In this Sunday’s "Week-End" newspaper , we could read about the “ Pénurie d’eau à Triolet “ .
For two weeks now , hundreds of families at Triolet (and other places) are having to do with the untenable situation of dry taps and repeated cuts in water supply by the CWA . The inhabitants are fed up; they evoked the electoral promises of a 24/7 supply. Now 7 years later, they are still waiting for round the clock supply of water promised in successive budgets via the replacement of old and defective pipes across the island, the upgrading and increase of treatment plants capacities and the Increase in storage capacities by constructing strategic service reservoirs and new dams.
There was also the additional Rs 4 included in the STC price structure for petroleum products to provide for the Build Mauritius Fund . We were told that the Rs 3 contribution to the Fund would be used essentially for investment to upgrade and modernise the water supply and distribution network.
Despite the billions of rupees of taxpayers' money gobbled by the STC and transferred to the Build Mauritius Fund, the situation has not improved ; the repeated cuts in water supply have even worsened . In addition to Triolet, there are so many regions in the north and the west of the island that have continued facing water shortages.
The inhabitants of these regions are stepping up their protests; they want immediate measures; they cannot wait any longer ,having being duped again and again with vain promises . They are demanding that funds be allocated to improve their water supply and the project implemented now. No more excuses now- "Pou Metro ena kas, mé pou delo kouch nahin”
This summarises the sense of priority of this regime !
Taxpayers feel they have been conned ; the billions collected, instead of being passed on to consumers in terms of a reduction in petroleum prices, went to finance prestige projects like the Metro , the Cote d’or stadium, Safe City or wasted on such blunders/scams like Betamax, Pack & Blister and the STC contracts to “quincailleries”, on Molnupiravir , on Air Mts and SBM under the supervision of the super accountant-cum-expert, Mr Sattar Hajee Abdoula.
I recall an article I had written in September 2018 on this question of knowing our priorities !
“At this crucial juncture in our economic development, when we are investing so many billions in a decongestion programme, with its great many unknowns and inherent risks, the country has other priorities that need to be addressed namely, among others, the need to boost growth and create productive jobs. Indeed, there are urgent priorities now which are more short term and should be tackled immediately.
For example, what is happening to our exports sector is very worrying; we need more resources for diversification, for training, for industry support , for restructuring , for improving external competitiveness. Equally in the agriculture , financial services, ICT, tourism and the environment sectors. We also need to start investing in the Ocean Economy and in a massive human capital formation programme in these sectors while consolidating the policies for inclusive growth. These policies have the potential of encouraging sustainable growth while diversifying the economy and creating productive jobs .
I had also drawn attention to the fact “ when Singapore was implementing its rail transit system, the real GDP growth averaged 8.5% p.a. This enabled Singaporeans to enjoy further rapid increases in living standards; its exports sector was flourishing, its companies were prospering and it was attracting record levels of foreign investments in productive sectors and its foreign reserves stood at some 30 billion dollars (some 6 times our present level). It could thus afford to educate and train its labour force while constructing its infrastructure and building its nation. We can equally do it if we know our priorities and we drive forward, one step at a time, ensuring that there is audacity and conviction to take bold decisions and a willingness not to succumb to the prestige projects of the day but to the initiation of long term reforms and expenditure prioritisation to chart a new path for Mauritius and a great future for our children.”
Four years later, we see that we are still failing to get our priorities right. An excellent article by L.M in today’s l’express, alerts us to the fact that we are condemned to maintain fuel prices at its present high level because of the continuous depreciation of the rupee and our unsustainable elevated levels of budget deficits and public debt.
The expansionary fiscal deficit is mirrored in the higher current account deficit which puts added downward pressure on the rupee. Till recently, the IMF had assessed that our rupee was overvalued by about 30- 40 percent - the economy was then being battered by the adverse supply shock to the tourism sector as well as increased volatility in the financial sector .
Because of the high budget deficit- Govt expenditures have risen to some 33% of GDP, while Govt revenue has remained stable at around 24% of GDP - government cannot afford to forego any inflow of revenues to finance its ambitious level of expenditures. That’s why IMF had recommended fiscal consolidation via spending cuts on non-prioritised infrastructural projects and on populist measures to restore economic balance and fiscal space and thus ensure that the country lives within its means.
What is the priority now ? The priority of priorities is tackling inflation which, besides hurting the poor and lowering living standards all around, is also creating economic instability ; we may even see the country being pushed into a spiral of still higher inflation and interest rates and falling economic growth. It has already robbed the central bank of its inflation-fighting credentials.
This is not Govt's priority ! Otherwise it would have put in more efforts for fiscal consolidation to achieve the debt target of 80% of GDP. This lack of fiscal efforts was noted by the IMF “Stabilizing the debt-to-GDP ratio toward the proposed anchor of 80 percent will require a greater fiscal consolidation effort in the medium term. It will be important to reduce debt through credible revenue and expenditure measures.”
Inflation is putting more pressure for social spending and the scope for reducing recurrent expenditures other than social benefits and employee compensation is limited. Fiscal consolidation, through revenue measures and spending cuts, and a more effective monetary policy are critical if we want to tackle inflation, but this is unlikely to happen in next two years.
They are already giving us the excuses that most of the countries are in the same boat facing the same situation of high energy prices that keep inflation elevated, squeezing household incomes and denting business confidence. They will continue to push the can down the road as far as possible till the next elections. Do not expect Govt to cut back its expenditures, especially on the infrastructural projects as it will depend on these to boost the economy if some of the other sectors fail to pick up above the 2019 level. Forget about the fiscal consolidation as recommended by the IMF, it doesn't not bring in votes.
As they did with with the IMF, they will be ready with their doubtful Medium Term Fiscal Framework- the over-optimistic projections of fiscal and debt parameters which seemed to have been drawn from the back of an envelope, a useless exercise as shown by their failure to meet the planned fiscal and debt targets year after year-for Moody’s to avoid another downgrading. We just have to hope that our toxic combination of a possible debt trap and the shrinkage of the central bank balance sheet does end us up being rated as junk status by Moody's and thus greatly increase the risk of a financial crisis.
This regime can’t get its priorities right. If it doesn’t address the medium-term debt vulnerabilities, contain and prioritise its spending and put public debt on a declining path, we are in for at least two more years of economic distress as the Jugnauth autocratic regime prepares itself for the next elections. That's their priority.
