Because he was not Finance Minister (FM) during any of the past eleven years when by far the most backward policies -- top tax rates were set HYPERLINK "http://kozelidir.blogspot.com/2013/07/how-high-should-top-tax-rates-be.html"too low and this broke the economy -- our country has known were implemented. For sure he has been a member of Cabinet during the last two and half years and as such has to accept part of the responsibility of the mess we're in because he could have vehemently asked for the end of the worship of the golden calf. Or at least distanced himself from it. Besides he was after all until recently a member of a party which has two interesting words in its name: Social Democrate.
XLD, Less So
Of course Xavier-Luc Duval (XLD) has a lot more to do with all the poverty created over the last decade because he was in the driver's seat for quite some time -- close to three years. But before we look into this let us not forget that poverty and the fight against it is heavily dependent on two quantities: the size of the economic cake (GDP) and how it is shared. From the 2012 household budget survey (HBS) -- which tells us about the sharing -- we know for a fact that the poorest two-tenths of Mauritian households saw their shares shrink by 10% to 15%. That's their smallest shares in at least two decades if you care to know. So we don't exactly get bonus points here. And what about GDP?
Decomposing the Sithanen Toohrooh
A disaster of epic proportions. As we've shown before a HYPERLINK "http://kozelidir.blogspot.com/2016/07/a-trillion-rupees-of-gdp-missing-almost.html"Rs927 billion GDP gap had accumulated over the eleven years ending in December 2016. This gap aka the Sithanen Toohrooh gives us an indication of the serious damage that that politician with a massive skills mismatch has inflicted to our economic machinery and which others who followed didn't fix. This is captured by Chart 1 which shows how the close to a trillion-rupee GDP hole can be split among the six Ministers of Finance we've known since 2005.
Doctor Infects Patient Who Had a Mild Headache With Disease
As we can see Sithanen (RS) is responsible for about Rs85 billion of the cumulative gap. It is quite small although he was FM for 52 months -- the longest time in the last 11 years -- because the trickle-down disease he infected the economy with hadn't yet compounded to a massive size. Relatively speaking that is because 15% of his gap is close to thirteen billion rupees. That's the cost of what some regard as an overpriced airport terminal. Or if you will more than 70% of a Metro Express we don't need. HYPERLINK "http://kozelidir.blogspot.com/2017/03/metro-express-not-needed-for-now.html"For now. But it was big enough to help drive HYPERLINK "http://morisk.blogspot.com/2016/07/why-poverty-is-winning.html"one of every six people who were poor in 2012 into poverty.
Meet Paragraph 406
Next in line was Pravind Jugnauth (PJ) who was there for fifteen months. His GDP gap was almost as big as that of his immediate predecessor although his stint was more than two-thirds shorter. The disease had started to spread. Indeed whereas there was on average Rs245 million of revenue missing every month under RS this number had risen to Rs711 million by the time PJ had taken over. Which explains why their numbers are quite close. Think of it of being on the wrong side of compounding. To his credit though his 2011 budget -- see paragraph 406 -- was the only one in the period of interest which held some kind of promise of a return to a sustainable fiscal path: the introduction of a Solidarity Income Tax. Of course PJ came back as FM in 2016 and has generated an additional GDP gap of Rs124 billion over seven short months. The disease has now spread quite badly: there's now a revenue gap of Rs2.6 billion every month. The total for PJ at the end of last year over the two stints was therefore Rs195 billion. And it's still growing.
Gabzi Lor Gabzi
Enter XLD. His GDP gap of Rs297 billion over his 34-month stop at the Ministry of Finance (MoF) is the largest of the period despite not being in the driver's seat for the longest time. Again it's because he was there for a sufficiently long period of time when the disease was growing fast enough. The recent criticism he leveled against Hon. Wong is kind of misplaced but quite interesting when you consider that he was Minister of Social Integration before he landed at the MoF. Not that Mauritius needed such a ministry given that her reputation of lifting tens of thousands of her citizens out of poverty and up the social ladder wasn't built on having time-killing contraptions like this one or those we've seen mushroomed for a while now. Rather, it was built on the back of brilliant policy-making and implementation: birth control, economic diversification and free education. Still we can imagine XLD coming in direct contact with the harsh reality faced by the weaker members of our society on more occasions than one -- we know how disturbing one such visit to HYPERLINK "https://www.youtube.com/watch?v=ehmLyCN1ffo"a poor household can be. And subsequently deciding to bring back top tax rates to more sustainable levels to improve both GDP growth and sharing. But he did not even though the elimination of the Rs297 billion GDP hole would have translated into an extra Rs166 million for the 10% poorest households every month.
El Presidente As FM
For seven months. True he was busy crafting a political bromance at Clarisse House with a great white shark. Not everybody agrees it was a great white though. Many think it was a hammerhead. And NR was totally mesmerised with fake electoral simulations predicting a 60-0. While probably drooling at the prospect of finally being called Mr. President. For seven years. But the trickle-down disease couldn't care less. The GDP gap advanced by 79 billion rupees during these months.
Economic Mirage 2.0
Enter Lepep with miracle man in the driver's seat. The myth exploded rapidly and Vishnu Lutchmeenaraidoo (VL) accumulated a GDP gap of Rs227 billion over the fifteen months he was there. That's the second largest after the one hatched by XLD. This has obviously provided HYPERLINK "http://kozelidir.blogspot.com/2016/06/mauritius-about-to-experience-aha-moment.html"an aha moment to large swathes of voters. Finally SAJ was FM for two and a half months during which the GDP shortfall rose by another 44 billion. Which is why a Minister has said recently that government had no money for capital budgets. The latest audit report is singing a similar tune: in 2014 HYPERLINK "http://kozelidir.blogspot.com/2017/04/what-you-can-learn-from-audit-report.html"one of every four rupees of government revenue was raised via debt.
We can also look at the Sithanen toohrooh from another angle: how the revenue gap has fared under the three PMs we've had since RS started this madness. Chart 2 does precisely that. If we stick with the very conservative number of government revenue as share of GDP at 15% then between 2006 and 2014 a Rs531 billion GDP gap has caused a Rs80 billion revenue shortfall to accumulate on one Rolex. That's over a nine-year period.What would our national debt and youth unemployment look like if there hadn't been such a shortfall? Wouldn't it have been nice to have let's say a Sovereign Fund with this kind of money in it?
Miracle? No, Huge and Growing Shortfall? Yes
SAJ's revenue shortfall -- we stopped the clock when he resigned as PM a couple of months ago -- is sixty-two billion. But accumulated over only a little over two years. That's a lot of money. It's greater than a few of our national budgets of the last decade and a half. The combined revenue shortfall of NR and SAJ is 142 billion rupees. At a Bheenick type of exchange rate that's close to USD5 billion or roughly the initial cost of the Dubai Metro.
The meter for PJ has started running and by end of June this year there will already be sixteen billion rupees of revenue missing. That's a lot of trash to remove. Trickle-down economics has also set back our private sector by about HYPERLINK "http://kozelidir.blogspot.com/2017/03/private-sector-behind-by-740-billion.html"three-quarters of a trillion of GDP.
So there you go Mauritius. The MMM let you down a long time ago. The Labour Party has been HYPERLINK "http://kozelidir.blogspot.com/2011/01/planning-maverick-barely-recognisable.html"barely recognisable since 2006 and now another apparently socialist party has turned its back on you.
When are we voting again?