Something back in March in an article title “The Budget Deficit : Caught in their own lies !!!” I argued that “ It may continue with its old trick of depreciating the rupee during budget time to reap the windfall credited to the Special Reserve Fund........”.
The general concern is that the worst is still not behind us— this massive depreciation of the rupee comes at a time when the increase in freights and international commodity prices, including international crude prices, which is currently above $70 a barrel, is likely to nudge on the local inflation.
And we are not likely to see any immediate response from the BoM on the inflation front, given the priority accorded to the revival of growth. And that is not good news for Mauritian consumers.
The PM in his intervention on the Budget debates reminded us that “ the Minister of Finance has managed to deliver a Budget that will continue to shield the most vulnerable sections of the population against the impact of the COVID-19, while presenting a roadmap to take the national economy out of the current difficult situation and move us towards a positive and resilient growth based on investment, revamped traditional economic pillars, new avenues of development, and a renewed sense of confidence.
And to support this confidence and to silence those doomsayers, the Minister of Finance is neither increasing current nor adding new income taxes and the Budget 2021-2022 refrains from tax burdening further the income of the population and the business community.”
Is this the road map to move us towards a positive and resilient growth ? Through the depreciation of the rupee !!!
A renewed sense of confidence ? I doubt it , we are giving investors the wrong signals !!!
For taxpayers,consumers and the most vulnerable sections of the population , the bill is not coming in the form of higher taxes or more austerity but in terms of a spike in inflation .
But the worst is yet to come - with rising unemployment and a rapidly depreciating rupee fuelling inflationary pressures, and our exports of goods and services (and tourism) failing to pick up, the country stands the risk of diving into stagflation which will pose one of the biggest economic challenges for recovery. It will be a herculean task to even achieve the lower 4.4% growth forecasted by Statistics Mauritius for 2021
