A Minister of Finance failing to rise to our aspirations

RATTAN KHUSHIRAM

Analysing and decrypting the two recent interventions of our Minister of Finance (MoF), one in the context of the Government Programme 2020-24 and the other on the “Plan de Soutien” to help the economy cope with the coronavirus outbreak, we were quite disappointed on both counts, if not disillusioned regarding our expectations, however low, from the new team at the helm at the Ministry of Finance that it will wake up to the realities and somehow get its act together.

We were expecting a master stroke from the new finance minister who would have unravelled a series of economic reforms and revival measures for our sagging economy which was facing much stiffer headwinds, largely of the government’s own making, long before the coronavirus outbreak. The latter is not only further stifling our faltering economy but is also worsening the already weakening macroeconomic fundamentals – a plateauing real GDP growth, a current account (excluding Global Business Companies) to GDP ratio above 11%, an imbalance between investment and savings, unsustainable budget deficits and  public debt whereas sector-wise, manufacturing is in a mess, services sector is not growing fast enough, and agriculture continues to be at the mercy of external elements and internal inherent problems.

These imbalances and constraints give an incredible insight into the challenges ahead and the new MOF was expected to dawn in, reassuring us on the major economic indicators that point towards distress while straddling the economic landscape with much confidence and leadership worthy of a MOF taking the economy by the horns. That would have had the effect of a shot in the arm of the economy, jolting it towards the right mandated directions to bring the fundamental changes which are long overdue. That was his role on both occasions, to convey the message of a strong government that can grapple with some of the country’s truly daunting tasks and steer Mauritius in the right direction.

It was difficult not to feel a sense of unease that instead of having an economic helmsman on board with a clear vision on the need of the hour, we are dealing with a MOF and team which has yet to evince a flair for economic management, confused and constrained that they are, by successive unfortunate events that are making it more onerous to absorb the financial burden of the populist measures dished out lately to score some quick wins.

The “Plan de Soutien” amounting to Rs 9 billion left us with a foretaste that we cannot expect much from this regime in terms of a slew of critical and structural reforms and hard and bold decisions meaning that it will continue in its own dubious ways to postpone the day of reckoning. Indeed, the package of measures of the “Plan de Soutien” is a mere attempt to “boucher les trous” of the impact of the coronavirus.  Many of the measures proposed -Equity Participation Scheme, Enterprise Modernisation Scheme, SME Factoring Scheme, SME Equity Scheme, Technology and Innovation Scheme, Freight Rebate Scheme, Speed to Market Scheme, and land made available to small planters – have been tried in the past to reinvigorate the economy but to no effect. Will these work now that the economy is in a crisis situation?

Like in the past, these measures will mostly benefit the corporates and most of them will pocket the money with little impact on supply. These measures are mostly meant to compensate the corporate sector for their losses or lower profits and little has been provided for the many workers who stand the risk of being laid off. Our doctor on poverty issues seem to be having second thoughts on his inclusive policies once he has taken the mantle of the economy’s finance minister. If a more consistent programme of reforms and innovative measures had been formulated, we would have had more of resources available to respond more effectively and flexibly to the evolving depth and duration of the crisis and also launch the economy, reformed and revitalised, on a more upward trend. We had missed an opportunity where we could have engaged all stakeholders not only for short term measures but prepare our workers and economy to have all its engines of growth running full blast once the crisis is over.