Titbits: Graduation to High-Income Economy !!! ; Promoting Competition in the Financial Sector; The NESC's role revisited.

Graduation to High-Income Economy !!!

         Mauritius, along with 14 other developing nations, according to a World Bank study on 215 countries carried out by research analyst Ehiwario Efeyini of the US Trust Bank of America Wealth Management, has the potential to graduate to the elite club of high-income economies. Indeed Mauritius, on the basis of its present model of development and policies, can easily increase its wealth in the years ahead but it is also likely that it may not make the transition and get trapped into the so-called “middle income trap” as pointed out by Efeyini.

Fiscal consolidation: an urgency

(Published in MTimes04Aril 2014  and L'express,30,April 2014)

In his reply to a PQ on the consolidated budget deficit inclusive of Special Funds, the Minister of Finance has stated figures of -2% in 2011, -1.9% in 2012 and -4% in 2013. However using the same methodology as applied by the IMF in the 2011 Public Expenditure And Financial Accountability (PEFA) Assessment report, the consolidated budget deficit works out to be -2.4 in 2011, -2.2 in 2012 and -4.6% in 2013, more or less the same figures as posted by Martin Petri in his presentation at the 32nd Monetary Policy Committee meeting on  February 3 of this year. (His presentation titled “Strengthening the Monetary Transmission Mechanism” is available on the Web site of the Bank of Mauritius.) We have every reason to believe that our figures which tally with that of the IMF are correct. (IMF’s: -2.1 % in 2012 and -4.5% in 2013)

Titbits:Propositions indécentes; Learning to unlearn; Excess liquidity and reform of the sector and Receding inflation risks

Propositions indécentes

The document ‘Prospects for Agricultural Markets and Income in the EU 2013-2023’ apprises us of the European Union proposal to wind up the sugar quota scheme by 2017 which will lead to a reduction in the EU domestic sugar price and EU sugar imports and that in the long term EU will be moving closer to full self-sufficiency and to being an occasional net exporter. EU sugar beet production is projected to expand in the coming decade and additional volumes will be used mainly to produce sugar rather than ethanol. The expiry of the sugar quota system in 2017 is part of the 2020 Common Agricultural Policy,(CAP).

Repo rate unchanged: Wise decision but......

The decision of the 32nd Monetary Policy Committee (MPC) to keep the Key Repo Rate (KRR) unchanged at 4.65 per cent per annum was a wise decision. Much of the wrangle between the Ministry of Finance and the Bank of Mauritius, for the moment at least, is misplaced. Instead of throwing stones at each other's glasshouses, they need to work together to mop up the excess liquidity in the banking system and strengthen the financial sector.

Titbits : Budget 2014 ; The Central Bank’s Macroprudential Measures; The Poverty Trap

Budget 2014 arouses at best mixed feelings. It attempts to give the impression that under a very difficult economic environment, the Minister of Finance has been able to walk a very tight rope to achieve fiscal consolidation and at the same time try to boost economic growth and improve living standards. It includes various measures which are positive and which we approve of. But the budget is also deceitful as it has concealed the negative aspects while highlighting the positive measures.

Titbits: MOFED: The merger Revisited ; The NAIRU Debate: Growth and Unemployment; Tackling the real estate bubble; The Budget: Prioritized expenditures

MOFED: The merger Revisited

Although the merger of the Ministry of Planning and Economic Development (MOFED) with the Ministry of Finance was announced in December 2003, efforts at an effective merger of the two cadres started in 2006. The whole idea about the merger emerged with the priorities set out in the 2000-01 New Economic Agenda.

The State of our Public Finances

If we want to comment on the state of our public finances, a cursory look at the budget balance as presented by the Ministry of Finance (MOF) is not enough. We need to go deeper.  First of all, we need to consolidate the figures;  the off budget funds-the Special Funds- will have to be integrated to the budget  to generate adjusted comprehensive fiscal aggregates.