FOUAD DIOUMAN
Even if the enormous deficit shows no sign of reduction in real terms (the elephant in the room), this year’s budget was relatively more coherent than the previous two exercises, littered as they were with bits and pieces of financial science-fiction. Maybe financial management is better spelt out in English, after all!* However, the interesting items enumerated this week are far too micro whilst the silence on a Strategy (let alone a Vision) to put Mauritius firmly on the future track to prosperity, admittedly a very tall order, is more deafening than ever.
The Good
Whilst it is much lazier to lean on the Demand side, we are thankfully offered various incentives to critically prop up production through agriculture, SMEs and even the very trendy electricity generation. Indeed, the current inflation stifling buying power around the world emanates from a lack of Supply, due obviously to the global economic machinery still not at full steam from the Covid slumber as well as the war in Ukraine. A lid has been put on the price of basic commodities, and even if this is against good economic management (a mere illusion as the money is taken from elsewhere, not least, from sharply higher fuel taxes), it does soften the blow on the most vulnerable.
Removal of already low Customs Duties on Hybrid cars bodes well for further reducing our consumption of fossil fuel and hence carbon emission, paving the way for the very ambitious target of a carbon neutral 2030. There is nothing like large cash discounts to convert philosophical critics of Hybrids and ‘pure’ Electric Vehicles (EV). The grant of Rs.200,000 on EVs is both surprising and commendable, now in line with European countries. Let us just hope that our dear car dealers will not increase their prices accordingly, we are in Mauritius after all… 
Furthermore, individual producers of electricity (ie. households) will now be able to produce more than they consume and sell the excess to the CEB whilst benefitting from a loan with a very low interest rate (2%) to fund a large part of the investment. At a national security level, this will ultimately reduce the CEB’s need to invest and produce more electricity.
Last but not least, income tax has been further reduced from a low rate of 15% to 10% and 12.5% on the first two taxable bands. It is to be noted, however, that the marginal propensity to consume is highest at these lower income levels. So the windfall gains will not go to much needed national savings and investment.
The Bad
Any government is always keen to show the bright side. Much of the budget rests on the foundations of an economy… yet to be buoyed by very optimistic growth. There are some signs of recovery around the world but the geopolitical and macro-economic headwinds remain so strong that it is quite dangerous to bet everything on a high growth scenario.
At a much more micro level, the Rs.200 per visitor is not such a bad idea per se. Despite social media having a field day with the usual sarcastic comments, a promo voucher goes a long way towards attracting more footfall with customers spending many times more, once they are lured into the shops. However, this is again a case of starkly misplaced approach and priorities which sadly characterise public ‘management’ in Mauritius. Is the National Budget presentation in Parliament really the forum for a Marketing promotion of £3.65 per visitor? If the right Marketing expertise existed at the numerous entities in charge of Tourism, they would have already come up with promotional offers regularly, as and when required. Instead of a voucher at arrival to tired travellers, mostly on an all-inclusive vacation, which looks more as an after-thought, a digital voucher before departure on a Mauritius Tourism app would have been more clever, with an accompanying email linking to a shopping website showing all the items available at the airport, with the tourist having the possibility to browse and pre-book her best souvenirs of Mauritius – as well as last minute gifts for cherished ones back home. This Marketing reflexion is not found within the realm of government. It is just a matter of bewilderment why Ministers, Chairmen and Advisers just aspire to be Marketing Officers when some of them have never even worked in the private sector, let alone in retail…
The Ugly
For decades now, we have seen absolutely no innovative Vision and Strategy to re-think our economy. It is always about buying equipment (helicopters, vehicles and even… radios), which are moreover imports, as well as building schools, sports complexes, rail and hospitals. Further increases in the number of civil servants and the MTPA budgets are merely money down the… new drains without any reform, accountability on efficiency and results. We are getting very low returns on investment from the tens of billions thrown at education (or rather, school building and civil servant salaries) and health. Oh, and how will we fund the deficit this time?
What could have been
The silver lining of any dire situation, as the one we are in, is that reform, by definition fundamental and structural, is much readily accepted, as a matter of necessity – and even survival. A non-exhaustive list could have been:
a) The Civil Service – a reduction, or at least a freeze, on the number of civil servants, as well as pay, until the sector is reformed.
b) Healthcare – a long overdue reform with emphasis on standards, processes, protocols, preventive and holistic care. A flat fee system (partly subsidised) at the point of delivery will help funding whilst promoting accountability, ensuring patients get value for money health service.
c) Education – free education has its merits but also numerous flaws. The re-introduction of school fees (with full subsidies to the most needy) will help eradicate the diabolical private tuition industry and increase much needed government revenue.
d) Ports and Airports – a fundamental review of this sector esp. regarding Air Access policy, Air Mauritius (business model, governance, ownership) and possibly sub-contracting the management of our airports and ports.
e) Pension – the oft-repeated elimination of all pensions for Presidents, Vice-Presidents (a totally useless position), Ministers and MPs.
f) Public Transport – a coherent strategy is severely lacking, the vacuum thus allowing for antagonistic measures such as rail transport promotion with more… expensive tickets whilst duties are reduced on cars.
g) Municipal Tax – on every household.
h) Parastatal bodies – most of them can be abolished esp. if Ministries were more modern and strategic with regulation and policy.
i) New Development – new industries based on environment protection (eg. recycling, renewables), marine resources and organic farming.
j) Tourism – a forward-looking Tourism Strategy based on Safety and Security, the Environment and the promotion of our unique history and identity.
k) Government expenses – no duty-free cars or driver/car/travelling allowances to anyone (politicians or civil servants) and ‘per diem’ replaced with refunds of expenses against receipts.
As mentioned, there are some snippets of useful measures in this budget. But sadly, and as usual, the easy, popular approach was favoured at the defining moment we can least afford it. An electoral budget is simply too attractive to resist by any government.
* [Disclosure: the author of this paper is hopefully not biased, having studied both in France and the UK]
