MAURITIUS BUDGET 2010: People on Finanace Minister’s mind

PORT LOUIS: When the Finance minister reads out his budget speech on Wednesday he will keep ‘people’ in mind. His focus might also be on accelerating growth across various sectors.
Since this is the last budget of this government, there is a high probability that it will "put people first" and therefore attempt an early harvest even though the financial space created was used to sustain the economy. Do not also expect any new reforms to be initiated, though existing reform programmes are doing fine.
Priority will thus have to be the safeguard of employment through various supports to businesses like continuation of stimulus packages and the maintenance of heavy public investment in infrastructure and other projects. This, unfortunately, could be at the cost of not bringing down the budget deficit to a manageable level.
The GDP growth should be propped back to its average level of five per cent so that jobs could be created and the debt-servicing eased through tax buoyancy.
That the economy is back on normal growth pattern and some more measures have been taken on the social front such as wage compensation, a betterment of the purchasing power and eradication of absolute poverty are pluses for the minister.
One can expect that the government to focus on utilities, particularly water supply and wastewater disposal programmes.
At the same time, investments in infrastructure and the stimulus package are keys to ensure job preservation and creation. The stimulus package that the government has offered has been fruitful. So it should be maintained as a shock observer for a traditional economy like ours that is still suffering from the global economic downturn. However, the government might review some of the programmes without disturbing the social dimension.
The MID (Maurice Ile Durable) fund could be reactivated in the context of the Copenhagen conference on climate changes and so would food security through regional initiatives.
The last budget has predicted budget deficit to GDP to rise to 4.8 per cent in December 2009 and it seems to be close to reality as the government spending continues to oil the wheel of the economy.
To eradicate poverty, the government has put in a lot of effort. The implementation of the two per cent Corporate Social Responsibility (CSR) Levy will soon be a reality and will go a long way towards poverty alleviation.
The major MID programme needs more regulatory framework for alternative forms of energy. This is more the priority as the price of oil looks to rocket further and electric cars seem to be of lesser priority.
Developing large infrastructure projects is a must to propel the economy. Infrastructure needs of this island country are high compared to available resources. This gap remains and therefore the focus will remain.
As Mauritius is a welfare state, the government has given a lot of emphasis on social security programme. The reinforcement of Mauritius as a Welfare State will and should continue as it will help those below the poverty line.
Among the sectors that might benefit could be the Small and Medium Enterprises (SMEs) segment that needs a re-look as it faces many challenges. Another sector expected to benefit would be the crisis-hit tourism industry.
Finally the common man will benefit as more jobs would be created and preserved, and social security benefits could be enhanced.
The budget could also have some surprises as there could be revised legislation to ensure a level playing field and any loophole is plugged for the new regulations in IRS/RES projects.
Though the government has been talking a lot about Knowledge Hub, Ile Durable, 24/7 working environment, it should also add a new working culture with a new mindset to be able to take the economy to the next level.
The reforms initiated since minister Sithanen’s first budget, if completed, will ensure that the country moves to the next level.
(In conversation with BDO De Chazal Du Mée's CEO Yacoob Ramtoola, corporate finance partner Afsar Ebrahim, and consultant Dr Babu Rajpatti.)


Rama Krishna Sithanen
Vice-Prime Minister and Minister of Finance and Economic Empowerment
Education: B Sc Economics (with First Class Honours), an MSc Economics (with a Mark of Distinction) at the London School of Economics and a PhD in Political Science from Brunel University
Tenure: Minister of Finance ( Sep 1991 to Dec 1995, 2005 to present). Elected to the National Assembly for Belle-Rose/Quatre Bornes (2005)
Distinction: Chosen by the Switzerland-based World Economic Forum in 1994 as one of the 100 Global Leaders for Tomorrow