Mohun Kanhaya

Much Ado About Planning 

Mohun Kanhaya

After the drubbings that the TINAwallahs (There is no alternative) got in Budget 2011, though a censorious dismantling of their main neoliberal policies that were blindly tried on the populace, we expected them to evaporate in thin air or scatter to the far end of the horizon blown by the winds of change. But even if things change, they tend to remain the same.

 

The TINAs have dug in their heels; they continue to play the role of the real power behind the throne. They have arrogated to themselves de facto the power of governance without any corresponding accountability. Mr Mohamad Vayid confirms it in an interview to this newspaper on 30 December 2010: “La continuité apparente cache beaucoup de feux sous les cendres…” and “ …

Et Pravind Jugnauth est soumis aux mêmes diktats du FS que son prédécesseur.” 

 

 

More recently Nita Deerpalsing, replying to the query of this paper on whether “there has been any major departure from the major TINA policies” reminds us that they continue to live on their borrowed slogans and are still proofreading the texts of their failed ideas in the implementation of government policies: “… Whether they are in Mauritius or on other shores. Paul Krugman has called it (The TINA policies) the strange triumph of failed ideas. Here in Mauritius, it is well known that for all his good intentions, our Financial Secretary is incurably imbued with those zombie ideas. Under the previous Minister of Finance, he had a free rein to pursue failed policies. It remains to be seen how the new Minister of Finance will be able to show the way to the right policies. Time will tell, but the fight of real progressives will not pause.”

With the change at the helm of the Ministry of Finance many anti-TINAs had built their hopes on sweeping changes that would usher in a new structure rather than the cosmetic reshuffling based on lists of tasks that have been assigned to different units. The anti-TINAs had been highlighting the fact that the TINA neoliberal policies had simply not delivered on our economic, social and environmental goals. The few touches to the tax rates and the improvement in the investment climate framework were not the broad based and inclusive reforms that would generate sustainable growth. Sector reforms have not been undertaken to generate productivity improvements in agriculture, industry, public utilities, health, education, etc., such that the long-run growth potential is insufficient to absorb the unemployed.

Moreover, the TINAs have not succeeded in fixing the flaws in the country’s hardware — its physical environment and the system that is required for developing it. Our infrastructure gaps in energy, water, transportation, ports, drains and telecommunication illustrate the problem. The absence of substantive reforms and investment in the economic infrastructure during these TINA budgets has affected the growth rate of the productive sectors. The TINA policies did generate fiscal space by overtaxing people and putting in place a more unfair and regressive tax system but its capital expenditure was so dismal that there was need for creative accounting in their four Budgets to show a higher than actual budget deficit because of underspending. Capital expenditure as a percentage of GDP, without the accounting gimmicks, had barely exceeded an annual average of 3%. Such a dismal investment performance has choked off economic growth by limiting public investments in key sectors.

One commentator had noted in these very columns: “For much less than such manipulation, one Finance minister was hounded by the mainstream press and the erstwhile opposition and had to resign. These shifty tricks of parking special funds outside the budget that were carried over three budgets to hide the TINAs ineffectiveness in implementing capital projects have had very serious economic consequences. The true picture was hidden from the population and more seriously it meant a total failure in the management of public finances, which had their implications on interest rates, the current account, exports, growth, and the level of public debt. The parking of Rs 11 billion at the Central bank has had a huge opportunity cost. At least if we had been drawing regularly from these funds we could have had some excuses for such poor fund management.” The Table below illustrates this point:

 

 

 

 

As a % of GDP 

2007/08

2008/09

July-Dec 09

 

 

 

 

 

 

 

 

Budget deficit

-2.7

2.5

-4.0

 

 

 

 

New Budget deficit

 

 

 

 

(Without

-1.5

-1.3

-2.8

colourable accounting)

 

 

 

 

 

Such tortuous accounting to hide their incompetence at boosting capital expenditures by stretching all the logic of Government Finance Statistics (GFS 2001) and the principles of sound public finances, raises serious questions about the credibility and understanding of high government officials and is clearly unacceptable except perhaps in banana republics.

To remedy these serious flaws and weaknesses of the TINA policies, the anti-TINAs had proposed that sector budget teams be converted into sector working groups with specific tasks for economists, budget specialists and finance officers. The Planning and monitoring function of the erstwhile Ministry of Economic Planning and Development (MEPD) — the medium expenditure framework, sector strategic plans, policy analysis, Public Sector Investment Programme, prioritisation and costing of programmes — which the country badly needs now more than ever would have been carried out by a team of economists while the more short-term budget work would be assigned to budget analysts and finance officers.

The anti-TINAs believed that such a structure would have supplemented the present short-term budget focus that had reduced the economists to glorified finance officers carrying out mainly mundane day-to-day administrative work and the routine fire-fighting of line ministries, with a more medium- to long-term view and thus enabled the policymakers to see holistically the big picture and achieve a proper cohesion in their vision, strategies and implementation capacities.

The anti-TINAs believed that a “redynamisation” of the planning function in MOFED would provide for an integrated and consistent macro-picture and framework for allocating public investment, for designing implementation strategies to see that outcomes are realised cost-effectively; it would be supported by an effective monitoring mechanism to monitor and evaluate service delivery from both a financial and non-financial perspective and to see that targeted outcomes are in fact realised.

The anti-TINAs made a desperate move to sideline the TINAs and acolytes and do away with the groping years of amateurism that was reduced, year after year, to a mere listing of intentions in budget speeches. They were proposing instead more coherent and holistic approaches for policy analysis and for the development of strategic plans within a consistent macroeconomic framework and a medium- to long-term perspective. And ensuring that the short-term fiscal policies are consistent with a sustainable long-term framework. In an interesting analysis on the need for a Planning Commission, Jean Paul Arouff of Business Magazine of the 2-8 March 2011 hits hard by pointing out that proper planning “nous aurait permis de faire l’économie de l’affaire Medpoint, par exemple. Une telle commission se serait penchée sur les implications d’avoir un hôpital gériatrique au lieu de plusieurs unités de gériatrie dans les hôpitaux régionaux” before granting financial clearance.

These are not normal times. The global market is uncertain. We are not insulated from global events. One has to differentiate between developments with a short-term impact and those that could structurally alter long-term prospects. Much of what is happening now appears short-term. On the macro front however the issues really concern the pace of increase in crude oil prices, inflation, soaring food prices, nervousness of markets on possible interest rates hikes to anchor inflationary pressures and expectations and bubbles in real estate markets. Corporate Mauritius is worried and sullen. Business, industry and investors want action on the policy front. But there seems to be an inexplicable inertia from the TINAs. They are again missing the clouds that are already obscuring the economic sky and are dragging government into a paralytic mode with their indecisions and tunnelled vision.

The countdown might take its time but it has already begun. The canvas is changing. There is no escape from demonstrating a sense of urgency to tackle the food security and energy issues. It also offers an opportunity for Mauritius to plan for the future, to redouble its efforts to pay attention to the food supplies, to look for cleaner energy sources. The TINAs will be forced to try to holistically understand the linkages between sectors, resource availability and implementing capacity. Ensuring a sustainable solution will require that they bring together all stakeholders to map out gaps, understand existing solutions and identify critical touch points that can be leveraged by different stakeholders. They will have to plan for the long term to ensure that the resources required are flexible enough to ensure constant improvement and innovation in the programme delivery but stringent enough to make sure that the results are delivered.

Jean Paul Arouff’s comments could not be more appropriate — a small presentation for the TINAs and acolytes would have helped — “Au lieu de toujours se laisser dicter par les événements et, de surcroît, par le marché, n’est-il pas temps de se doter de moyens pour permettre au pays d’anticiper les événements et d’agir en conséquence. Pour cela, il faudra disposer d’une équipe dont le rôle sera de penser l’avenir. Une telle équipe peut évoluer dans une unité spécialisée, une commission voire même au sein d’un ministère. Un ministère du Plan, pourquoi pas ? Nous en avons eu dans le temps.”

We cannot continue to work with structures that have failed to train our economic analysts to foresee and warn us about the economic clouds gathering. When the raindrops began to fall, they failed to forecast and prepare us for the deluge and a clearer sense of direction. Plus shortsighted que ça, tu meurs.

 

Mohun Kanhaya

Add a Comment

Your email address will not be published.