Budget 2015-16 : Evolutionary or Revolutionary !!!

From Table 1, we can see that the Consolidated Budget deficit, inclusive of special funds, has been quite high for the past two years, a result of both cyclical issues and structural challenges. There are likely to be future concerns about revenue buoyancy. Both total revenue and tax as a % of GDP have been dipping while current expenditures are likely to increase further to more than 22% of GDP with the continuing high growth in government wage bill and the additional Rs 4.7 billion in old age pension. This may not be a problem in 2015 if it is met from the Special Funds but will be a big burden in future years.

Budget 2015 : Future orientations !!!

Published in L'Express, 26 December 2014
Today the economy stands at a crucial crossroads. As crucial as in 2006, when a new team of policy makers, known as the TINAs (There Is No Alternative)  set out to craft a new socio-economic model - a model based  mostly on the  reports of the Bretton Woods institutions, namely the IMF Report "Fiscal Adjustment Strategy and Measures to Protect Low-Income Households"and "Mauritius: From Preferences to Global Competitiveness" , an unpublished World Bank Report .

Damning Audit Report :The Programme-Based Budgeting?

Published in Le Mauricien, 23 Dec 2014

The National Audit Office's Report shows again and again that wastage and unnecessary expenditures have continued unabated. It is unacceptable that at a moment where everyone was bearing the brunt of the continuing global and the consequent local slowdown, our Ministries and Departments and State-owned enterprises were profligate with taxpayers’ money .

Crony Capitalism impairs growth

          The nexus between business, politics and cronies was never out in the open as it is at present. It is grudgingly acknowledged today by even the most ardent votaries of the policies of democratisation, followed over the past few years, that crony capitalism has become rampant and that a new breed of oligarchs has emerged in an environment characterized by governance and ethical deficits.

Titbits: Managing the Trilemma: The MPC; SOE reform: Need for a new dynamism; Indiscipline and violence in schools; Reform of the welfare state.

Managing the Trilemma: The MPC

The " impossibility trinity or trilemma” holds that monetary policy authorities cannot simultaneously and continuously follow the three objectives of free capital mobility, fixed exchange rates, and an independent monetary policy. And even if the exchange rate is allowed to float, monetary policy cannot be entirely independent of what is happening to the value of the rupee. The trilemma implies that an economy can enjoy capital inflows and an independent monetary policy so long at it gives up worrying about the appreciating exchange rate. It is impossible to have all three goals at a time.

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)