One point of view ,as put by Sameer, is that : "We do however have to acknowledge the fact that Govt did try to make some pension reform which is not very popular and we also do need to acknowledge the fact that the masses are used to populist freebies because they don't really understand that they will always paying for this via the vat and rupee depreciation.”
My point of view is that: Yes partly right, but if the authorities had communicated effectively and engaged in discussions with Lepep on the different pension reform options and the needed fiscal adjustment efforts continuously over the past six months, perhaps we would have had a better chance of success.
Effective communication is crucial for successfully implementing reforms, not from above , not via decrees in Budget speeches , but “lor terrain”, repeatedly engaging with "le ti pep", the trade unions , the NGOs …making them understand that otherwise they will ultimately be“ paying for this via the VAT and rupee depreciation”…pa nek pas létan kritiké ek dénonsé lansyen rézim dan parlman, which are reproduced by the media to keep LePep busy with the long-running series of intrigues and frauds..
In January itself, there had been propositions for the revival of a National Economic and Social Council ,an institution aim at building a strong national consensus on the pursuit of economic and social policies for sounder and faster development.
For NESC to be more relevant to the application of a reform agenda, it was proposed to include a wider range of civil society representatives , the opinion leaders, the NGOs, relating to the environment, consumer protection, etc, which would have raised the NESC’s profile and strengthen its reach to the wider population.
A Commission of experts on pension reform should have started work as early as Jan 2025 …The Commission would have come forward with different pension options, including a more targeted approach and the NESC would have facilitated a respectful, constructive and sustained dialogue on the pension options and the unavoidable fiscal adjustment . Perhaps the more targeted option would have led to a more positive reception because it focuses on specific audiences and their needs,
They had six months to build consensus , to engage the main stakeholders, to explain to them the future benefits and outcomes…and most importantly for LePep the burden of the fiscal adjustment should be equal or fair …starting from the ruling class itself…
Since this govt has taken over, it’s business as usual; no urgency, they were not setting the good examples(for example, a reduction in their pay or allowances even if is just symbolic, abolition of the duty free , of the free meals , of the position of Vice-President etc) , no immediate measures to contain unnecessary expenditures and wastage; on the contrary they were giving the wrong signals -parties, all kinds of nominations, new press attachés, missions abroad with a whole delegation… .u won’t believe that the country had a Damocles sword over its head…Sanzman didn’t really mean genuine Sanzman.
Moreover, as rightly pointed out by Sameer, "the government needs to move faster and they need to show that they are much more efficient and …. a lot of that depends on having younger nominees that have the skills because … they only have the old guards that are past their prime and are running us slowly “ as we would probably all at that age
If only they had tried and had started running, perhaps the response would have been different …a big if.
Sameer Sharma
Rattan Chand the Gov is indeed slow to make decisions and even nominate people and certainly they should have spent more time educating people but it does not divorce the fact that we needed to bite the bullet. The retirement age at 60 in a country where the population is living longer and is aging was never going to be sustainable and all this has been overdue for many years so I know that some people have been saying they could have waited more they could have made it a bit sweeter but we have been overdue to do this and that is perhaps the bitter pill that people have to swallow. We have been writing for years that the pill was going to be bitter for the next 5 years and this is what's happening and of course this government is not going to be popular by doing these things but at least they are doing it. What is disappointing of course is that the budget does not distinguish enough between rent seeking activities and non rent seeking activities so the corporate taxes are implemented across the board and I'm confused about how we will attract more investors especially when I expect foreign real estate sales to go down and really don't know what will offset it because I don't really from reading this budget understand why I should come back to Mauritius as a member of the diaspora or why a company should come and set up a business in Mauritius. Omnicane, Medine enl ciel should have paid a lot of the burden sharing after the mic loot ... more than they are now.
There is of course something important about the budget that is missing and it is about the bank of Mauritius and the value of the mic assets on its balance sheet. These asset values are fake they need to be much lower and that will have a big impact but because we are all about the makeup these days in front of Moody's and Beyond we don't want to do it we don't want to have that independent audit but then we don't really resolve the problem and we're not making the people who benefited from all this loot to pay enough so I understand the frustrations of people in cases beyond the pension stuff like having to pay more for a car but then look these are political decisions at the end of the day for me if I will finance minister all your conglomerates will be paying a windfall profit tax that is much higher than they are paying now and as long as they want to remain only got police I would have made it very expensive for them because I would have shared the monopolistic profits with them and say you want to remain Monopoly you don't want to participate let's do profit sharing with the state until you learn your lesson but they did not do that because Mauritius as we all know it's full of Lobby groups and that's how it works we shouldn't be dreaming either..
You could argue that rather than reducing the vat threshold which would obviously not be popular that they could have just increased the windfall profit taxes on the big players and they could have implemented land value taxation rather than having property taxes which is more efficient (lvt) on big landowners given that land ownership is still so concentrated and that would have stimulated the economy because you would have pushed more land into the market. Especially if you would have said that I won't tax improvements you make on this land but if you just hold the land you're going to pay taxes you better do something with it sell it or build something on top of it. If you do agriculture then I won't tax you etc... see they don't come from a school of thought where they can use taxation to influence behaviors enough and I think that's the problem right that's what they should have done refined the way they tax.
They could have done better but the mentality in Mauritius is the minute you get nominated to a post you believe you actually are the sum of knowledge and so everyone else is stupid but you are an intelligent genius and you figured it out so you don't need their advice and then after a couple of years they tell you that they regret they should have done something else it's a repeatable pattern that has happened over 20 years in Mauritius. Just ask, how the humility to listen to others is a very complicated thing in Mauritius because they believe that nominations grant them Divine powers of knowledge it's a problem across governments to be fair. I will follow the Finance Minister thought he was some God of economics when he was just being corrupt.
And I think the budget also has a lot of talk about other meetings like you talk about the national pension fund 2.0 and some expert committee to be set up. Why do you need to set up another expert Committee of non experts why don't you just ask the people who have the experience now and they will tell you now so you stop wasting your time with committees. When I was at the bank of Mauritius we actually worked on this whole file of the national pension fund and gave very good advice to them already about how to restructure the entire portfolio of the npf from a quantitative perspective and we even had support from very credible people outside of Mauritius and doing that task that was the time when everybody was talking about the national investment Authority which the former Finance Minister and then prime minister BJ did not support. We could have really enhanced the way you manage the portfolio and do better portfolio construction and acknowledge the fact that local Capital markets are underdeveloped and you can't just have 70% of your assets and a market that generates low returns and are you also need to professionalize and be more dynamic and you shouldn't have exaggerated Capital Market assumptions when you constructing portfolios like these guys always do in Mauritius. I can tell you what the solutions are now you don't need to go and set up a committee for 10 months full of random people we can resolve the problem now every month matters
It is like such an unproductive setup let's go and do a committee let's meet people let's pay some chairman let's spend a year or two and let's figure this out because we have three years of a transition. It's so slow. They need to get people with experience on their team and I think that's where they are lacking right now they have some old guard who maybe were good 25 years ago but are not as good today and then they don't really know what to do so they need to create blueprints which means they need to get other people to come and help them but then if they're only going to talk to the people who are friends of theirs to help them then they're going to be stuck and they're shooting themselves in the foot and I hope they don't do that
