Sweets for Everybody

The present budget sends one back to the school days when a teacher freshly trained by Teacher Training College decided to distribute mint sweets to every pupil in his class on his first teaching lesson.

That gesture was obviously one intended to establish a positive rapport between teacher and pupils. Today such an approach would be looked upon as a public relations exercise to avoid ruffling any feathers but unfortunately it has no influence on the quality of teaching or the learning outcomes of his pupils.

The present budget seems to have adopted the same strategy: an effort to please everyone. It is a “rupture” from the mystical haze of his immediate predecessor who had promised the country an “economic miracle”. And hopefully also a “rupture” from the idiosyncratic policies of the last eighteen months. However some corrective measures here and there to soften the lot of the most vulnerable people in society, and a little something for everybody will unfortunately not take us far or help us attain the lofty heights of a high income economy.

It should have been obvious to everybody that, by listening too closely to the ground, one cannot devise a strategy for the future. Maybe the truth is that the budget has no ambition to plan for the future or maybe the Minister has resigned himself to accepting the vision of the previous government and its economic reforms of 2006. There is no structural “rupture” or departure from the 2006 economic model. All that it can do is to pursue the work that has already been undertaken through incremental changes in different sectors.

Many will be disappointed and many more frustrated especially those who had been hoping for breakthrough innovation, reforms or measures for the long-term transformation of the economy to drive real GDP. Are the challenges so overwhelming and so daunting that we should take refuge in a long list of mini-measures? Or have we lost the capacity to be innovative, think big and out of the box?

Why should the budget have included a long list of ongoing projects or those already being implemented? Educators have already been interviewed by the PSC and are waiting to be recruited. Renovating or building police stations, constructing the Phoenix-Jumbo roundabout have all been planned many years ago to be implemented in phases. Why include one of the many university programmes which had already been advertised and for which students have already been admitted? It looks as if there was a need to lengthen the budget speech or simply do the filling up. The obsession with mere allocation of resources even provoked some irritation among ministry officials who resented that the budget was being reduced to a mere accounting exercise.

One would have expected that some special attention would be given to attracting FDI to our productive sectors, given that growth down the years has largely been determined by the inflow of FDI in the country. At the moment, FDI has gone down and the anticipated 4.1% growth rate by the Governor of the Bank of Mauritius for 2016 has so far proved elusive.

On the other hand our growth rate for 2016 has been revised down to 3.2% this year. Faced with such an economic reality, the government should have consolidated the BOI and scrapped the Financial Services Promotion Agency and other marketing institutions and go for the setting up of an Economic Investment Board. This would have given more coherence to the investment strategy and avoided unnecessary and wasteful duplication. But it would appear that this has proved too much for the government to envisage for purely political reasons. Instead, rationalization of other institutions has been given priority.

One is therefore left wondering who is going to drive economic growth. Not the civil service where, with very few exceptions, most of the higher officers and the SCEs are said to refrain from taking important decisions or have been reduced to being pen pushers or speech-writers. No fundamental change can be expected in service delivery nor will there be any transformation of the civil service to make it more productive and technology driven.

Our local private sector is ever waiting for more incentives and will continue to remain risk averse; in any case it would seem preferable, from their perspective, to persevere with the rentier mindset and focus of turning land into gold through property development. The absence of a clear short-, medium- and long-term strategy will not restore confidence in the country. Unemployment will continue to increase with another 3000 university graduates joining the labour market this August apart from other school leavers.

Nothing substantial has emerged to develop the ocean economy. The ICT sector has not received the support it needed to make it a major pillar of the economy. The government is incapable of devising a policy of attracting skilled professionals for the various sectors. As for our economic diplomacy or even our diplomacy, this has taken a back seat. Moreover, there is nothing in the budget which indicates that the government wants to encourage innovation in various sectors to drive the economy. Innovation is mentioned only seven times in the budget compared to the budget in Singapore where it appears 59 times. This reflects poorly on our ambition to become an innovation driven economy.

It is doubtful whether business confidence has been restored at all, but it should not come as a surprise, given the Minister of Finance’s performance, that the MMM should be sending the ‘right’ signals to the MSM for an eventual ‘rapprochement’. Indeed, the MMM is in a stronger position to set the terms of a new alliance knowing too well that the other MSM partners will not last long. One of them is a one-off accident in the present government and prefers to feather its own nest while the sun shines. The other has been shown the door as its voting bank in the rural areas is no more significant than its urban base. Perhaps this time the MMM will bargain from a stronger position with a view to getting its electoral reform agenda through once the present Prime Minister is no longer in the saddle.

Finally, the present budget, by failing to restore confidence and stability in the country, will usher in an electoral campaign much earlier than expected. From now on alliance brokers will be active, and attention will focus on the various permutations for the future though elections will still have to wait for at least another two years unless the economic situation becomes intolerable. Nonetheless a peculiar situation has been created in the country leaving in its wake a mood of ‘wait and see’ in both the civil service and the business sector.

S. Chidambaram