Blog: Budget 2013 - Bold Measures missing

Is there a Minister of Finance in the world who can satisfy the wishes, expectations and dreams of the citizens of his country in a Budget Speech? Is there a government or country which has all the resources or means to do so?

The way I have put the question, the obvious answer could be but in the negative. Then why so much fuss after the Budget Speech of Xavier-Luc Duval last Friday? The answer is simple. It is the basic fundamental right of every citizen to hold an opinion and express it freely. It is his right to have wishes, expectations and dreams. This is what democracy is about. And we have chosen and adopted a democratic way of life.

Being a little bit familiar with the budget making process and methodology, I have always wondered whether it is fair to expect a budget to solve the financial and economic problems of a country and its citizens, particularly at this juncture of world and euro zone economic crisis. It is practically an impossible task.

In the face of frustration and criticism expressed by the opposition, opinion leaders, consumers, trade unions, trade organizations, I have a feeling that we are missing the real issues.

Have we ever thought of the high caliber officials supported by international economists and experts who are responsible to prepare the budget and advise the government on the appropriate measures to be taken? They form part of a permanent system established at the Ministry of Finance to advise all governments of the day, Finance Ministers, Prime Ministers on the political and economic orientation and the choices available.

This year Xavier-Luc Duval has announced the choices of government. We are all aware that if the budget is not approved, government will fall. There is not even a small chance of this happening. Besides, by and large the budgetary measures have been accepted by the population although they would have liked something more for themselves in it.

Based on the achievement of the last budget - growth rate at 3.4% with a forecast of 4% in 2013, inflation at 4.1% with a projection of 6% next year, balance of payments of 3 billion rupees, 500 million more than estimated, budget deficit of 2.5% of GDP expected to be reduced to 2.2% in next year, public debt at 54.2% expected to be further reduced next year, increase in FDI by 20%. The Minister of Finance has every reason to be satisfied.

In spite of the forthcoming village and municipal elections, it should be appreciated that government has not given way to the temptation of “faire la bouche doux”. It should be commended for being a responsible government. I have not seen the sort of negative reactions the civil servants had against the PRB recommendations. Of course, there could have been some bold measures, some inspirational and motivational measures which could have put the country on a war footing to face the challenges ahead. Perhaps that is not the style of Xavier-Luc Duval. He is no Vishnu Lutchmeenaraidoo or Rama Sithanen, but his fundamentals are correct.

Both Paul Bérenger, leader of the MMM and Pravind Jugnauth, leader of the MSM have been finance ministers and we all know that they have not been better if not worse finance ministers. It is natural for them to sing a different song when they are in government or opposition. Are they not the ones who had mentioned l’état d’urgence économique and tsunami referring to the economic situation of the country.

Viewed in a historical perspective, the measure I have applauded most was the provision to give a hot meal to poor students in ZEP schools and provision to help poor students in other areas and incentives for them to attend schools. Xavier-Luc Duval is right when he says that after free education and free transport, this measure is revolutionary. According to a report of NESC, free transport, subsidies on rice, flour and LPG, subsidies for exam fees, social aids, allowance to fishermen, pensions, free health service, free education constitute the major share of budgetary provisions.

Just imagine if Xavier-Luc Duval would have announced an increase in salary of 22% to 30% to civil servants, employees of parastatal and local government bodies, how much applause he would have received? It was all messed up by a wrong strategy of announcing the PRB recommendations before the budget. Nobody thanked the government for making provision of Rs 4.6 billion for payment in toto of PRB as from January next year.

The massive increase in capital budget for improving the infrastructure of water, roads, hospitals, energy will go a long way in modernizing Mauritius. Reduction in internet access and giving 20,000 tablets to Form IV students will open a whole new era of information and education to all. Some other positive measures have been the incentives for small entrepreneurs and the agricultural sector. Capping bank charges is another popular one.

Xavier-Luc Duval should ask himself what has gone wrong that after so many positive steps, no sector is fully satisfied. For the small entrepreneurs and the small planters, these measures are not enough to put them on a sound footing. His measures have not gone far enough to equip the country to face the real issues of poverty alleviation, creation of jobs and wealth. Government has the time and resources to take corrective bold measures and should not wait for 2014-2015. It is now or it will be too late.