Budget 2018: The 4G team has taken over

A small new advisory team seems to have more or less acquired controlling influence at the juncture of PMO, Treasury and a few vital “independent” institutions. They are the new back-room boys, the 4G team

The context of this year’s budget was particular, with Hon Pravind Jugnauth wearing several hats, leader of the main political party in office, the MSM, in alliance with the ML, Minister of Finance and Economic Development and head of the Treasury’s multiple agencies and also, in our small complex island, he remains the ultimate arbiter as Prime Minister.

The second particularity is that mid-way in their third year, MPs and political analysts will also have gauged announced measures in the budget against the backdrop of the PM’s agenda and timing for upcoming general elections. Every Minister of Finance has manoeuvring room for those ritual announcements which some sections of the population and government’s own MPs and Ministers in Parliament eagerly await, particularly if the year has been rocky or marred by scandals.

Is this Hon Pravind Jugnauth’s last budget exercise is a question that, nonetheless, must have hovered in all minds as MPs tried to decipher the budget’s “sugariness” and assess their own electoral story-line against ground realities. It certainly explains the partial backdown on fuel prices that had generated a furious public storm and the status-quo on water rates, whatever the previous ominous declarations of the concerned Minister for Public Utilities, the Minister mentor or the PM himself on the topic. Neither has government chosen to aggravate an irate public with higher duties on tobacco or alcohol.

It would also explain several of the socially appealing “dish-out” measures in this budget and they are all over the place giving the impression of a brain-stormed list of palatable and justifiable measures targeting various sections of the electorate.

Of particular note, the new 10% income tax bracket and the deliberate effort to “mop up” youth unemployment through various accelerated placement schemes. To the current basket of five or six different schemes, operating under the aegis of several different Ministries and agencies (Finance, Education, MITD, Labour) will be added another scheme concerning about 1,000 young adults to be managed by the Ministry of Youth and Sports. So much the better for the reprieve of unemployed youth, even if temporary, but if you believe in assessment of efficacy and coordinated action plans rather than political considerations and patronage, then you might understandably be left bemused.

More curious in the same 1 billion Rupee “mopping-up” package is the unprecedented offer to provide “free graduates” to SMEs through the good offices of the HRDC. As nothing is free of course, the community will bear the monthly salaries of Rs 14,000 over a two-year period, nothing much being spelt out at this stage about what type of SMEs or recipients would qualify. Up till now, companies and HRDC or government contributed a fair share each of the recipient’s salary and both had a stake in monitoring the work, experience and training acquired by the stagiaire on such previous schemes. One wonders what type of “entrepreneurial spirit” development our political deciders might have in mind with this free lunch approach…

The third particularity is that a small new advisory team seems to have more or less acquired controlling influence at the juncture of PMO, Treasury and a few vital “independent” institutions of the likes of FSC: the newly private-sector run Economic Development Board and perhaps Landscope for state land development. They are the new back-room boys, the 4G team, geared to new technologies and international finance and certainly competent in their specialty domains. Blockchain, Fintech and Artificial Intelligence (AI) are probably along their lines. Measures to foster AI initiatives are, one notes, the subject of a recent report by renowned French mathematician Cedric Villani to President Macron.

However, despite their fresh outlook and brains, or perhaps by virtue of it, they may not have a fuller grasp of the social and historical perspectives of their elders. Which could explain how government became entwined in a Joint Technical Committee with Corporate Sugar, the latter using the platform effectively to raise another bout of alarm bells, proposing to curtail workers’ rights and conditions and pressing for more subsidies from public purse on the grounds that the small planters are getting out of cane cultivation.

One is tempted to believe corporate sugar’s share of derived Cane activities (land conversions, energy, biomass, molasses, rum, refined sugar) are pretty massively profitable, and have been so for long if one judges the alacrity and speed with which they jumped in to buy all Illovo lands under the MSM-MMM regime. Surely, if cane-sugar needs a fresh look, we might start by making an unprejudiced assessment of who gets what from the proceeds of cane, revise revenue sharing agreements in the national interest, revise leonine IPP contracts and direct financial help to those in real need of it to keep the sector alive.

Neither do the 4G advisors seem fully aware of past budgetary announcements of the same government since 2015 and which have remained hollow “effets d’annonces”. Which may explain a couple of the stranger recurrent announcements in this as in previous budgets, regarding, for instance, pig-breeder debt restructuring or write-offs at DBM, the measures to encourage greater innovation and creativity or the flamboyant announcement of new social housing estates for 6800 units on 19 sites, when government’s executive arm, the NHDC, is still working hard to complete those 1,200 units it has under way since 2015. At some 350 units in GF plus three structures per site, the orientation towards high-rise ghettos is disquieting for those who understand the sociological realities of the country.

Another case in point is the proposed measure to open our shallow waters (bank sea fishing) and their diminishing fish resources to international fishing groups to supply the local market. This flies in the face of past programs financed by the EU for fishermen to regroup in cooperatives, to invest in bank-sea vessels and go for bank-fishing around Saya, Agalega and other outer islands to earn a livelihood they could no longer earn from our coastal waters!

Our markets, if anything, are saturated with fish of all varieties and the market is competitive. By its very nature (line fishing from boats) the “pêche sur les bancs” has preserved both the maritime and corallian environment of our outer islands. There is real concern that nobody from offices in Port-Louis will effectively control fishing methods or fish catch tonnages of international buccaneers and that our fragile sustainable reserves would be wiped out within two years.

Another measure that seems jacked out of the 4G team is the proposal that henceforth the EDB oversees and operates two schemes to sell Mauritian passports and nationalities. While productive investments or luxury villa sales were previously grounds after a proper time period to become eligible to apply to PMO for long-term resident or citizen status, ordinary Mauritians, private sector and all Opposition parties have roundly condemned what sounds like a “braderie”. A proposal without investment contre-partie can only attract those whose wealth and motivations are dubious, of the Angolan variety, against which our formidable, professional and in-depth vetting procedures have proved their worth. We trust the PM will review the stance of the EDB, the 4G advisors and the Treasury Minister on this critical issue!

Economists will make a better informed judgement after going through the figures and the nitty-gritty of the detailed budget documents. They will in particular have to delve into the real state of our public finances and the real state of public debts and liabilities taking account of government-guaranteed special-purpose mechanisms and vehicles.

But the lack of policy and strategy for cane-sugar or for the ocean economy, the lack of strategy to effectively combat drug-trafficking or tackle criminality, some ill-advised measures, the lack of novel thinking or strategies concerning our public-funded Universities, the lack of substantial economic growth rates despite massive incentives to conglomerates and sizeable investments in public infrastructure, dampen the overall outlook and the enthusiasm one might have felt for the social give-aways of the budget. Given the context, government’s social generosity was largely financed by the 9 billion Rupees of grants from India in exchange for the virtual end of the DTAA treaty.

* Published in print edition on 22 June 2018