“Moody's a invité quelques opérateurs pour une réunion virtuelle où la forte croissance de l'année dernière, rajoutée aux projections de cette année ont été soulignées. Les facteurs sur lesquels Moody’s notera Maurice pourront inclure notre situation économique actuelle et les tendances qu'elle semble indiquer, la rigueur de nos institutions et de notre gouvernance, la solidité de la position budgétaire du pays et finalement, notre résilience aux risques.
Let’s examine the virtual reality of the CEO of BM.
--La forte croissance de l'année dernière
GDP at market prices in 2022 grew by 8.7% in 2022. Most of the productive sectors( Manufacturing, Agriculture, Financial Services, ICT..) were still below the 5 % growth rate . The sectors that were showing the highest growth rates were the construction and tourism sectors. We are not surprised because when we compare 2022 to 2019, we can see that despite the 8.7 % growth in 2022, the level of real GDP in 2022 is still about 96% of the pre-pandemic 2019 real GDP . Patience, Mr Ramkaloan, you need not be so euphoric about the 8.7% growth, we still have to catch up to the 2019 level . In due time, we will, if we show more dynamism, for e.g by attracting investment in sectors other than real estate..
--Projections de cette année
As for this year’s forecasts, the WB has posted a growth of 4.7% to SM’s forecast of 5% and and a steeper inflation rate of 9.8% as to BoM’s 6%. IMF forecast of our growth is still lower at 4.6% and on inflation it is 9.5%. If we take into consideration the fact that our GDP deflator is based on lower inflation forecasts and in view of the failure of the central bank to prevent the further depreciation of the rupee given the huge current account deficit and the misalignment of exchange rate (REER ,the deviation of the real exchange rate from its equilibrium value), the forecast for 2023 may have to be revised significantly downwards.
--Notre situation économique actuelle et les tendances qu'elle semble indiquer
Most of the economic indicators are in the red ; the current account deficit in 2022 was around some 12.2% of GDP whereas it was only 5% in 2019; elevated public debt and budget deficit figures; a proper calculation of the net foreign exchange reserves of the BoM may reveal that it is presently equivalent to less the 12 months of imports; Exports of goods in 2022, in real terms, represented only 95% of the 2019 level; Public Investment has dipped to a mere 3.9% of GDP in 2022 from 5.2% in 2019 and the Investment rate in 2022 is just 18%, lower than in 2019 and pre-2014 levels.
--La rigueur de nos institutions et de notre gouvernance.
Our spin dictator and the clique of mafiosis, at the helm of this country, have robbed our great traditions and institutions of their greatness, of our passion for fairness and impartiality, of our culture of discussion and tolerance, of our respect of our adversaries and our determination to frame policies for greater economic and social equity.
We have lost trust in our institutions - the foundation of our trust in our institutions is rooted in years and years of nation building. It's gone before we could fully grasp what it was that happened, undermined and obliterated by the very custodians of our laws.. Our institutions have been crumbling under the weight of nepotism, cronyism,… of an ethical and governance deficit—yes, we have lost trust in our electoral system, trust in our governance, the rule of law , in economic management , in the police force , in….u name it
The recent Eco-deer scandal summarises it all, we’ll see whether Lepep will “dédouane” them when they pass through “la douane” du peuple bientôt”.
-La position budgétaire du pays
The recent WB publication - Africa’s Pulse- points out that the the fiscal deficit which exceeds 7 percent of GDP in countries like Mauritius, Zambia, and Malawi is the main reason why they are having problems in curbing inflation to achieving macroeconomic stability.
“Monetary authorities in the region have been raising rates to dampen demand and contain inflation; however, other government interventions have weakened the impact of monetary tightening. For instance, rising interest rates in countries with fiscal dominance lead to greater expectations of fiscal stress, currency depreciation, and even higher inflation. Foreign exchange restrictions that widened parallel market premia have also contributed to derail the fight against inflation in some countries. There is a risk that de-anchoring inflation expectations would fuel further inflation, accelerate interest rate increases, and increase the probability of a downturn in economic activity. “
--Notre resilience aux risques
Is the economy resilient ? The capacity of the economy to bounce back depends, to a large extent, on the state of the economy, on its economic fundamentals . With greater fiscal space, a reasonable level of public sector debt to GDP , a more manageable current account deficit, a more diversified FDI and export sector and greater efforts to reform , to act more decisively and responsibly, the economy would have been more resilient and better equipped to absorb the shocks and recover.
Unfortunately, with this government, economic management has today turned into economic irresponsibility which continues unabated on the way to "full recovery"-becoming more and more realisable only in a distant future
We hope that the Moody’s show works out for our CEO , but ultimately he will have to come out of his virtual world to face the fact that Moody’s may end up being more convinced by the analysis and figures of the recent 2-page report of the WB - Macro Poverty Outlook for Mauritius -April 2023 .
The report notes that “…..Several interrelated structural challenges rendered the country’s growth trajectory more fragile. These include stagnating private investment, sustained loss of export competitiveness, skills shortages coexisting with high structural unemployment, rising inequality, and mounting pressure on public finances from high and increasing social security spending driven by the aging population, leading to persistent fiscal deficits and a growing public debt-to-GDP ratio.”
The figures show that the 2022-2023 budget deficit/GDP is -5.5% from -8% in 2021-22, the CA deficit/GDP for 2022 is -14.2 % and the Public Sector Debt will continue to remain as high as around 83.5 percent of GDP over the medium term.
Forget about Moody’s, are we not conning ourselves ?
