The coming budget will be a test for the government. It can either limit the exercise to a traditional “accounting” exercise or at least start laying the foundations of the credible and acceptable alternative…
With the beginning of May comes Budget season. The sun is back and, pun notwithstanding, this should be of good omen for the government. Indeed one of the determinants of a successful budget is the feel-good factor and morale of the nation as it takes cognizance of the measures that are proposed.
Lord Keynes was the first to speak of the “animal spirit” when it comes to the ways in which people emotionally react to and shape economic events. And mood, trust and feel-good factor are its principal constituents. As part of the annual ritual, the succession of consultations with stakeholders will go ahead, and there will no doubt be some interesting propositions that will crop up during this exercise.
In this article we do not intend to discuss budgetary measures as such. We propose to give consideration to the budget as an instrument for communication and for focussing the minds of the nation on priority issues of interest to socio-economic development.
One of the critical weaknesses of this government since its inception has undoubtedly been the series of scandals which have successively rocked the boat as from day one of its formation. For almost three years it projected the image of a rudderless boat on the roughest of seas. There seems to have been some calm over the past months, and this provides a rare window of opportunity for the government to at long last imprint a sense of direction and make explicit its vision for the country.
With the presentation of the next budget coming at the ripe time, the government has the ideal instrument and occasion for such an exercise of signalling its intents and defining the road ahead for achieving its objectives. May be, even more importantly, this could prove to be a tipping point for the future of Pravind Jugnauth as Prime Minister as he faces the task of debunking the perception that he lacks the determination and willpower to lead the country forward in the face of the huge challenges ahead. Signalling, as our readers would have understood, is all about intent and purpose and not about data and accounting.
“We are all too familiar with the notions that the budget is primarily about consolidation of macro-economic fundamentals — read reduction of budget deficits and government debts as well as recurrent expenditure. The sum of which is called Austerity measures, which have a knack of affecting the poorer sections of the population more than the wealthy. While macro-economic fundamentals are indeed critical for the long-term stability of a country, one cannot ignore the fact that a budget is also if not primarily a political exercise…”
For some time now there has been a prevailing feeling that Mauritius is at the cusp of some momentous events. This is principally prompted by a consensus that the status quo is untenable and can only lead to misery for the larger numbers. There are usually four central forces that bring about significant changes in governance regimes at national or global levels. Whether these impact society positively or negatively will be determined by the scope and nature of actions undertaken by government or eventually by the absence of a coherent response. The four forces of change are as follows:
Severe economic shock
Although one can argue that Mauritius has not actually suffered from a severe economic shock as such, it has nevertheless been confronted by the effects of the Great Financial Crisis (2008) in its principal markets. Furthermore it is generally accepted that with a growth of 3.5 to 3.8% over the years, the country is unable to break away from the infamous “middle income trap” and therefore incapable of delivering on its promises of a “high income” economy and especially to meet the aspirations of the younger generations, particularly those possessing academically advanced qualifications.
Intellectual collapse of the existing model
The call for a radically transformed economic model has been on the agenda since the last decades of the last century. It became clear that the trade regimes of preferential access to European markets and protection to the local market would be seriously challenged by the emergence of globalization and free trade as the leitmotivs of global economic exchange.
The writings were on the wall regarding the inevitable end of the erstwhile Sugar Protocol which was the basis of much surplus economic value. It is sad that in the end Mauritius was at the receiving end of the whole exercise and was practically feckless in influencing the course of events. The worst is that successive governments were incompetent in introducing the kind of transformative changes called for by the occasion.
Loss of faith by the public in the existing system
There is no need to labour this point. In fact the despair of the population can be derived principally by their voting behaviour over the past decades. For all intents and purposes, the electorate votes to sanction an outgoing government instead of voting for new propositions for progressive economic and social reforms. There is a case to argue that the numerous signs of social disruption – from law and order breakdown to crimes including large-scale drug trafficking and rising numbers of road accidents — are all evident symptoms of such loss of faith in the existing system.
A readymade and credible alternative
Whereas all three of the above factors have been at work in Mauritian society ever since the turn of this century, it is unfortunate, to say the least, that the political leadership – independently of parties and alliances — have miserably failed in creating this essential perquisite condition for change. Clearly what is missing is a coherent, readymade and widely accepted alternative development model which can mobilize the progressive forces of the country around a consensus that will command support from all stakeholders.
We are all too familiar with the notions that the budget is primarily about consolidation of macro-economic fundamentals — read reduction of budget deficits and government debts as well as recurrent expenditure. The sum of which is called Austerity measures, which have a knack of affecting the poorer sections of the population more than the wealthy. While macro-economic fundamentals are indeed critical for the long-term stability of a country, one cannot ignore the fact that a budget is also if not primarily a political exercise in which there are constant trade-offs and choices to be made. These choices made are what constitute the essence of policy making and determine the nature of the political regime.
The coming budget will be a test for the government. It can either limit the exercise to what is for all intents and purposes a traditional “accounting” exercise with some sprinkling of popular measures or it can – to be fair to it — at least start laying the foundations of the credible and acceptable alternative…