“We at the mercy of the economic elite”

Political Caricatures

By L.E. Pep

Resistans ek Alternativ (ReA) is of the view that the “the economic elite has taken over this government”. The Economic Development Board (EDB) and the traditional economic oligarchy are the ones at the helm of the economy with the connivance of the State and they are responsible for most of the problems that the country is facing today…

Ashok Subron of ReA notes that within three months of the coming to power of the new regime, the government has handed over the levers of power to the traditional propertied oligarchy. “We were not surprised to hear last year that this government was trying to sell Mauritian passports like hot cakes and that the Economic Development Board wants to have a free hand and bypass all environmental laws and legal procedures on all national projects. For sure, we are settling in for an ecological disaster.”

Ashok Subron relates the recent floods in the north partly to the destruction of the wetlands. The government has spent Rs 400 million to build roads for the private sector – Les Salines for Beachcomber and New Mauritius Hotels (NMH) – while encroaching on wetlands. The smart city of Pointe d’Esny has already obtained its EIA licence. Omnicane has recently disclosed with much fanfare a construction project in the south of the country while Mahen Jhugroo has yet to announce whether this company will obtain the crown lands in an area that is of priceless natural beauty for the country.

All this will have an impact on our ecology. “The EDB, which I’ll prefer to label as the “Environment Disaster Board”, is made up of people who live on another planet and do not see the ecological disaster that is awaiting us at the next turn. Pravind Jugnauth, the EDB and the economic oligarchy are leading us straight off the cliff.” This ecological disaster will have important socio-economic consequences.

This government was elected on the promise that it would stop land grabs and encroachments on coastal lands that were happening under the previous government but these have actually accelerated under the current one. He is convinced that that these issues will be a central theme of the next elections. Those who have favoured land grabs and encroachments will pay a heavy price.

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The call for boycott of newspaper(s)

Recently we have had several cases of some trade unions, organizations, NGOs and religious bodies concerned about what they consider as biased or distorted reporting of their activities or in relation to their communities threatening to launch a campaign urging their own people and own advertisers to boycott the newspaper(s). Whatever their gripe, they have every reason to vent it out through their press conferences or street protests but calling for a boycott is tantamount to editorial interference, bullying, censorship and a form of harassment.

Many of these protesters hide behind the abused over-utilised sensibility of “we are a mixed community” to call for a boycott of the press for the unflattering coverage of their activities or beliefs. This has become part of a disturbing trend, which has resulted in an erosion of our democratic dispensation and values.

In a constitutional democracy there are many more concrete ways to deal with ethical and legal grievances; if these do not work out, there are other multiple channels for redress without infringing on media freedom and transparency.

In that mixed community of ours, are we not being a bit too nervous to preserve our identity, our cocooned world? Are we not a bit over-sensitive and narrow-minded? To some extent hypocrites also, in the sense that we all fired up to “protége nu bann, nu commuaute, nou l’organisation…” but as far as encroaching on others’ rights, freedom or beliefs, we do not give a damn.

Have a closer look at our own “regal” demeanour that we impose on unwilling others – our own religious processions take precedence over others’ traffic rights, our right to prayers are more important than others’ parking spaces and rights, some of our discriminative privileges are at the expense of other taxpayers, we elect our representative who will serve our community first and foremost, our beliefs come first even if we happen to trample on others: for example the case of an opposing political party, the other community, neighbours or other trade union views and the LGBT. Let us first learn how to assure that this cocktail of races from different continents live and not only exist together in a maturing democracy.

Perhaps Raheem Sterling, the Manchester City player’s case can help us move up the learning curve. He was racially abused by some rival team fans and he argued it out with the media that they were fuelling racism by the way they portrayed black footballers and demanded stronger punishments for fans who racially abuse players. That changed his relationship with the media and they honoured him with an award for his stance against racism.

And let us begin by ensuring that a call for a consumer boycott of any media outlet be henceforth discouraged and be deemed acceptable.

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Beating his own drums… on a wrong note

The Prime Minister and Minister of Finance, Pravind Jugnauth, keeping up the tempo of the unannounced electoral campaign, seemed to score some valid points on his adversaries by pointing out, as listed down by his lot of advisers, the praises he has received from different quarters for his stewardship of the economy. The IMF Executive Directors have congratulated him personally and the Mauritian authorities for the solid macroeconomic performance over the years and also for his continued effort to address structural bottlenecks. He also quoted Moody’s and MCCI and made reference to the increase by 4.1 points in the Business Confidence Indicator in the first quarter of 2019 from the latest quarterly business survey of the Chamber of Commerce.

He also stated that he had to beat his own drums as he cannot rely on the local press to extol on his achievements as they have a tendency to be too negative, pointing out mainly the problems and issues. But the PM should be careful to pick up the right tune to accompany his beating of his own drums. We have ample examples in different instances from the same Moody’s, IMF and MCCI which were continuously commending the previous regime for its management of the economy. That did not prevent the electorate from booting them out of power

It would be advisable for his advisers to warn him not to pay too much attention to these different notes and reports, which look overly appreciative, but when read carefully and between the lines are a totally different narrative, very much near what the local critics have been advancing.

As the Land Transport Minister, Nando Bodha candidly acknowledged “we do not yet have the recipe for the second one (miracle) therefore we are just going around in circles.” Indeed, soaring public expenditure via the Metro, Cote d’Or Sports Complex or the Safe City prestige projects will not be enough to release the cylinders of growth and rescue us from the plateau of tepid GDP growth. Moreover, we have now four sectors – sugar, textiles, tourism and financial services – that are in need for drastic measures and incentives to regain some of their earlier dynamism.

The country needed structural reforms not the budget largesses that we have been witnessing. In these circumstances can we afford to continue with a government “qui agit mais sans réfléchir”?

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Anti-Money Laundering & Combatting the Financing of Terrorism: A question of effectiveness.

In 2016-17, Mauritius underwent an assessment of its Anti-Money Laundering and Combatting the Financing of Terrorism regime by Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG), and a mutual revaluation report (MER) dated July 2018, was published in Sept 2018, after approval by the ESAAMLG Council of Ministers meeting in the Seychelles. The key finding of the MER is that the AML/CFT regime of Mauritius “has not kept pace with the evolving global AML/CFT environment and therefore it has several weaknesses that negatively affect its effectiveness”. The current legislative amendments are meant to align Mauritius more closely to the Financial Action Task Force AML/CFT standards.

Most of the speakers both from government and the opposition have agreed to the need for greater effectiveness. Laws and regulations are not the end of the story; we must put in greater efforts to ensure that these laws and regulations are effectively applied. The whole institutional framework must be reviewed with a view to enhancing performance and bringing concrete results, with the injection of additional human and financial resources, greater capacity training, and greater cooperation between law enforcement agencies, amongst other measures.

Some opposition speakers have drawn attention to the fact that Mauritius cannot afford to lag behind in the global endeavour to clean up financial systems worldwide. Enough time has been wasted, and far too much incompetence and negligence has been tolerated. We need to set things right urgently, and look forward to a situation where Mauritius is no longer on the brink of a blacklisting, or be at risk of criminal financial abuse or terrorism.

But the whole issue remains the effectiveness of the AML/CFT regime! Once the amendments have been made, will the law enforcement agencies and other relevant institutions be up to the task ahead? We doubt it! ICAC, the agency responsible for investigating AML cases is in a sorry state. The police also enjoys poor credibility, with a CP who is alleged to have committed a serious blunder but stays put. The FIU is without proper direction, with the sacking of its former long-standing and experienced director. The Asset Recovery Unit has been dumped in the FIU and converted into a division. Suffice it to say that beyond passing legislation, this Government is incapable of ensuring the right environment and conditions for institutions in Mauritius to function independently, to perform efficiently, and to deliver effectively on their mandate to combat money laundering and the financing of terrorism.

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The 2019-20 Budget: Fiscal rectitude or profligacy?

What will be the fiscal stance for the forthcoming budget? Will it be an austerity budget given the pressures of the IMF for greater efforts at fiscal consolidation and reining in of the public sector debt as from this budget itself to be able to meet the debt target?

In an article titled ‘L’austérité budgétaire pour réduire la dette publique ! A quel prix?’, Dr Lutchmayah Appanah and Dr Vasant Bunwaree, a former Minister of Finance argue that we are in such a critical situation because of the financial largesse and the lack of fiscal discipline in recent years by the Lepep government. They align themselves on the position of the IMF that “la marge de manœuvre budgétaire est limitée”.

Dr Takesh Luckho, economist and researcher, is of the opinion that we cannot expect the government to carry out meaningful reforms like the targeting of the Basic Retirement Pension at the end of its mandate and on the eve of general elections. It is more likely to continue with a “faire la bous doux” budget with the civil servants and pensioners in mind. But this will further aggravate the budget deficit and public debt. At a time when the country’s main economic sectors — textiles, tourism and offshore — face enormous challenges, besides the challenges posed by Brexit, the revision of the treaty of non-double taxation with India and the decrease in the number of tourist arrivals in the country, Dr Luckho notes that many observers and operators are expect that the 2019/2020 budget will come forward with a range of measures, including structural ones, to re-dynmanise these key sectors. Will it be so?

Our own estimates of the consolidated budget deficit for 2018-19 turn out to be around -2.9% of GDP as compared earlier estimates of -3.8%. As in previous years, the budget deficit has been contained by sacrificing capital expenditures (Net Acquisition of Nonfinancial Assets -NANA) to a dismal 1.5% of GDP. This trend is likely to continue in the next budget with the populist policies — plenty of giveaways and goodies — at the cost of NANA.

What about Public Sector Debt (PSD)? This is the Mauritian magic. There have been two recent developments that are crucial to this Mauritian magic: the publication of gross as well as net debt figures on the Finance ministry’s website and the circular from the Financial Secretary for all Non-financial Public Sector Bodies to invest their surplus balances in the Treasury Certificates. These latter investments will be netted out of the Gross Pubic Sector Debt figures. And in the Finance Bill, it will then be announced that the PSD has been redefined in the PDM Act not as gross but net debt. Result: As they have calculated for December 2018, the “Gross Public Sector Debt” of 64. 9% of GDP becomes magically “Net Public Sector Debt” of 58.2% of GDP. With the Mauritian magic, who needs fiscal rectitude?

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MCCI: Budget proposal of lowering the Corporate Tax to 5%

Dev Sunnasy, Secretary General of 100% Citoyens, finds the MCCI’s proposal irresponsible and unpatriotic especially at a time when the World Bank and the IMF are pressurizing us because of our unsound fiscal management and elevated level of public debt. “Corporate tax in Singapore is 17% and 16.5% in Hong Kong. The MCCI proposes to reduce by almost Rs 8 billion the revenue of the State. Our annual budget is already in deficit each year by more than Rs 10 billion. Would it be a plan of some to force the privatization of essential services?”

Economist and investment consultant, Frankie Tang, believes it is important to first measure its impact not only on the Stateʼs revenue but also on the offshore sector. “If the State loses revenue, it will have to recover it otherwise. So will there be another rise in VAT and other taxes?” he wonders. Secondly, he opines that offshore companies will lose their attractiveness if domestic companies pay tax at 5%.

While corporate tax brings in only some 12% of total revenue, taxes on goods and services contribute around 53%. Our VAT and fuel taxes are highly regressive and impact far more heavily on both the middle class and the poor. The supposed attractiveness of Mauritius as a low tax jurisdiction that will bring in lot of FDI is no longer a valid argument; the tax rate of 15% is no longer a determining factor for boosting local and foreign investment.

Now that there is an urgent need for substantial fiscal consolidation to put our public finances back on a sustainable path, there is need for bold measures to enhance tax and non-tax revenues. We should review our whole tax system to make it more equitable and fair – increase the progressivity of income tax, hike the property taxes – rural and urban, introduce a wealth tax, a carbon tax and a special environment tax for the hotels, etc.

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The Safe City project: Towards a surveillance state

The queries at the National assembly on the Safe City project, which comprises the installation of 4000 intelligent surveillance cameras, 4500 trunking smart handsets, 350 vehicle-mounted radios, 150 fixed desktop terminals to be installed in various Police Stations/Posts and an Emergency Response Management System, have not helped to clarify the various concerns about the project.

Quite the contrary, since we are now told that the data will be handled by trained police officers and stored for a reasonable time; moreover it would appear there will be no legislation or a code of practice to cover the police use of the CCTV cameras and prevent abuse, misuse, surveillance of all types – whether with respect to civil servants or politicians. Unlike DNA or fingerprints, there is no specific regulation governing how police use facial recognition or manage the data gathered.

Government is not being transparent about the usage of the data. This new technology as it exists today is unreliable, and represents an unnecessary infringement on people’s privacy and liberty. In many countries legislators have voted to ban the use of facial recognition. They have taken the view that facial recognition technology is incompatible with a healthy democracy and that residents deserve a voice in decisions about high-tech surveillance. In the UK, an office worker has had recourse to crowd funding to pay for the UK’s first major legal challenge to police facial recognition cameras which he claims have breached his human rights while he was Christmas shopping.

People have doubts about how their biometric data will be extracted and processed without their consent. Technology breaches data protection and equality laws. These CCTV cameras raise a fundamental question about invasion of privacy as well as data protection and equality laws. Ram Seegobin, one of the leaders of Lalit, is concerned that we are in a surveillance society and that “Safe city is like having the NIU posted on every street with a noteboook.” Are we safe with the Safe City project?

* Published in print edition on 24 May 2019

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