DRISHTA TENGUR
PhD Economics (Newcastle University, UK)

A budget announced when the number of COVID-19 cases are rapidly increasing.  This is a rather pessimistic budget for an upcoming year full of challenges. The second wave of the pandemic has not really hampered the economic activity, and it still represents a challenge for the country. The government has announced a recovery of the economy based on the COVID-19 vaccination programme. The government has indeed announced an additional levy of Rs 2 per litre of Mogas and Gas oil which will be applied as from 1st July 2021 to finance the purchase of COVID-19 vaccines. The petroleum levy will be directed to the National COVID-19 vaccination programme fund. It is wise to recall that the price of Mogas has increased from Rs 44.00 to Rs 48.40 per litre on 2nd April 2021.

Although the confidence of consumers is still low as compared to the pre-pandemic level, the government has projected a rise in tax collection from VAT, income tax, trade tax and other tax sources, for the financial year 2021-22. The budget indicates that social contribution is expected to increase to Rs 9.4 billion, and this is mainly due to the CSG private sector employees, public sector employers, private sector employers, and self-employed and employees under pension scheme. Property income is also expected to jump from Rs 1.8 billion to Rs 11.4 billion. Despite the forecast of a rise in these tax avenues, total revenue will still be lower at 27.6% as a ratio to GDP in the financial year 2021-22, compared to 35.3% in the financial year 2020-21. A possible explanation is because the government will not be receiving grants from other general government units and no special transfer from the Bank of Mauritius, with the exception of India providing a grant of Rs 2.7 billion. The government has envisaged a lower level of subsidy, that is, less Wage Assistance Schemes and Self-employed Assistance Schemes and less transfer to special funds for the financial year 2021-22, while the other components of expenses are estimated to remain relatively the same.

This budget has not fully addressed the problem of unemployment, mainly youth unemployment. Youth unemployment rate has increased from 22.8% in 2019 to 26.1% in 2020. The Bank of Mauritius and the Financial Services Commission will launch a one-year training programme on AML and related matters for a minimum of 100 graduates with a monthly stipend of Rs 15,000. Moreover, the SME Graduate Scheme will cater for some 1,000 students. Around 4,450 jobs will be created for police force, education and healthcare sectors. These measures are not likely to absorb youth unemployment. The government has further announced job creation in knowledge economy, pharmaceutical, biotechnology, renewable energy and digital industry, but the main concern is if we have youth looking for job in these sectors presently. International students will be given the opportunity to grab experience locally, which might be a hindrance for domestic students seeking employment.

A pessimistic budget, with measures to boost investment in the medium term, has been presented, yet the issue of youth unemployment has not really been addressed and very scare measures regarding women participation in the economy.