Pas en situation de crise, mais il y aura impact économique

STIMULUS PACKAGE: A MoF failing to rise to our aspirations

Before we reveal some of the cracks in the inclusive policies of our Minister of Finance (MoF), let us, first of all, try to decrypt some of main elements of his first major intervention at the National Assembly in the context of Government Programme 2020-24, devoid of the false triumphalism one usually hears on such occasions.

We were expecting a master stroke from the new finance minister who would have unravelled a series of economic reforms and revival measures for our sagging economy which was facing some stiff economic headwinds, largely of the government’s own making, long before the coronavirus outbreak. The latter is not only further stifling our faltering economy but is also worsening our already weakening macroeconomic fundamentals - a plateauing real GDP growth, a current account (excl GBC) to GDP ratio above 11%, an imbalance between investment and savings, unsustainable budget deficits and public debt whereas sector-wise, manufacturing is in a mess, services sector is not growing fast enough, and agriculture continues to be at the mercy of external elements and internal inherent problems.

These imbalances and constraints give an incredible insight into the challenges ahead and the new MoF was expected to dawn in, reassuring us on the major economic indicators that point towards distress while straddling the economic landscape with much confidence and leadership worthy of a MoF taking the economy by the horns. That would have had the effect of a shot in the arm of the economy, jolting it towards the right mandated directions to bring the fundamental changes which are long overdue. That was his role on that occasion, to convey the message of a strong government that can grapple with some of the country’s truly daunting tasks and steer Mauritius in the right direction.

It was difficult not to feel a sense of unease that instead of having an economic helmsman on board with a clear vision on the need of the hour, we seem to be having affairs with the head of a research department or a Minister of Economic Empowerment debating parochial issues and waxing lyrical on the different poverty and growth theories . It was just the antithesis of everything that was expected from a Finance Minister. But Mr Padayachy did excel in his forays in the politics and economics of inclusiveness – de penser, dès aujourd’hui, au ‘nous’ au lieu du ‘je’- which was a much-needed master account of what should constitute the core of our philosophy and policies on poverty, told in lucid, analytical, comprehensive and committed language. The very foundation of this commitment and socializing sensitivity owes it to his origin which seemed to have motivated his doctoral thesis on poverty and allowed him to understand the situation that prevails in Mauritius. Mr Padayachy makes a strong pitch to economic analysts and policymakers to think beyond the “trickle down policy dogma” that has traditionally defined and constrained, according to him, the pursuit of our lackadaisical inclusive policies.

But Mauritius aiming to attain very soon the exclusive status of High-Income Economy and with more of relative rather than absolute poverty (having a bare minimum of households living below the commonly accepted poverty line) may not be the typical archetype to base and establish our redistributive social policies to reduce poverty. This explains, perhaps, why in some of his arguments he makes the cardinal mistake of critiquing the trickle-down economic theories from the luxury of the populist measures, removed from the temporal constraints of the general elections that forced these decisions in order to score to score quick wins; this is a methodological error. When you fuse a methodological mistake with an ideological attempt at the moral superiority of your populist measures, you get a flawed analysis of the genuine inclusive policies.

Double standards:
We are aware that each civilian government had its own pact with the economic elite and now that the coronavirus is having its full impact on the local and global economy, all kinds of concessions and stimulus packages are being proposed solely to our local entrepreneurs on the assumption that they will create “les richesses au sommet de la pyramide sociale afin qu’elles ruissellent vers les couches inférieures” with a view to improving the livelihood of our people. The populist ideology that came to dominate the years preceding the last general elections is starting to reveal some cracks. Despite a 20-30% fall in petroleum prices globally and the massive profits that are likely to be reaped by the CEB, there seems to a dearth of the inclusive policies, via lower fuel and energy prices, for the population at large. Has the MoF done justice to the plaudits he earned when he talked about the need for Mauritius to rise to its aspirations and be revered as a model of inclusiveness in the world ? We doubt it.
Certes, la route sera longue.