Historical Context
Let us place this budget in its historical context. It follows on the trail of the vision and long term planning of SSR, the pragmatism and sober approach of SAJ, the immaturity and profligacy of recent governments.
SSR gave the country a sense of direction and laid the foundations of our University, the diversification of the economy, the tourist industry, Air Mauritius, Free Education, the State Bank, new trunk roads.
SAJ’s business like approach boosted these acquired gains, consolidated the economy and gave it a further impetus to cash in on the more favourable world situation, so that the Island could taste the benefits of an unprecedented prosperity. But then an ungrateful nation kicked him out unceremoniously. Thereby hangs a tale.
Since 2000 we have experienced a major onslaught of three C.s : casteism, cronyism and corruption, combining to create a corrosive cancer that has been eating at the vitals of the nation, with catastrophic results.
Had the Governments of recent years appointed the right people in key positions in the administration and strategic parastatals, Mauritius would have progressed by leaps and bounds, avoiding the problems of water supply, energy, road circulation, to name only a few of our chronic troubles. With the right people in place the country would have been spared the colossal wastage of billions at Air Mauritius, STC, SIC, strategic support packages, Empowerment Fund etc.
As we stand on the threshold of a new, emerging world order, the country is singularly ill-prepared to face the threats of “slings and arrows of outrageous fortune” which the shift in the economic centre of grants from the West to the East is bound to bring in its train. Rhetoric alone cannot solve problems, as Barrack Obama has clearly discovered to his dismay.
Ploughing our lonely furrow or Plugging into the Global Economy ?
At a time when Britain has cut back 390,000 Government jobs, France announces an austere budget, Ireland has closed two of its Embassies, the Netherlands has pared down its cabinet of ministers, Greece, Spain, Italy are threatened with bankruptcy, our national budget is content to whistle in the dark and points to an elusive promised land that only exists in the imagination of its framers with nary a word about curbing public expenditure or improving efficiencies, except lip service to revamping the Civil Service and over centralisation at the Ministry of Finance.
There is no message of austerity, belt tightening, moderate consumption or higher performance of our public administration to deliver on the 178 proposals of the Finance Minister. Indeed the (in) capacity of the Civil Service to execute all the projects listed in the budget is the biggest stumbling block facing the Minister. We do not have managers, still less project managers in the Civil Service : we have bureaucrats attached to procedures, not to results. And the autocratic governance of public administration has led many of even the most qualified and competent employees of the state to abdicate their responsibility and content themselves with carrying out the whims of ministers.
And there are so many ministers unequal to the job in hand that, without the dedication of a few top officials, the country would have hardly been able to move forward. This is the weakest Council of Ministers the country has known since Independence.
Socialist Governments are known to love to spend, spend and spend, often without knowing where the money is coming from. Gordon Brown was hailed as a brilliant Chancellor of the Exchequer when he presided over the fortunes of Britain for 10 years. It was after he left that the full extent of the damage he had done to the economy became apparent.
Similarly Mauritius seems blissfully unaware of the cold blast of reality that no doubt awaits it, unless the Government girds up its loins and braces itself for a deepening recession in its traditional markets for its exports and its tourist industry. There is no sign yet, given the free-wheeling tone of the budget, that this realisation is about to dawn on our decision makers. Yet our economy is sailing too close to the wind.
Three Reasons
There are three reasons why professional organisations and a section of the press have praised XLD’s budget, one objective and two highly subjective.
The objective reason is that XLD’s style of speech delivery was relaxed, refreshing and candid. He also did not appear to take himself too seriously – and this is reflected in the various proposals contained in the budget. This is in stark contrast with the cockiness, the condescension and intellectual arrogance of Rama Sithanen – and should be applauded.
The subjective reasons are first, that they owe it to a fellow accountant, as a matter of professional courtesy, to support him – especially as many of them benefit from substantial audit fees from Government organisations and parastatals. Second, and this concerns a section of the media, it is political correctness to curtsey to the first Creole to present the budget since Independence.
Let’s face it : there was also general relief and satisfaction that Xavier Duval has completed the unscrambling of the Sithanen/Mansoor omelette, which proved so indigestible.
Too Optimistic Assumptions
The Budget is based on too many optimistic assumptions. The forecasts of revenue are unduly sanguine. To expect tourist receipts to jump from Rs 39 billion to 45 billion errs on the side of day dreaming – when our traditional markets are going through a long crossing of the desert. To privatise lame ducks and loss making enterprises is a facile solution. To be brave and bold Air Mauritius, State Investment Corporation, State Trading Corporation, to name a few should have been on the block as well. But the Minister has chosen the soft options instead of facing hard choices.
Does Mauritius need embassies in Germany and Malaysia when these countries have no resident diplomat in Mauritius ? And we are about to add two roving ambassadors to our foreign service !
Air Mauritius abandoned the Dubai sector stupidly and irresponsibly. Today Emirates has 11 to 13 flights a week – and they are all full. To compound its mistake, MK also closed its office in Dubai. And now it is investing heavily in developing new routes to Asia from scratch. Emirates also promised to exempt Mauritian citizens from visa requirements for Dubai, that promise, made five years ago, has never been kept. And Emirates is laughing all the way to the bank while MK is to be content with 45 seats on each flight. What an unholy mess ! Professionalism is cruelly absent at MK, while conflicts of interest are rife.
Many of the promises introduced in the budget will remain unfulfilled largely because the necessary funds will not be available and the capacity for execution is severely limited. But two measures are particularly incomprehensible. It was at worst irresponsible and at best insensitive for the Minister of Finance to require civil servants to work on Saturdays. The Minister fails to realise that it is not the amount of time spent in the office that matters but the quality and responsiveness of officials. And, the 10% new tax on Global Business operators is counterproductive as it emasculates the attractiveness of our financial sector to foreign investors and deprives it of its most alluring feature.
Had the Minister leaned on the commercial banks to open on Saturdays he would have rendered a sterling service to the community at large – but this is no doubt a hard choice.
The proposal to amend the registration of doctors to facilitate the recruitment of foreign practitioners is also a serious bone of contention which the Minister takes too lightly.
Some curious omissions of the budget are the LBOI (Land-Based Oceanic Industry) highjacked and scuttled by Sithanen despite its adoption by the Government in 2006. This would have given a strong shot in the arm to our economy but those responsible were too incompetent to translate it into reality.
Worse the project of Geothermal Energy which could have revolutionised our power sector does not even rate a mention. Government is obviously incapable of facing demanding challenges.
The Budget gets a B+
There are tensions smouldering under the surface of our society, with potential treats to social peace and stability. These tensions have to be addressed. Over politicisation of institutions has made expatriates throw in the towel. Thus the Director of the Competition Commission, the Vice Chancellor of University of Mauritius, the Director of our Forensic Laboratory, the Comptroller of Customs have all been fed up with this Government’s style of management and preferred to quit. The Budget does not seem to be aware of this situation. Pity.
This Budget is commendable because of its compassion for the destitute, the homeless and the young unemployed and because of its substantial investment in training and development. A kind examiner might even give it a B+.