By Jan Arden
From the layman’s point of view, governments run the country’s business through our direct taxes, the taxes, excise duties and other impositions on fuel and imported goods, our consumption and VAT extracted in shops and supermarkets. To this must be added the corporate taxes and those taxes and transfers to government coffers applied to public bodies and which we also fund (Air Mauritius, Mauritius Telecom, etc.).
In other words, we fund firstly the salaries, lifestyles, perks, privileges, and pensions which Ministers enjoy, a comprehensive package that outshines most EU counterparts and must leave those in giant African or Asian nations dumbfounded at our countrymen’s boundless generosity as our Ministers have become regular dutiful faces at cocktail rounds of seminars or shows held at sexy destinations like Dubai, London or Paris.
Lest we be accused of being biased, this did not start yesterday, and many MPs or Ministers try to do an honest job, plying their official duties with constituency responsibilities and some, having invested heavily to get elected, do indeed spend to keep that investment alive.
We have moved on from early independence days when a Minister would be regularly lambasted for heading – out of public purse – a trade delegation to secure ration rice or more recently when official ministerial travel could be to watch the World Cup onsite or meet starlets at the Cannes Film Festival.
We understand the need for a high-level political presence accompanying a competent delegation at key international events such as the COP27 or African Union or Commonwealth Heads of State meetings. By not “staying under the bed” as Deputy PM Obeegadoo put it, ministerial and official travel and productive meetings at international events or their busy corridors, have over decades helped shape our economy in numerous ways, including geopolitics and investment in our economic pillars. But, in the aftermath of a daunting pandemic and the ongoing Ukraine crisis, maybe a lot of us have simply grown more sensitive to the abuses of our generosity when hard times called and still call for restraint in Executive lifestyles paid for out of our pockets.
With the world economies and our own facing continued duress, we should be able to trim down the sails and reset the way we conduct business although, given the vested interests in a status quo, that may remain a forlorn expectation.
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National Currency and BOM: a massive credibility gap
The Finance Minister, who also holds an overbearing influence over the Bank of Mauritius, as the latter published its financial statement of emptied coffers in October, has expectedly made some soothing statements, namely that central banks are not there to make profits and that GDP growth, as estimated by the Bank would be above 7% this year fuelled by higher than expected tourist arrivals.
While we do not expect otherwise from the Minister selling to the general public the narrative of a buoyant post-covid economy, it may not cut ice to those corporate operators holding on to their earned foreign currencies, very dubious about the ability of the Central Bank to maintain what they see as an over-valued currency despite several costly interventions in the forex market to attempt at stabilising say the US dollar buy/sell rates at slightly below Rs 45.
With the run-down reserves published in October and worse expected for November, those fears may well be self-fulfilling and international trading agencies (like Trading Economics), based on comprehensive tracking data, forecast our national currency tumbling dramatically to Rs 51.6 by end 2023. Independent economists like Sameer Sharma, Rattan Kushiram, Eric Ng Ping Cheung or any that ventures a different narrative from the MoF’s rosy glasses, have expressed themselves forcibly while Roshi Bhadain, adept at deciphering and explaining complexities and intricacies of public finances to the lay population, has zeroed in on the Rs 168 billion extracted from the Central Bank since June 2019.
The current account gap has been increasing wider at each quarter since the pandemic with imports consistently outpacing exports as evidenced by Statistics Mauritius data:
Mauritius Current Account:
FDI has dwindled in parallel and the over reliance on luxury property sales may be reaching its limits, while the tourist figures may be indicative of a psychological rebound of source countries (so much the better!) from the pandemic years and may not carry over in successor years. There are thus many grounds for caution particularly if the world economic situation remains volatile. Read More… Become a Subscriber
Mauritius Times ePaper Friday 2 December 2022
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