Right of reply
“The Guy must go!”
— A. Mansoor, Financial Secretary
I refer to the article “The Guy must go!” published on the front page and on page 8 of the edition of Friday 29 April to Thursday 5 May 2011 of the newspaper Mauritius Times.
2. The allegations in the article clearly demonstrate that they refer to the Financial Secretary. The allegations are unfounded, malicious, incorrect, false and are misleading readers while at the same time causing prejudice to the integrity of the officers as well as tarnishing the reputation of the Ministry of Finance and the Government.
3. You are accordingly requested to publish this letter as a right of reply under section 289 of the Criminal Code.
4. The whole structure of MOFED was not just dysfunctional but non-functioning.
Following the merger of the Ministry of Economic Planning and Development (MEPD) with the Ministry of Finance and Economic Development (MOFED), the organizational structure of MOFED is functioning as evidenced by continued high impact delivery of services as
· the high scores on international comparators for areas under the primary responsibility of the Ministry such as the Doing Business Index and Public Expenditure and Financial Assessment (PEFA), .
· the good marks for economic management as evidenced by favourable assessments by the African Development Bank, the Agence Francaise de Développement, EU, World Bank and IMF in reports which are in the public domain ,
· meeting most of the PBB targets for the Ministry as approved by the National Assembly;
· innovation in budgeting and planning as evidenced by international recognition for the successful introduction of Performance Based Budgeting. This has led to countries such as Botswana, Liberia, Namibia and Rwanda seeking to benefit from our expertise;
· successful stewardship of the economy through a series of cumulative crises (triple shocks of 2005-2006; Great Recession; European Crisis);
· `mobilization of record levels of FDI and of unprecedented levels and rates of disbursement of grant funding from the EU including bonuses for good performance on a regular basis;
· Innovation and energy in engaging the EU and other development partners to better align their support with national priorities and resulting in qualification for V-Flex grants to the tune of Rs 453 million;
· development of the first Circular Migration Programme in the World between France and Mauritius;
· successful launch of Regional Capacity Building initiatives including the Regional Multi-disciplinary Centre of Excellence (RMCE), AFRITAC South to provide IMF Technical Assistance (TA) to all of SADC, interest of the IMF to locate all its training for Africa in Mauritius;
· a recognized leadership role in developing regional initiatives including the reformulation of the EU’s Regional Integration Support Mechanism (RISM), developing an agenda for using Aid for Trade to support Regional Integration (to be shortly the subject of discussions in SADC and COMESA) and shaping the design of and securing the location of the COMESA Fund in Mauritius;
· Acknowledged leadership in the field of budgeting and planning as evidenced by the request of the African Centre for Economic Transformation (ACET) for a partnership to enable us to share our expertise in furtherance of the economic transformation of Africa.
5. The falsification of documents by junior officers
· There is no reported case of any officer having falsified any document. This is a serious offence and if the Mauritius Times has evidence of such falsification it is its duty to report the case to Police.
6. It is the strikingly inept management of the Ministry that has been allowed to carry on unchecked for years
· The management led by the Financial Secretary is responsible to the Vice-Prime Minister and Minister of Finance and Economic Development and is accountable to the Director of Audit and Public Accounts Committee. It cannot therefore be said that it has been operating unchecked. Moreover, the specific examples above prove that the unsubstantiated accusations of ineptitude, are factually incorrect.
7. It is this lack of accountability that has contributed to a series of one-man shows, unilateral decisions, economic policy failures and blunders that reflect a lack of understanding of the dire realities of public policies and administration
· The system is fully accountable starting with Parliamentary oversight. Cabinet provides the policy-decisions and implementation rests with the Executive. The Executive is under the scrutiny of the Director of Audit and the Public Accounts Committee. Moreover, in case there is corrupt malpractice, ICAC intervenes.
· More importantly, there is a clear record of success as reflected not only in the listing of some selected specific achievements above but the good opinion that the international community and our neighbours have of our actions to deal with economic policy challenges (the various crises) and the challenges of public policy (the return to planning and ensuring it is linked to the budget) whilst focusing on improved delivery (focus on linking performance management with performance budgeting).
· Another innovation in the Ministry is a movement to a more collegial leadership. The management team, both at Director level and at team leader level, is consulted extensively on decisions and policy discussions. Moreover, there is a policy encouraging staff to come forward to bring their views forward, especially when there are differences of opinion on the best option.
8. They have started flouting the rules and regulations and procedures of PSC and the Civil Service. Protégés, who were quite junior and inexperienced officers were promoted to the position of authority and those who were not toeing the line were transferred away
· No junior officer has been promoted nor can this be done. Appointments and promotions are made in accordance with the rules and regulations of the Public Service Commission.
· However, it is true that no appointment or promotion has been made at MOFED since 2008 in the Analyst Cadre due to problems with the Scheme of Service, a problem that has become generalized across the Civil Service. It is not correct to say that PSC and Civil Service rules and regulations have been flouted. There is no report of violation of such rules and regulations. If the Mauritius Times is aware of the contrary it is duty bound to report these to the relevant authorities. The Schemes of Service are still being amended since the last PRB Report.
· Also, no officers have been transferred against their will. In fact, when outside assignments have been requested, a transparent process was initiated to identify staff who was interested to take up the assignment. This was most recently done for posting to the Office of Public Sector Governance. On the contrary, this approach is innovative and in line with modern management practice compared to previous practice.
9. Ad hoc allowances, selections to Boards and overseas missions were given to Protégés of the inner circle without any transparent selection criteria; these doings went against the procedures and best practices in other departments and institutions
· Ad hoc allowances are cleared by the Ministry of Civil Service before payments are made.
· Appointments to Boards are made in accordance with the schedule of officers and are subject to regular changes and in line with a clearly established policy. Moreover there is a process that several officers have availed themselves of to engage management when they have issues with the appointments that have been made. Also, fundamentally, appointments to Boards are to ensure appropriate oversight and are not a privilege or entitlement.
· Officers attend overseas missions as part of their work schedule. No departure in procedures has been done and instead a transparent system has been set up with a roster to ensure that there is a rotation and opportunity is given to all qualified staff to benefit from the capacity building provided by missions and training. The Mauritius Times can be shown the rules and the roster if it so desires.
· Also, it would be instructive for the Mauritius Times to meet the staff of the Ministry of Finance and to survey the work which they are producing and which staff have the most contributed to the many achievements of the Ministry (including those listed above).
10. Special Budget allowances which had earned the reprimand of the Director of Audit, were distributed generously to Protégés
· Annual budget allowance has not been reprimanded by the Director of audit. In fact, the PRB in its last report commended the Ministry of Finance for its transparent and rules based approach to this matter and has recommended that other Ministries may follow the same principles for payment of allowances.
· Moreover, budget allowance is not a privilege. It has been paid over the last THIRTY YEARS to compensate the extra efforts and hours put in by dedicated officers during Budget time. .
· The quantum is determined on established criteria and there is a process that is subject to review by the Director of Audit to determine the recipients. Indeed, compared to earlier periods, there is now full transparency in the process according to clearly established criteria spelt out in the relevant circulars.
11. Under Capacity Building and Service to Mauritius that were costing more than Rs 50 million per year. (With a maximum salary for local recruits of Rs 200,000 for per month all inclusive
· First fact: Rs 130 million has been budgeted for the Capacity Building Programme (CBP) and Service to Mauritius (STM) Programme for 2011.
· In 2010 these programmes cost about Rs 38 million. However, the issue is not the amount spent but the results obtained. The fact that Ministries are increasing their demand for services under both programmes is an indication of success.
· Another important fact: no local recruit has ever been remunerated at Rs 200,000 per month. There is a rule that no local recruit can be paid more than Rs 75,000 per month. Moreover, the Capacity Building Programme mobilises services on the basis of a tender and the amount paid reflects these procedures that have been cleared by the State Law Office and Public Procurement Office.
· In the case of STM, no one has received more than Rs 40,000 and most receive between Rs 20,000 to Rs 25,000 per month.
12. Given the wave of recruitment of consultants in different areas of ‘expertise’ including Office Administration and Management of Financial Secretary’s Office, the office attendants especially those serving tea, would have to be assisted by an international consultant soon
· This is completely false and only exemplifies the negative state of mind of the author of the article.
13. Rs 233 million package to Microsoft for software licenses: the clearance of Ministry of Information Technology or the PMO or the IT specialist was not obtained. This contract concerned the purchase of 7 000 licenses Microsoft for personal computers, 28 000 customer Access Licenses and 16 servers. The intrigue turns around the rapid decision of the Treasury to sign this contract, on June 27th, 2008, on behalf of the MICT. More serious, in mid-June on 2008, this ministry had flatly refused to affix its signature to this contract. The motive invoked to justify this reservation was unambiguous: « It is a loss of money! ».
· A policy-decision was made by Government to acquire the Microsoft licences and regularize the Government position with Microsoft. MOFED, acting in its capacity as the financial agent of the Government, signed the agreement at the request of the PMO.
14. Under their watch unsound hedging sagas at Air Mauritius and STC swallowed of rupees and burdened the national debt.
· In the case of Air Mauritius, MOFED had no involvement in the decisions and the Financial Secretary (the MOFED representative on the Board) was NOT on the hedging committee. In fact, once the Financial Secretary and MOFED were alerted to the problem, they worked with the Management and Board of Air Mauritius to address the problem with the result that the bankruptcy that threatened the airline was avoided. It should be noted that despite a difficult international situation, Air Mauritius avoided not only liquidation but did not need recapitalization.
· In the case of the STC, the hedging committee, where the Ministry of Finance was represented, was disbanded and the then management of the STC took over all responsibility for such matters.
15. The Ministry of Finance is supposed to have representatives on the Board of our national airline company, the CEB, NTC and the STC and other non-performing parastatals to precisely have an oversight over such financial issues.
· All parastatals follow Government policy. MOFED has provided the oversight necessary to make Government aware of financial difficulties and has helped develop and supported recommendations for corrective action in line with its mandate to safeguard public finances and promote value for money.
· However, MOFED has no authority to enforce restructuring exercises on entities that are not under its jurisdiction. It is in recognition of this issue that the Government has created an Office of Public Sector Governance (OPSG) in the PMO. The OPSG has full authority to oversee and enforce good performance in the public sector.
16. Similarly in the case of the stimulus packages, the officers of the MOFED failed to properly monitor or impose any restructuring plan on the recipient firms. There were very little measures to improve the competitiveness of labour and capital in both the short and long term. A more visionary leadership would have implemented an emergency response while laying the ground for long-term measures… The TINAs ended up approving millions of Rupees for RS Denim and RS Fashion, Infinity BPO and River Heights while acknowledging that they were not sure of recouping our money !!! Individual enterprises were thus allowed to feather their nests with cash and government was just throwing money ‘aux petits copains’ to prop them up. It is just a transfer of wealth from the public purse to the private sector with absolutely no influence over what they do.
· The oversight of the Stimulus Package has ensured that Government has not lost ANY money invested in supporting restructuring. In fact, Government is earning a good return on the funds invested. The details have been provided in answers to several questions in Parliament.
· Moreover, operational responsibility for monitoring the programme rested with the Ministry of Industry and not with MOFED.
· In any case, all independent and objective observers including our development partners have only high praise for the effectiveness of our programmes in this area. In fact, the international community has precisely acknowledged that the Government under the leadership of the PM did display a visionary leadership in implementing an emergency response that not only was highly successful but also laid the ground for long-term recovery. They also commend the Country’s leadership with achieving all this not only at no cost to the taxpayer but in fact earning a return on the funds provided. Again, it would be useful if the author of the article could provide specific proposals on a better alternative to the highly successful interventions.
· Not only there has not been a loss of funds, but there is no record of any statement by MOFED or Government that we were unsure of recouping the money invested in supporting our productive sectors. In fact, all safeguards were designed and did in fact work to protect the investments made by Government.
· Evidence of money being thrown would need to be provided since the Ministry of Industry working closely with MOFED developed clear rules for the MTSP committee to provide assistance. The details are a matter of public record following several parliamentary questions.
17. The TINAs promised us a lot on fiscal consolidation and proclaimed high and loud all kinds of golden rules for the budget which they were the first to flout. With much improved tax administration, higher economic growth has automatically brought more revenue under VAT and other taxes. Yet, fiscal revenue as a proportion of GDP has stagnated at 20% of GDP, despite the breast-thumping of the TINAs. A simple yardstick of competence of successful fiscal consolidation is the extent to which fiscal revenue has been strengthened, not in absolute terms, but as a proportion of the country’s total income. The TINAs were able to reduce the fiscal deficit by slashing capital expenditures sharply. The TINAs were able to reduce the fiscal deficit by slashing capital expenditures sharply. A mark of a performing technician, besides strengthening revenue, is to reduce the proportion of current spending as against capital spending. Instead, they did the opposite, and put the burden of fiscal adjustment on capital expenditures, which are sorely needed to boost the country’s infrastructure.
· The IMF and the EU have commended Mauritius for the results achieved with fiscal consolidation. The recent IMF Article IV report is only the latest in a series of positive assessments. At a time when the crisis has pushed up public debt in both developing and industrialised countries, Mauritius gets credit for having kept control of debt and kept it on a downward trend, even though we have had to scale back the speed of debt reduction.
· Also, the Mauritius Times is correct in its analysis that we need to shift spending from consumption to investment. However, it is a mistake to analyse in terms of capital versus current because investment in human capital (health, education and social welfare) is as important as investment in physical infrastructure. There has been a marked improvement in the quality of spending as evidenced by the shift of spending as reported by the CSO. In fact, in 2005 public consumption amounted to 70 percent of spending whilst in 2011 this is expected to be below 67 percent.
· Moreover, even if we accept the outdated notions of current versus capital spending, the facts are that the share of capital expenditure has risen from 6.3 percent in 2005 to 7.5 percent of GDP in 2010. Moreover, as a share of Government expenditure, it has stayed around 13 percent over that period.
18. The MOFED, singularly incapable of a proper understanding of the present policy issues, is absent on all fronts be it – the strategic plans of Ministries (MOH for e.g.) or of parastatals (NTC for e.g.), or the Tertiary Education Commission (its Open and Distance Learning Policy for instance), energy and food policy or the innovation, diversification or democratization of the tourism sector or the MID project, etc., you name it
· Unfortunately, the former MEPD had abandoned planning prior to its merger with the Ministry of Finance. The last Public Sector Investment Programme (PSIP) was published in the nineties and the last Long Term plan dates back to 1992/93. It is only with the merger and the move to a Performance-Based Budget that the Planning process has been revived. Due to not having been required to work on planning for a long time, MOFED staff are taking time to put in place a fully operational planning function. However, the elements for planning are in place and Ministries are making slow but steady progress in upgrading the planning function.
· Already we have a fully operational 3-year rolling plan which is co-terminous with the 3-year rolling budget. This plan fully integrated with the budget (the PBB) is approved by the National Assembly and indicates not only targets and resources to achieve them, but also a Strategic Note that explains aims and objectives of each Ministry.
· In line with modern thinking, planning must take place at the level of each Ministry with a central agency (MOFED in our case) providing the integrating framework and ensuring coherence. This process is gradually being improved with an emphasis on integrating the short term operational plan in the PBB with a long-term strategic vision at the level of each Ministry. In addition, MOFED staff will develop cross cutting issues focused on moving the country from middle income status to high income by achieving a Trillion rupee economy in the 2020’s.
· A crucial component is the development of the PSIP and its formulation of a 10 year infrastructure programme that will need to be embedded in the strategic plans and linked to the national development goals.
19. Why has MOFED fallen so low? Because most of the analysts have been castrated into mere numbers-crunching Finance Officers within a structure that has mainly a short-term budget focus. Economists have been reduced to glorified finance officers carrying out mainly mundane day-to-day administrative work and the routine fire-fighting of line ministries. One of the building blocks for policy work is strong research skills. The TINAs do not believe in research; they dismantled the Economic Analysis and Research Section (EARS) of the earlier MEPD and for more than five years now the Documentation centre of the Ministry has not purchased any economics book not even a cheap version of the best sellers Freakonomics or the Money Mischief: Episodes in Monetary History or Fair Trade for All: How Trade Can Promote Development and so on. Unbelievable that our friends at MOFED were starved of foods for thought for more than five years.
· Previously, the MEPD was responsible for central planning and most of the recommendations were left at idea stage only. With the merger of finance and planning functions, a more integrated and implementable approach has been adopted for the planning function to be more effective. Our Analysts are not number crunchers but rather required to analyse issues related to economic and social development and ensuring that the financial resources required are available. Our main challenge is to ensure that planning is focused on ensuring that targets can be achieved because they are consistent with available resources. This requires significant analytical skills that mere number crunching would not produce.
· It does, however, require staff who can both be analytical and master quantitative techniques. For those staff who do not have such skills, training has been offered including in Excel.
· Analysts play a crucial role in ensuring that our plans can be translated into effective and practical budget measures and by ensuring that proper funding and human resources are being provided for in the PBB. There is no point in having abstract plans that are not implementable, one of the main weaknesses of traditional planning, that has led to this more modern approach being increasingly adopted worldwide. This integrated approach is already delivering results as evidenced by the Road Decongestion Programme, for example.