The press release of the IMF Article IV Mission conveying the preliminary findings on the economy was quite diplomatic as expected , highlighting fiscal consolidation as a priority. A primary fiscal deficit (exc. capital spending) of 2.9% of GDP in 23/24 is quite high, by IMF standards. Growth in 2024 is less optimistic at 4.9% compared with official forecast of 6.5%.
The information from inside sources of the IMF is that the Mauritian Authorities had exercised lot of pressure to change the composition of the IMF Article IV team( the previous team, more-up-to date on the Mauritian economy, had firm views and expressed them in forthright term especially on the quasi-fiscal operations, effectiveness of monetary policy, beefing up the FX and MIC , not to the liking of MOFED ). The new IMF team was closely monitored and restricted in its interactions with other stakeholders. Our Pada, well groomed by Manraj, has now become an ace in manipulation and scheming.
While we await for the publication of the Article IV Staff mission report, we have a recent WB report , “MAURITIUS PUBLIC EXPENDITURE REVIEW: From Resilience to Performance which is yet another inevitable “rotin bazar” to shake this government out of its inertia , incompetence and and flawed policies.
If we want to ward off further severe distress to our economy that continues to rely on steroids and progress towards a more robust, inclusive, and resilient economy, this report proposes the following main reforms/recommendations :
> There is scope to increase revenues from direct taxes, as the government’s heavy reliance on VAT increases the regressivity of the tax system, while the income tax regime is subject to a rapidly expanding array of exemptions.
>Mauritius can adopt cost- effective innovations in revenue administration informed by insights from behaviorally informed strategies to improve tax compliance among individuals and businesses.
> The Special Funds(SF) should be integrated into the budget for better expenditure coordination, accountability and transparency would help provide a more accurate fiscal picture.
>Strengthening the key function of the budget and MTFF, which is to plan and monitor public finances in a transparent manner, will be critical for the government’s ability to manage the fiscal consolidation efforts ahead and make a more efficient use of public resources. A return to program-based budgeting would help strengthen strategic planning and mainstream climate- change adaptation and mitigation into the public investment cycle.
>Restructuring the national pension system to free up considerable fiscal resources with no adverse effects on poverty or inequality.
>The specific optimum level of a new debt ceiling or alternative fiscal rule, as well as the desirable path of convergence towards it, need to be carefully calibrated to ensure that it strikes the right balance between anchoring fiscal policy to reduce vulnerabilities, and allowing adequate flexibility to support growth.
> MIC should return any undisbursed and uncommitted funds to the central bank to mitigate its current under capitalization
>A stronger M&E framework could more closely link expenditures with outcomes. M&E should encompass the technical efficiency, allocative efficiency, and distributional equity of public spending. Resuming the use of fully program- based budgeting could clarify the relationship between expenditure planning and outcomes and
> Improving Equity and Efficiency in Education
Will this be another of the many reports piling up in government lockers and gathering dust because our policy makers do not have the guts, the drive to carry out these reforms ?
We have constantly avoided making hard choices.
We need a new breed of politicians-young turks- technicians and advisers with new ideas and with grit see us through these reforms!
