(Published in MTimes 22 March 2019)
At a business forum that the Economic Development Board had organized to improve economic cooperation between Mauritius and Madagascar at The Westin Turtle Bay Resort in Balaclava on Wednesday 13th March, Foreign Minister Vishnu Lutchmeenaraidoo expressed his "shame" at our dismal growth performance.
Perhaps it was in reply to our dispirited ex-Minister of Finance that the longstanding senior adviser at the Ministry of Finance bragged about the country doing not so badly, having already achieved 85% of the target for a high income economy status which was earmarked in Budget 2017-18 for 2023.
We keep moving the target forward despite the fact that the benchmark has been consequently revised downwards since 2015. Like in the case of Public Sector Debt (PSD), we keep missing the PSD target of 60% of GDP and we keep shifting the goalposts. We believe that it is quite improbable that the high income economy target will be reached by 2023 without major macroeconomic and sectoral reforms.
We should not be asking by how much we have bridged the gap but why is it taking us so long to reach there. Why are we failing continuously to meet our set targets? Are we pursuing the right sustainable growth strategies and putting in place the drivers of productivity, innovation, and competitiveness while strengthening the economic fundamentals that foster and stabilize growth? And it is not only a question of a higher standard of living by encouraging large public expenditures in pursuit of short-run growth performance, as seen in some Latin American countries where subsidies to ineffective projects led to increased wastage and corruption and eventual economic slowdown.
This obsession to boost growth at any cost could lead to unsustainable policies that eventually create trap-like patterns of dismal growth that middle-income countries are trying to avoid in the first place. Future sustainably of the growth spurt is as important, if not more, than increases in GNI per capita. Our senior adviser might have got it wrong, the target of high income status is not a destiny but an obstacle to be overcome.
