Responsible, but reformist?
Honourable Minister Duval came up with rather positive macro-economic statistics with inflation at 4.1%, growth at 3.4% and importantly, the year’s budget deficit at 2.5% and the overall debt level falling to 54.2% of GDP.This can only be good news for the country. In spite of regional elections due in the next few weeks, the Minister resisted the temptation of being populist and clearly put the country’s long term interests first. This near equilibrium appears to have been achieved through both revenue raising measures – fiscal revenues were up 9.3% on 2011 – and prudent spending with Government expenditure Rs7.9bn short of budget. It has been a few years since we’ve seen such impressive figures. The Minister pointed out our improved rankings on a range of benchmarks and we are clearly doing well at the macro level.
In spite of such a rather tight budget, growth is expected to reach 4% next year, a commendable figure in the current international climate. Of concern is inflation that is raising its ugly head with a projected 6% for 2013. This will lead to monetary measures that will hurt businesses and households alike.
What is however lacking in this budget is a resolute positioning of the country towards greater things, towards a new and modern vision for Mauritius. Thus the Minister talked of access to internet as a fundamental right for every citizen and yet his only measure for the population was a Rs149 drop in the monthly cost of the most basic formula. What the country needs is very high speed internet, a service already available in Reunion and even Madagascar, and yet no change is proposed to provide access to such a service. He went on to mention plans to move towards e-Government, a vast programme and exciting future but the measures appeared modest compared to what could be done to promote a hyper efficient public administration.
E-Government is a step in this direction but is far from sufficient. Government has not leveraged on this budget to declare its intention of taking us towards less Government. Several metrics are available – the number of civil servants per head of population, or total Government spending as a proportion of GDP etc. A more efficient public administration means more value adding and better paid jobs for those in public employ. Less Government means more private sector, more democratisation of the economy, job creation, better service to the population, higher efficiency by the service providers etc. The Minister announced a hot meal for all school kids and this will be probably administered by PTAs rather than Government employees, which is positive. Additional funds will be made available to local authorities to clean up the country but here no mention is made of the cleaning effort being privatised. The Minister has however announced the creation of a Public Sector Task Force and of a Local Authority Governance Unit, two bodies to improve the efficiency of the public sector. We can only hope they will be efficient and will have real teeth when faced with wasted resources and poor services.
Next, the term Maurice Ile Durable (MID) was not mentioned. Is this the end of the project? The future of Mauritius is as an environmentally conscious island, with clean neighbourhoods, recycled materials for energy production and well administered building standards. Our next phase of development requires the creation of a quality destination for our tourists, that would go well beyond their hotels, and the development of sound values for our youth. The Minister nevertheless allocated significant funds for the solar water heater scheme, inefficient electric appliances will suffer import penalties and smart electric meters will be installed to enable the application of tariffs depending on the hour at which electricity is consumed. Further, it is supporting the production of local compost from recycled waste through a subsidy per ton produced. These are steps in the right direction but a policy and vision statement were lacking.
The real challenges are in deeper structural reforms.
Let us however not ignore the capital investment programme that will continue in 2013 for a massive Rs28.6 bn and a whole range of policy measures that will no doubt have a positive impact on various sectors of the economy. These are reviewed in our brief.
09 November 2012