Georges Chung sent to the front for damage control

From the interview of G.Chung in Le Defi, it appears that our special adviser to the PMO- our metro man, who had been selling us the dream of the new transport infrastructure transforming Mauritius into “modern, liveable ,vibrant and environmentally-friendly Smart Mauritius”- has been sent to the front lines to limit the damage caused by the recent IMF article IV press release and the accompanying hard-hitting comments from various quarters.

G. Chung tries vainly to justify our elevated levels of budget deficit and public sector debt by comparing us with the developed countries like France and Great Britain. We have too much respect for Mr Chung to classify him among those analysts -cum- propagandists who have the bad habit of adjusting their measuring rods to suit their purpose. It must have been an unintentional lapse. We think that he should be comparing likes with likes, as in the table below. It shows the weakening economic fundamentals of our precariously perched economy relative to our peers.

On the question of the exceptional grants of Rs 60 billion from the Bank of Mauritius (BoM) to Govt, the IMF had decided instead that an amount of Rs32 billion be written off from the Special Reserve Fund and the remaining balance of Rs 28 billion to be treated as advance against future profits distributable to Govt. Mr Chung thinks that “Ce qui est, vu dans l’ensemble des actifs et du passif de notre pays tout entier, un transfert d’une institution a une autre au niveau de I’écriture comptable.”

No Mr Chung, unfortunately we cannot dismiss it so easily as another bookkeeping entry; otherwise why would this face-saving compromise, for the Rs 60 bn that has already been spent, be accompanied by a severe warning by the IMF that such policies should be discontinued and the BoM law be amended to prevent such exceptional transfers in future. The double-entry logic of it being a mere transfer from one institution to another does not make sense. BoM is just not another institution .

On the MIC, Mr Chung prefers to blow hot and cold. While acknowledging that it is not the CB’s role to come to the rescue of failing enterprises, he tries to convince us that the Minister of Finance would eventually turn out to be smart enough to change course in due time. Maybe, but given his “bilan” up to now, it is easier to believe that, now, after the resounding smack from the IMF, he could not afford not to change course, smart or not.

On the other hand, Mr Chung tries to justify the creation of the MIC as a necessary political decision given the exceptional circumstances. He throws a crucial lifeline to his colleagues policy makers of the government by presenting it as an inevitable landmark decision “pour éviter le marasme des fermetures des entreprises… et le chômage massif dans une conjoncture ou les pertes d'emplois peuvent à leur tour provoquer un appauvrissement généralisé.” He shrewdly concludes on these cornelian terms “Le choix par rapport à ce qu’il faut faire est sans doute cornélien”.

No, Mr Chung, there is no cornelian choice; many of us,including the parliamentary opposition, are convinced that we must save both lives and livelihoods but, as recommended by the IMF , the financing of the MIC should not be done by the BoM but through the budgetary process which makes it more transparent, accountable and responsible.

On the ballooning public debt figures, Mr Chung still believe that we can work way out via the traditional remedy of “provoquer et …de réaliser la croissance et le développement de économie à vitesse exponentielle”.

He can’t deny that this regime has not tried. At least on paper, they started by a nice storyline of a growth rate of 5.3 % in 2015-16 and 5.7% in 2016-17 based on the mega or smart cities to be realized in the medium to long term . But quickly they realised that it were mere sound bites without the crucial ingredients for a higher growth path. They then decided on a new course, a “new era of development”, which was followed by “rising to the challenge of our ambitions” … They did improve on the catchy sound bites and headlines grabbers but it still failed to deliver.

They even tried massive capital spending-Metro express and road projects, Safe city, sports complexes- to get the economy going ,but again the whole narrative contained some serious flaws. It failed to extricate us from the quicksand of declining growth and productivity such that in 2019, growth even dipped to a dismal 3.0 %, one of the lowest since the 4.1 % realised one decade ago.

If they dare to look beyond their own rhetoric, it will take some years before our main economic indicators reach more satisfactory levels. First we have to put our house in order and (as noted by one of our knowledgeable economists) “the new stated emphasis on Govt expenditure control provides a ray of hope for better economic governance. But…it is still a long way home.” As for achieving an exponentially increasing growth rate, let’s not be too ambitious- a step at a time, starting by an an internally consistent economic plan with new ideas and policies to brace the beleaguered economy, tackling the economic and financial fallout from the coronavirus pandemic and reviving the fortunes of the economy and …..Let’s get going.

19Prakash Neerohoo, Kevin Teeroovengadum and 17 others

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