2015 – Economy Back To Centre Stage

The elections are now over and the new government is well in place. The time to dissect the causes of the results and the futile exercise of sharing of blame among the losers is gone. The lessons drawn from the experience though should be carefully assimilated by the winners and losers alike. The electorate has again shown that there seems to be a clear red line for tolerance of politicians’ shenanigans beyond which no arguments or numerical strengths can prevent total defeat.

Going forward and, as we suggested in a previous piece, the central feature of change through the ballot box in a mature parliamentary democracy is that it needs not result in a “winner takes all” situation. Government’s actions must always be constrained by due respect for the rule of law, the prevailing rules and regulations as well as conventions. Generally speaking, the electorate will expect a degree of fairness in the way that adversaries are treated although it must be admitted that what is considered to be “fair” tends to be very subjective and is in a large measure determined by the way the previous incumbent government had behaved when in power. This is the basic reason why true democrats call for “statesmanship” from leaders.

Civil behaviour based on predictable laws and rules leads to reciprocity and enhances the process of governance thereby adding to the maturity of the process of transition from one government to the next. Unfortunately we are far from such a situation and the degree of vindictiveness of the protagonists is only a reflection of the exact opposite of the “maturity” of our democratic process. Not that one party is better than the other, mind you. One can only wish that for the sake of saner politics there will be a halt to the vicious circle at some time.

In this respect the actions of the government over the short time during which it has been in power seems to follow a well-planned pattern. It has initially given priority to the implementation of some of the most popular measures of its electoral promises and thereby created a substantial layer of sympathy and trust among the population. Building on this and the popular mandate which it can legitimately claim to have received from the electorate, it is now engaged in a more delicate phase of what we can be described as “vindictive” actions.

Among these is the dismissal of all the “mandarins” of the previous regime sometimes in quite spectacular fashion, taking action in cases which in the popular mind constitute the most glaring cases of nepotism and favouritism and re-possessing land which had been granted to known partisans of the former regime. The government claims that all this is being done within the realms of the laws of the country and that legal advice is being sought whenever needed.

Nevertheless the new government is here engaging on slippery grounds. There is only a fine line between taking spectacular actions and due respect for the law and for institutions. The public sentiment in these circumstances can also prove to be quite fickle and it can as easily acclaim the “determination” of government for taking decisive action as it can suddenly start feeling that it is going overboard in “persecuting” its opponents. “Managing public opinion” has been developed into an art form by most political parties in the liberal democratic settings and only time will tell how successful the communications experts will have been in keeping the lid over the present exercise.

Having said all the above, however, to our mind there can be one very positive outcome from all that is going on around us, as long of course, as due process is observed. If the government follows through with its determination and takes matters to their conclusion by charging those who are involved in cases where a prima facie case has been established, then a precedent is being established.

A clear signal is going out that the kind of “omerta” which used to favour the perpetration of acts of nepotism and favouritism has now exploded. This should definitely clamp the appetite of the proverbial “rodeurs boutes” which infest all political parties. On the other hand one would think that having taken such well-publicized measures and with such forcefulness even this government is likely to be restrained in its propensity to commit the same sins all over.

We started by stating that the new government’s actions seem to be following a well-established schedule. In this vein one would expect that the next phase would be when the serious business of the economy will come to the forth, probably at the beginning of the year leading to the presentation of the next budget.

The business community and the general public are surely anxious to obtain at least some clues about what would be the general orientation of the economic policies of the new government. The twelve measures presented during the campaign are ad hoc propositions with a heavy populist flavour as would be expected from a political manifesto.

That we have been spared the sort of alarmist discourse which new Ministers of Finance generally tend to adopt is of good omen. Nevertheless there are huge challenges which need to be tackled if the kind of transformational reforms that are required for attaining the requisite levels of economic growth are to be accomplished. Pressing issues such as unemployment in general and graduate unemployment in particular, widening income and wealth inequalities and eradication of poverty would surely be high on the agenda.

The synchronization of fiscal and monetary policies with the aim of achieving a coherent set of policies for attaining the objectives of economic development will also be a pressing issue of concern to most economic observers and analysts.

The recent elections have been characterized by the fact that little indeed was mentioned by the contesting parties about the economic fundamentals of their programmes. The sooner the new government puts the economy back on the top of the agenda the better it would be for one and all.


* Published in print edition on 30 December 2014

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