Le ministère des Finances jubile : « Maurice fait son entrée dans la catégorie des pays à revenu élevé »

HIGH INCOME ECONOMY – TEMPORARILY !!!

HIGH INCOME ECONOMY – TEMPORARILY !!!
If only they had cared to find out about the methodology of the WB classification, there would have been less of these triumphalism and chest-thumping.

First, the GNI per capita(p.c) represented 97% of the WB threshold in 2018, increasing from 67% in 2011 and 85% in 2014. The current Government has not contributed in any significant manner towards reaching HIC status, except by ensuring a modest annual increase in national income. Higher economic growth would have already ushered Mauritius into HIC status. Seychelles became a HIC in 2014.
In fact, GNI p.c. remained stuck at 86% of the WB threshold in 2015 and 2016, partly because of the sizeable depreciation of the Mauritian rupee against the USD in 2015. Subsequent rupee appreciation in 2017 and relative rupee stability in 2018 has imparted a new progression in GNI p.c. to reach 91% in 2017, and 97% in 2018.
Second, as from 2018, the World Bank included the net primary income of GBCs in its GNI data series, which has added about 8% % to GNI. Without this statistical adjustment, GNI p.c. would be lower by about 6%, and would stand at only 94% of the WB threshold.
Third, Mauritius GNI per capita in 2019 stood at Rs 405,252. To this is added the Rs 32,998 p.c of the net primary income of GBCs. And on the basis of the World Bank’s Atlas method of conversion of Mauritian rupees to USD, using a 3 year moving average exchange rates adjusted for differential inflation, the GNI p.c works out to be $12,740 and the real exchange rate at Rs 34.4 compared to 34.8 in 2018 (please note inspite of the depreciation of the rupee, our inflation rate-0.3%- was much lower than that in advanced economies-2-3%). The Atlas HIC Threshold is 12,535 in 2019.
In 2020, even without Covid-19 , the outflows from the GBC sector, the continuing depreciation of the rupee and a higher inflation rate relative to the advanced economies (meaning a higher real exchange rate) would have meant a GNI p.c falling short of the Atlas HIC Threshold. It may take us years before we are able to regain this classification.
Future sustainably of the growth spurt is as important, if not more, than increases in GNI per capita. Our Finance Minister seems to have got it wrong — the target of high income status is not a destiny but an obstacle to be overcome.