Titbits : A different perspective: The 24/7 economy model ; And the Grand Bassin show ; Kowtowing to the Asian Powerhouse ; Collective responsibility and witch-hunting; The next Minster of Finance; Depreciation of the rupee ; Abolishing the laureate system

 A different perspective: The 24/7 economy model

An avid commentator of the Mauritian scene once remarked that we are des beaux parleurs, and we get so carried away by our own rhetoric that we start believing in them and the clichés that we readily churn out. We have turned our homeland into a knowledge hub, a regional financial and services hub, a Seafood hub, a judicial hub, an inescapable Cyber hub, a Financial, Banking, Management or Legal Service Centre, a Maurice Ile Durable, you name it.

Aberrant !!! : Hedging; Extension of class hours; Food security; Two million tourists in 2015; The Integrated Resort Scheme (IRS); Our man from Harvard.

It is so aberrant that some of the stewards and opinion leaders of our economy have grown so gullible, refusing to wake up from the torpor into which they have been lulled in as the new formidable cohort of followers and cheerleaders. It is much easier to bend to the wind, to join the bandwagon than to take a hard look at the facts and filter out the frivolous statements, the incendiary rhetoric and its inadequacies.  Leadership or management or any such position of responsibility is supposed to be about more than cheering your team, humbling and jeering the other side- the dissenting side- that has freed itself from that horrible urge to always fit in and now dares to think differently. It’s supposed to be about changing the country for the better.

Stimulus package: Greater Coherence needed

The effectiveness of the additional stimulus package of around Rs 10 billion, equivalent to 3.8% of GDP ( much above the 2% norm recommended by the international institutions) to shore up our economic performance will depend to a large extent on some important parameters. A fundamental one, as pointed out by erudite Pierre Dinan, is our ability of “sortir du mode du projet pou passer à l’action” - especially the big time lag between allocation of funds and actual work being started.

THE NEW TAX BURDEN

Following the advice of the IMF in its document “FISCAL ADJUSTMENT STRATEGY AND MEASURES TO PROTECT LOW-INCOME HOUSEHOLDS” of February 2006, the Ministry of Finance decided to apply some of its recommendations in the reform of our tax system. The IMF, in its standard application in most countries, usually argues in favor of streamlining the tax expenditures or tax concessions. 

Managing capital inflows

The recent IMF policy discussion paper-“Capital Inflows and Balance of Payments Pressures—Tailoring Policy Responses in Emerging Market Economies (EMEs).” prepared by Atish Ghosh, Manuela Goretti, Bikas Joshi, Uma Ramakrishnan, Alun Thomas, and Juan Zalduendo dated  June 2008  raises some of the very issue that we have been discussing recently on the appropriate policy responses to the surge in capital inflows.

It’s all about Competitiveness

Mauritius has been successful in transforming its economy over the past four decades and achieved remarkable progress with sustained economic growth and significant improvement in the standard of living. It outperformed most other countries in the region and middle income and small island states as well. From 1968-2005, per capita GDP growth averaged 3.8% compared to 2.3% for all low and middle income countries.   Annual rates of growth have averaged over 5 per cent and per capita income now exceeds $6,000.

The Rupee’s Zigzag ?

On Tuesday 21 May 08, the Bank of Mauritius (BOM) intervened on the domestic foreign exchange market selling Rs 10 millions of US dollars at Rs 27.75, a move to restrain the rise of the rupee that touched new heights at the beginning of this month on the back of investors betting on continued capital inflows and some speculation that there will be little intervention to check rupee gains. (For the priority of priorities was to allow the rupee to appreciate brusquely to dent inflation.) Before that, on 2 May, the BOM reduced the key Repo Rate by 50 basis points to 8 per cent per annum.