Budget 2015 : Future orientations !!!

Published in L'Express, 26 December 2014
Today the economy stands at a crucial crossroads. As crucial as in 2006, when a new team of policy makers, known as the TINAs (There Is No Alternative)  set out to craft a new socio-economic model - a model based  mostly on the  reports of the Bretton Woods institutions, namely the IMF Report "Fiscal Adjustment Strategy and Measures to Protect Low-Income Households"and "Mauritius: From Preferences to Global Competitiveness" , an unpublished World Bank Report .

Damning Audit Report :The Programme-Based Budgeting?

Published in Le Mauricien, 23 Dec 2014

The National Audit Office's Report shows again and again that wastage and unnecessary expenditures have continued unabated. It is unacceptable that at a moment where everyone was bearing the brunt of the continuing global and the consequent local slowdown, our Ministries and Departments and State-owned enterprises were profligate with taxpayers’ money .

Crony Capitalism impairs growth

          The nexus between business, politics and cronies was never out in the open as it is at present. It is grudgingly acknowledged today by even the most ardent votaries of the policies of democratisation, followed over the past few years, that crony capitalism has become rampant and that a new breed of oligarchs has emerged in an environment characterized by governance and ethical deficits.

Titbits: Managing the Trilemma: The MPC; SOE reform: Need for a new dynamism; Indiscipline and violence in schools; Reform of the welfare state.

Managing the Trilemma: The MPC

The " impossibility trinity or trilemma” holds that monetary policy authorities cannot simultaneously and continuously follow the three objectives of free capital mobility, fixed exchange rates, and an independent monetary policy. And even if the exchange rate is allowed to float, monetary policy cannot be entirely independent of what is happening to the value of the rupee. The trilemma implies that an economy can enjoy capital inflows and an independent monetary policy so long at it gives up worrying about the appreciating exchange rate. It is impossible to have all three goals at a time.

Titbits: Graduation to High-Income Economy !!! ; Promoting Competition in the Financial Sector; The NESC's role revisited.

Graduation to High-Income Economy !!!

         Mauritius, along with 14 other developing nations, according to a World Bank study on 215 countries carried out by research analyst Ehiwario Efeyini of the US Trust Bank of America Wealth Management, has the potential to graduate to the elite club of high-income economies. Indeed Mauritius, on the basis of its present model of development and policies, can easily increase its wealth in the years ahead but it is also likely that it may not make the transition and get trapped into the so-called “middle income trap” as pointed out by Efeyini.

Fiscal consolidation: an urgency

(Published in MTimes04Aril 2014  and L'express,30,April 2014)

In his reply to a PQ on the consolidated budget deficit inclusive of Special Funds, the Minister of Finance has stated figures of -2% in 2011, -1.9% in 2012 and -4% in 2013. However using the same methodology as applied by the IMF in the 2011 Public Expenditure And Financial Accountability (PEFA) Assessment report, the consolidated budget deficit works out to be -2.4 in 2011, -2.2 in 2012 and -4.6% in 2013, more or less the same figures as posted by Martin Petri in his presentation at the 32nd Monetary Policy Committee meeting on  February 3 of this year. (His presentation titled “Strengthening the Monetary Transmission Mechanism” is available on the Web site of the Bank of Mauritius.) We have every reason to believe that our figures which tally with that of the IMF are correct. (IMF’s: -2.1 % in 2012 and -4.5% in 2013)

Titbits:Propositions indécentes; Learning to unlearn; Excess liquidity and reform of the sector and Receding inflation risks

Propositions indécentes

The document ‘Prospects for Agricultural Markets and Income in the EU 2013-2023’ apprises us of the European Union proposal to wind up the sugar quota scheme by 2017 which will lead to a reduction in the EU domestic sugar price and EU sugar imports and that in the long term EU will be moving closer to full self-sufficiency and to being an occasional net exporter. EU sugar beet production is projected to expand in the coming decade and additional volumes will be used mainly to produce sugar rather than ethanol. The expiry of the sugar quota system in 2017 is part of the 2020 Common Agricultural Policy,(CAP).

Repo rate unchanged: Wise decision but......

The decision of the 32nd Monetary Policy Committee (MPC) to keep the Key Repo Rate (KRR) unchanged at 4.65 per cent per annum was a wise decision. Much of the wrangle between the Ministry of Finance and the Bank of Mauritius, for the moment at least, is misplaced. Instead of throwing stones at each other's glasshouses, they need to work together to mop up the excess liquidity in the banking system and strengthen the financial sector.