“Madam Speaker, let me express our gratitude and recognition to the Government of India of the exceptional financial support of US$ 353million that is some Rs12.7billion which we shall be receiving over 4 year period starting in this budget.”
These are wise words from the Minister who has a lucky charm and has undergone a conversion and realized that the money from tax payers of India should be invested so that our children and their children could benefit as well.
However, unlike Lady Thatcher the Minister of Finance would probably go down in history as the Minister with the biggest U-turn. Some would argue he has been intellectually dishonest. Let me clarify.
Metro Express
The Metro Express has become the most cherished project in the PSIP under the External Financing of Projects, Projects Grants and it’s good to recall that the Leader of the MSM wrote a letter to the Indian PM Modi (when his Minister of Foreign Affairs was on an official visit to Mauritius in October 2014)  for the light rail project to be set aside.
It was spelt out while the electoral campaign was gathering momentum. Despite repeated pleas made by the former Chairperson of the MCCI and the public at large to implement the project, it fell upon deaf ears because the regime was too busy with political vendetta, expropriation  and nationalization of BAI.
The deal to finance the light rail project was concluded after arduous negotiations between the previous Government and the Government of India. The latter agreed to finance in toto the project at a concessionary rate with an attractive in-built grant element. This massive investment of Rs 25 billion would have  reenergized the economy and addressed one of our major supply side constraints.
Now imagine the state of affairs today, had the already negotiated investment been allowed to flow in the country at that point and the decision to block it not been a purely political one whereby the MSM opposition members at the time felt that their interests would be better served by automatically saying the contrary of what the then Government was proposing without looking at the merits of such a decision. What a U-turn indeed to the detriment of the country, once again.
Notwithstanding unnecessary delay and unlike EU accompanying measures, there is also no clarity and certainty in respect of the financing of projects. If there were predictability  and reliability on the alleged quick disbursement of financial support, I would expect the Minister of Finance like one of his predecessors to announce that a warehousing system from bank consortium would be set up to finance the identified projects. We are told that the Metro Express project would be scaled down and another feasibility study would be conducted. This is not Express, not even tip top bus of my early childhood.
The Budget at paragraph 383 states that the Indian grant of Rs12.7 billion will be spread over 4 fiscal years starting from 2016/2017 in two successive tranches of Rs4 bn, a third of Rs3bn and final of Rs1.7 bn.
The amount earmarked in 2016/2017 for a host of projects total Rs2.8 billion although it appears unlikely that the Government of India will disburse funds for Governments equity participation  in Heritage City for Rs1.5 billion and Metro Express for Rs 0.8 billion. Besides where is the reference to the Indian grant?
Even allowing for this possibility, one cannot reconcile the amount of project expenditure of Rs2.8billion with figures of grants from the Government of India of Rs4 billion, as indicated in the budget. The Minister has not apprised the nation if there has been prior agreement with Indian Government for advance disbursement on these projects, besides grants received will not exceed Rs 2.8 billion and most likely nearer to Rs 2billion. Let us have a reality check here.
Exceptional Revenues
Since the budget relies heavily on exceptional revenues – transfers from National Resilience Fund( Rs2bn), transfer from STC (Rs 1.7bn), windfall gains of Rs (1.8bn) from CEB in addition to higher external grants (Rs6.4bn) these are likely to be project tied and since there will be no upfront or quick disbursement therefore the effective grant receipts for 2016/2017 will only be Rs 2bn. With a lower total revenue by an estimated Rs 2bn, the consolidated deficit inclusive of the deficit of special funds would be Rs 21.7bn or 4.8% of GDP.
Capital spending will in reality be lower by Rs 2bn than the inflated figure of Rs 10bn. A high consolidated deficit and a weak capital spending will not support growth and creation of employment. The 2015/2016 budget had similarly estimated grants of Rs 2.6bn but only Rs 0.3 bn was received.
Total revenue in 2015/2016 was Rs 2.6bn below budget mainly because of this grants shortfall.
Where is Growth?        
 With a high public debt, low job creation, weak capital spending and decreasing FDI, Government will find it impossible to implement the measures announced. Where is the Economic growth for sustainability? Besides the incentives given to companies in the global business sector only confirm the harm that the present Government has caused. The effect is so dire that new measures are put in place to attract new businesses in this sector and salvage the current exodus. The optimist would probably say it’s better late than ever but the realist knows the harm done is almost irreversible.
Mr Li Kwong Wing, Chairman of SBM holdings, agrees that there should be no more harm or reckless spending and Heritage City does not fit the bill. It is not the Senior Adviser to the Minister of Finance who will contradict the Chairman of the SBM.