Budget 2018-19

 Budget 2018-19 is not likely to be just an exercise in arithmetic given the political context in which it will be presented

Budget 2018-19 is not likely to be just an exercise in arithmetic given the political context in which it will be presented. If this is not the last budget of the current government – in case it is feeling comfortable to face the electorate on the strength of its record in terms of government achievements –, it will most likely be the last but one before electors are called to cast their votes at the 2019/2020 general elections.

Unfortunately, the precious first three years of the government have been marked by the distractions caused as it concentrated much of its efforts in unearthing the perceived wrongs of the previous dispensation. In parallel, equally rather disastrously, came the long, unending list of “scandals”. Both these happenings have combined to this day to mar its credibility. What with its inadequacy in terms of electoral weight on its own, all this would seem to militate in favour of a remake of the earlier MMM-MSM alliance, which in the current political context appears to be the only viable political solution for the MSM to overcome its present predicament. An alliance with a Navin Ramgoolam-led Labour Party does not appear to be on the cards. On the other hand, Paul Berenger’s MMM could be amenable to play the MSM card should it be convinced to take the view that an alliance with the Jugnauth party would help it avoid an eighth consecutive defeat at the polls next time round.

The Prime Minister and Finance Minister Pravind Jugnauth is well aware of the amount of catching up on his government’s record that has to be undertaken in order for him to be in a better bargaining position during alliance negotiations with the MMM. The second, and perhaps most important consideration that should be uppermost in his political calculations, especially if he is inclined to go for the long haul, must be his ambition to position himself as a serious alternative to the Labour Party leader, one capable to deliver on his government programme and thus capable to lead a government team. This would thus call for astute balancing of economic and political objectives in the 2018-2019 budget.

In light of this political context in which the budget will be presented, one could expect that no major fundamental reforms will be undertaken as elections are drawing near, given the short time available. In any case, any radical reform is usually carried out early on in any governmen’s mandate. Besides the usual satisfecit that Finance ministers are wont to express as regards improvements in the macro-economic fundamentals, the budget is likely to contain more of the same in terms of the simplification and streamlining of administrative procedures for opening up the economy to investment, fiscal consolidation and reforming the social welfare program and such other matters – as usually called for by the private sector.

While macro-economic fundamentals, on the other hand, may speak well about the health of the economy, they do not tell the whole story about what’s happening at the grassroots, about social disruption in the country relating to law and order breakdown, crimes including large-scale drug trafficking and rising numbers of road accidents which tell us a different story – that of loss of faith in the existing system.

Besides, an issue which has been flagged for a number of years by analysts all over the world, and which has affected Mauritius too, is the impoverishment of the middle class. Any amount of serious literature over the years has come to the conclusion that it is the class which dynamises an economy, because it is made up of people who are on the go, are ambitious and looking forward to be upwardly mobile through education and jobs commensurate with their qualifications. Jobs which they themselves help to create too, as they are educated and have both the means and the know-how. But if they are made to feel neglected their impoverishment affects the economy significantly.

A genuine threat to employment looms at the category of cane and field workers after the submission of the Joint Technical Committee report. While it is true that the unemployment rate is currently at a ‘reasonable’ low of 7.1% (although youth unemployment is still quite high at about 20-25%, mirroring the situation in certain European countries), the fear is that if corporate sugar’s request for curtailing jobs and acquired rights, that have been fought for over years and years, is acceded to, not only we’ll be rolling back gains of the long-drawn battles in favour of the working class, but it may well have a spill-over effect on other economic sectors as well. Allied to this is the problem of widening inequality and the need to further consolidate the Welfare State. Some have opined that it is perhaps time to review the Flat Tax which has not produced the results that were sold to the population.

On the whole, therefore, while the Prime Minister and Minister of Finance probably has more leeway compared to previous peri-budget situations, there are certainly factors of a socio-economic and political nature that will heavily influence if not colour the budget and which may give an indication of ‘what next’ in the calculations of the government. There will probably be no major bitter pills to swallow. What we need, though, is a strong signal of genuine hope for the future. We do not know whether it will be forthcoming…