government can no longer be the employer of first or last resort nor act as a communal safety valve. “ Was there a deliberate attempt to fiddle with the safety valve ?
You recall the Rs 233 million package to Microsoft for software licenses; the clearance to sign the deal with Microsoft was not obtained from the Ministry of Information and Communication Technology (MICT) or the Prime Minister’s Office (PMO) or IT specialists-A protégé of the TINAs, who is just a senior economist without any qualification or experience in such matters gave the go ahead. This contract concerned the purchase of 7 000 licences Microsoft for personal computers, 28 000 customer Access Licenses and 16 servers. The intrigue turns around the rapid decision of the Treasury to sign the contract, on June 27th, 2008, on behalf of the MICT. More serious, in mid-June on 2008, this ministry had flatly refused to affix its signature to this contract. The motive invoked to justify this reservation was unambiguous: « It is a loss of money! ».
After the big fiasco, unique in the annals of the preparation of the Budget and the history of the Ministry, of the Budget documents which were not ready in time for the National Assembly and after the management, meaning the TINAs and coterie, succeeded in passing the buck and in finding appropriate scapegoats, we had some more fiascos- the hedging sagas. Under their watch, unsound hedging activities at Air Mauritius and STC swallowed billions of rupees and burdened the national debt. The Ministry of Finance is supposed to have representatives on the Board of our national airline company, the CEB, NTC and the STC and other non-performing parastatals to precisely have an oversight over such financial issues. These same officers, whose contribution in Board meetings peaks only when baajaas , samoosas and tea are served, are being rewarded with hefty ad-hoc allowances while our lambda citizen carries the burden of the mismanagement and hedging losses.
Similarly in the case of the stimulus packages, the officers of the MOFED failed to properly monitor or impose any restructuring plan on the recipient firms. There were 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 TINAs ended up approving millions of Rupees for RS Denim and RS Fashion , Infinity BPO and River Heights while acknowledging that they were not sure of recouping our money !!! Individual enterprises were thus allowed to feather their nests with cash and government was just throwing money ‘aux petits copains’ to prop them up. It was just a transfer of wealth from the public purse to the private sector with absolutely no influence over what they do.
The TINAs promised us a lot on fiscal consolidation and proclaimed high and loud all kinds of golden rules for the budget which they were the first to flout. With much improved tax administration, higher economic growth has automatically brought more revenue under VAT and other taxes. Yet, fiscal revenue as a proportion of GDP has stagnated at 20% of GDP, despite the breast-thumping of the TINAs. A simple yardstick of competence of successful fiscal consolidation is the extent to which fiscal revenue has been strengthened, not in absolute terms, but as a proportion of the country’s total income. The reason for his failure to consolidate fiscal revenue is known, notably the largesse extended to the private sector in terms of reduced corporate taxation. Even at these generous tax rates, the corporate sector fails to bear its fair burden, on account of its opaque accounting practices that shield the true extent of its profitability. The Financial reporting council (FRC) today is an eunuch. If we were sincere about diversifying our sources of revenue, we should have first of all strengthened the FRC to ensure we are able to tap these private companies . These are the puissant de la fraude fiscale ; not the small individuals and professionals .
The TINAs were able to reduce the fiscal deficit by slashing capital expenditures sharply. A mark of a performing technician, besides strengthening revenue, is to reduce the proportion of current spending as against capital spending. Instead, they did the opposite, and put the burden of fiscal adjustment on capital expenditures, which are sorely needed to boost the country’s infrastructure. If meeting the country’s infrastructure needs is so critical, they should have done more budget-cutting on current expenditures in earlier years, or raised more revenue, to provide enough fiscal space for badly-needed infrastructure spending. They stooped so low as to manipulate the budget figures to hide their dismal performance on capital expenditures. Moreover they also failed in implementing the reform programmes of the so-called new socio-economic model . Year after year the Budget was becoming just a “ list of intentions” as pointed out by an IMF PEFA team and taken up by Jean Paul Arouff’s article of Bus Mag –“ Ce qui les amène très souvent à annoncer une série de mesures lors de chaque exercice financier. Mais arrivé en fin de mandat, force est de constater que ces mesures demeurent toujours au stade d’intentions.”
Similarly in the case of the stimulus packages, the officers of the MOFED failed to properly monitor or impose any restructuring plan on the recipient firms. There were 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 TINAs ended up approving millions of Rupees for RS Denim and RS Fashion , Infinity BPO and River Heights while acknowledging that they were not sure of recouping our money !!! Individual enterprises were thus allowed to feather their nests with cash and government was just throwing money ‘aux petits copains’ to prop them up. It was just a transfer of wealth from the public purse to the private sector with absolutely no influence over what they do.
The TINAs promised us a lot on fiscal consolidation and proclaimed high and loud all kinds of golden rules for the budget which they were the first to flout. With much improved tax administration, higher economic growth has automatically brought more revenue under VAT and other taxes. Yet, fiscal revenue as a proportion of GDP has stagnated at 20% of GDP, despite the breast-thumping of the TINAs. A simple yardstick of competence of successful fiscal consolidation is the extent to which fiscal revenue has been strengthened, not in absolute terms, but as a proportion of the country’s total income. The reason for his failure to consolidate fiscal revenue is known, notably the largesse extended to the private sector in terms of reduced corporate taxation. Even at these generous tax rates, the corporate sector fails to bear its fair burden, on account of its opaque accounting practices that shield the true extent of its profitability. The Financial reporting council (FRC) today is an eunuch. If we were sincere about diversifying our sources of revenue, we should have first of all strengthened the FRC to ensure we are able to tap these private companies . These are the puissant de la fraude fiscale ; not the small individuals and professionals .
The TINAs were able to reduce the fiscal deficit by slashing capital expenditures sharply. A mark of a performing technician, besides strengthening revenue, is to reduce the proportion of current spending as against capital spending. Instead, they did the opposite, and put the burden of fiscal adjustment on capital expenditures, which are sorely needed to boost the country’s infrastructure. If meeting the country’s infrastructure needs is so critical, they should have done more budget-cutting on current expenditures in earlier years, or raised more revenue, to provide enough fiscal space for badly-needed infrastructure spending. They stooped so low as to manipulate the budget figures to hide their dismal performance on capital expenditures. Moreover they also failed in implementing the reform programmes of the so-called new socio-economic model . Year after year the Budget was becoming just a “ list of intentions” as pointed out by an IMF PEFA team and taken up by Jean Paul Arouff’s article of Bus Mag –“ Ce qui les amène très souvent à annoncer une série de mesures lors de chaque exercice financier. Mais arrivé en fin de mandat, force est de constater que ces mesures demeurent toujours au stade d’intentions.”
The MOFED , singularly incapable of a proper understanding of the present policy issues, is absent on all fronts be it - the strategic plans of Ministries (MOH for e.g) or of parastatals (NTC for e.g) , or the Tertiary Education Commission ( its Open and Distance Learning Policy for e.g), energy and food policy or the innovation, diversification or democratization of the tourism sector or the MID project etc, you name it - an important role that the dismantled Ministry of Planning and Economic Development (MEPD) was assuming with brio and authority and also in taking initiatives in policy reforms and advocacy. The MEPD was also giving its views on important policy matters that would come up. Unlike other ministries, it did not have a vested interest and so could be expected to give an unbiased opinion.
Why has MOFED fallen so low ? Because most of the analysts have been castrated into mere numbers-crunching Finance Officers within a structure that has mainly a short-term budget focus. Economists have been reduced to glorified finance officers carrying out mainly mundane day-to-day administrative work and the routine fire-fighting of line ministries. One of the building blocks for policy work is strong research skills. The TINAs do not believe in research ; they dismantled the Economic Analysis and Research Section (EARS) of the earlier MEPD and for more than five years now the Documentation centre of the Ministry has not purchased any economics book not even a cheap version of the best sellers Freakonomics or the Money Mischief: Episodes in Monetary History or Fair Trade for All: How Trade Can Promote Development and so on. Unbelievable that our friends at MOFED were starved of foods for thought for more than five years. !!! Some must be regretting those days at Planning under the helm of the erudite present Governor of the Central Bank when thousands of ideas and thoughts were allowed to flourish.
We are indeed concerned that there has been an erosion of the capacity at MOFED for research, analysis and evaluation, even though these are the very skills that underpin the fresh thinking that has the potential to resolve national problems. Only a genuine “redynamisation” of the planning function in MOFED would enhance the breadth and depth of the policy, leadership and management skills needed at MOFED and reinforce the capacity of economists to provide strategic policy advice. It would provide for an integrated and consistent macro-picture and framework for policy analysts in allocating public investment, for designing implementation strategies to see that outcomes are realised cost-effectively; it would have be supported by an effective monitoring mechanism to monitor and evaluate service delivery from both a financial and non-financial perspective and to see that targeted outcomes are in fact realised. A more medium- to long-term view would thus enable the policymakers to see holistically the big picture and achieve a proper cohesion in their vision, strategies and implementation capacities. For this to happen the Guy must go. !!!. We are not getting value for money disbursed partially in dollars
We are indeed concerned that there has been an erosion of the capacity at MOFED for research, analysis and evaluation, even though these are the very skills that underpin the fresh thinking that has the potential to resolve national problems. Only a genuine “redynamisation” of the planning function in MOFED would enhance the breadth and depth of the policy, leadership and management skills needed at MOFED and reinforce the capacity of economists to provide strategic policy advice. It would provide for an integrated and consistent macro-picture and framework for policy analysts in allocating public investment, for designing implementation strategies to see that outcomes are realised cost-effectively; it would have be supported by an effective monitoring mechanism to monitor and evaluate service delivery from both a financial and non-financial perspective and to see that targeted outcomes are in fact realised. A more medium- to long-term view would thus enable the policymakers to see holistically the big picture and achieve a proper cohesion in their vision, strategies and implementation capacities. For this to happen the Guy must go. !!!. We are not getting value for money disbursed partially in dollars
