When coyness is not a virtue!

Tit-bits

By S. Callikan

Finance Minister Renganaden Padayachy and his team must have burnt the midnight oil as they juggled out the complexities and forecasts for Budget 2020-2021 and parsed them out in policies and priorities for our consumption in his Budget Speech and as appropriately detailed estimate supplements for MPs and knowledgeable analysts. Future exercises, which the PM himself remarked was 105 minutes long, we suggest could be easily curtailed to a compact one hour by cutting out the tedious listings of minor encumbrances which detract from impact.

This extract from a statement by Pope Francis during his January 2015 visit to cyclone-devastated Philippines comes to mind in these pandemic recovery times: “it is now more than ever necessary that political leaders be outstanding for honesty, integrity and commitment to the common good.” And, in the current trauma of recovery and reconstruction requiring sacrifices from all quarters, we will not doubt that the budget team was fully ensconced in that spirit and those deep earthy values which, in today’s management terms, embed precepts of transparency, good governance and accountability.

Yet we know that, while they delved into the new vision and priority measures for a difficult restart of the national economy, part of their craft would lie in highlighting the popular, skirting or shying from what is considered embarrassing and avoiding altogether those items not judged useful, particularly when there is necessity to shake off the chaff of more buoyant days as touted in last year’s budget for instance.

Some of the shyness is unexplainable for the most major element (BOM financing) which has rendered this budget at all possible and which is in public domain anyway. Only careful perusal of the detailed Supplements will locate the “helicopter” Rs 60 billion of our national reserves from the Bank of Mauritius, injected as Rs 33 bn in current expenditures for the year and Rs27 bn in various capital projects over 2-3 years.

Nothing is indicated about the costs of Central Bank financing this “one-off” grant from excess liquidity on the market, neither is it easy to find the fate and usage of the additional Special Reserves of Rs 18 bn transferred from Central Bank earlier this year, nor, even more unfortunately, of the transparency and accountability concerns around the Rs 80 bn of our reserves which the Central Bank through the Mauritius Investment Company ltd proposes to use to bail out the big majors.

Equally discretely camouflaged were the Rs 9 bn earmarked for future helping out of our national airline MK, burdened it seems with a billion Euros of debt at end 2019 and which any gust would have brought tumbling out of the blue skies. Such coyness could be viewed as an accounting sleight of hand and it was rather unexpected in Hon Padayachy’s first and probably most important budget exercise. When calls are made for the nation to unite in the difficult sacrifices ahead, we should expect greater transparency and accountability in usage of our own funds.

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Budget bits

The Finance minister has chosen to retain certain major public infrastructure investments under way and understandably postpone others, for example, the airport runway at Plaine Corail in Rodrigues and the new Passenger Terminal at SSR International airport, near Rs 22 bn jointly, on which works are only expected to start in 2021/22.

Postponement, let alone scaling down or outright cancellation, has been disregarded for the Rs 19 bn Safe City CCTV project, although the budget fails to detail either the current stock and assets nor the number and locations of future street CCTV additions for an annual fork-out of some Rs 600 m. We trust government will heed calls for appropriate legislation to ensure some degree of parliamentary or judicial oversight of those surveillance activities to ensure citizen rights are not encroached beyond what is necessary for public safety.

On the other hand, we do learn that the Core d’Or Sports Complex, nominally valued at Rs 4.7 bn, has outstanding payments of Rs 2.4 bn due to 30th June 2020. But the baffling element is the commercial association with Liverpool Football Club (bless the ‘You’ll Never Walk Alone’ crowd!) to the tune of near Rs 400 m over 3 years, on terms which are kept away from public domain, other than the contract would promote inbound tourism. Together with a planned Rs 50 m Branding exercise, both carefully forked out to the National Resilience Fund (the same that earmarks support for the national carrier MK), they are side-dish oddities in the tourism promotion budget, at a time when a more structured emergency action plan might have been expected for what has been and will remain for long months the most embattled sector of the economy.

In laymen terms, it stands to reason to minimize risks associated with our currency depreciation, through a lesser reliance on foreign debt sources. The debt to GDP ratio of 75% forecast for June 2020 has been criticized for convenient under-estimation and figures of 83% or more have been aired publicly. Specialists and economists will weigh in on the macro-economic public sector debt management strategy adopted by government in today’s difficult circumstances. Despite those circumstances, the Minister had the exceptional leeway with the massive grants from the Central Bank and the significant freefall of international oil prices. The latter, we may add, have not been passed on to the consumer or to the fuel-hungry economic activities.

The Rs 30 gas cylinder rebate, some low-interest loan facilities and the well-deserved cash grant to some frontliners, were the relatively sparse moments of government MPs noisy appreciation, for a Budget Speech that was curiously received with caution and even some baffled silence when the demise of the 40-year old National Pension Scheme was announced as a bolt from the blue. Even the clarifications since by the Minister have not entirely cleared matters. Obviously government will have to justify such a mighty pen-swipe and better explain pension workings when proper consultations or a White Paper was deserved on all aspects of the question, including electoral promises made and the sustainability of the replacement scheme.


* Published in print edition on 9 June 2020

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