𝐁𝐑𝐏 𝐬𝐮𝐬𝐭𝐚𝐢𝐧𝐚𝐛𝐢𝐥𝐢𝐭𝐲 𝐚𝐧𝐝 𝐆𝐫𝐨𝐰𝐭𝐡

There’s the argument that BRP sustainability depends on GDP growth rate (see diagram below)

Yes, it depends on the quantum of growth and the inflation rate!

Growth could be lower, and inflation could be higher, in which case the BRP/GDP ratio will not be decreasing.

The critical issue is that the debt/GDP ratio is too high( it is the debt situation that is too unsustainable ) which is already affecting out short term and long term metrics - the exchange rate, inflation, interest rates, exports growth, current account , investment and GDP growth! Interest servicing is now around Rs30 bn.

Budgetary capital expenditure remains constrained, by limited taxation, high recurrent expenditure including debt servicing, stagnating at very low levels of less than 2% of GDP.

Same line of thinking as our ex-FS who keeps arguing for productivity based growth banking on our typical DNA to realise illusory GDP growth rates ; we have been struggling regime after regime to boost productivity, including under the Mansoor/Sithanen tandem-when they discreditably put the burden of fiscal adjustment on capital expenditures, such that we ended with dismal capital spending over more than a decade , which is impacting on our growth rate now.

Most Mauritians are well aware that the country needs to invest in its future: its new economic pillars , education, innovation, AI infrastructure.

”How do we create this “marge”, the fiscal space to generate more capital investment for higher growth? -through a solid framework of “fiscal consolidation.”

Let us first start by genuine fiscal consolidation without resorting to 𝒘𝒊𝒏𝒅𝒐𝒘-𝒅𝒓𝒆𝒔𝒔𝐢𝐧𝐠 𝐨𝐟 𝒕𝒉𝒆 𝒃𝒖𝒅𝒈𝒆𝒕 𝒅𝒆𝒇𝒊𝒄𝒊𝒕 𝒃𝒚 𝒕𝒉𝒆 𝒖𝒔𝒆 𝒐𝒇 𝒕𝒓𝒂𝒏𝒔𝒇𝒆𝒓𝒔 𝒕𝒐 𝒔𝒑𝒆𝒄𝒊𝒂𝒍 𝒇𝒖𝒏𝒅𝒔. !

A lower BRP/GDP is a fiction. Raising taxes on IPPs to preserve the welfare state is only a partial solution.