Titbits: Depreciation of the Rupee; Wrong timing - The trip to Maldives; Quality institutions make a difference; Tablets for Form IV -a Challenge; Disciplining the medium.

Depreciation of the Rupee.

The IMF report ‘Mauritius External Balances from a Long-Term Perspective – May 2012’ notes that “… using cross-country panel methodologies as well as single country time series techniques, we estimate that the Mauritian Rupee is mildly overvalued with respect to fundamentals. Nevertheless, there is significant uncertainty about the size of the overvaluation.” And recent data on real exchange rate show that between 2007 and 2011, the real effective exchange rate (REER) appreciated by 18%; in 2010 and 2011, it appreciated by 3.2% and 6.2% respectively.

Titbits: Budget 2013: The need for clarifications; Prospects for 2013; Monetary policy: what next ?; The recent NESC Report.

 Budget 2013: The need for clarifications

The summing up of Budget 2013 by the Minister of Finance (MOF) in the National Assembly left many of our queries unanswered, namely, on the size of the budget deficit, the special funds , the lack of overall coherence and the stop gap measures. It could have been an opportunity to discuss the economy, talking it up and be more precise on the measures planned to stem the downslide in growth. We expected strong signals that the policy paralysis that has gripped MOF is over, that important changes were going to be announced to counter some of the criticisms and which would have resulted in swifter policy execution. Instead we just got illusions wrapped in cheap rhetoric.

Budget 2013 : Thinking Small

It is unanimously acknowledged among economic analysts that  lacklustre Budget 2013 is devoid of a credible path of reform and the building blocks for realising a better future. We have been served the same recipe once more- the ones that have not offered a more cohesive explanation for the problems or any real solutions.  A coherent, credible and holistic plan for the long-term economic growth rate of the country is absent despite all the built up on the 10-year Economic and Social Transformation Plan (ESTP).

Titbits: Revving up economic growth; Budget 2013: A better use of Special Funds ; Indian Diaspora - Doing business together .

 Revving up economic growth

The latest forecast by some economic analysts of the real growth rate of the Mauritian economy settling down to a slow pace of 3.0 %  for 2012 points to a gradual collapse in our growth performance. It is lower than the 3.4 % posted by the Ministry of Finance which seems to have lost some credibility as their growth predictions have continued falling way off the actual figures. But the Mauritian growth has been going off track as its small open economy is being uncoomfotably exposed to the global meltdown. On 9 October, the IMF released its World Economic Outlook which painted a gloomy picture of the global economy.

Titbits: Overvaluation of the rupee !!!; Our proposals for Budget 2013; The PRB award: a futile exercise ; A strategic rethink of the tourism sector.

Overvaluation of the rupee !!!
Over the past three years in these very columns we have been highlighting the fact that the rupee (REER) was misaligned but at the same time we did point out that while the Bank of Mauritius( BOM) has obsessively focused on maintaining interest rates and stabilising the rupee to contain inflation, it has also alerted to the dangers of relying unduly on a falling rupee to stimulate economic activity.

Policy Paralysis

 Modified version published in L"express, 12 Oct 2012

Titbits: Policy Paralysis; Where are we with the NSTC?; Loosening monetary policy to revive growth !!!; Budgetary figures: Some Rs 10 billion in Special Funds; A financial services centre of substance.

Policy Paralysis

The world economy retains deep scars from the collapse of the western banking system in 2007-09.  Advanced economies’ debt crisis remains unresolved. These economies are in once-a- generation seminal process of deleveraging; debt reduction -- private as well as public -- still have years to run, acting as a drag on growth long into the future.  The emerging markets’ economies, the engine of global growth so far, are slowing down appreciably. Domestically the situation is not so desperate but the economy is obviously not in good shape.