Perigeum Capital : cruising across the waves of continuity in a complex conjunctural global climate

Honourable Pravind Kumar Jugnauth, Prime Minister, Minister of Home Affairs, External Communications and National Development Unit, Minister of Finance and Economic Development, delivered his budget speech for year 2019/2020 in a mood characterized by the will to uphold the country’s momentum on its already-defined trajectory and in the context of the current world situation depicted by tensions on different fronts related to trade, geopolitical, social and environmental issues. The budget is a hotchpotch of critical measures addressed by the Prime Minister and which touches on delicate subjects impacting on our society both at present and in future. While there are tinges here and there to restore equilibrium in certain vulnerable areas, there is also this hard resolve to cut across the various strata of society in order to take the bull by the horns with respect to sensitive issues linked to drugs, inequality generally and resilience throughout the entire fabric of our manufacturing industry.

The budget hinges on ten principles that would, in the view of the Prime Minister, enable the country to enfold inclusiveness, sustainable economic growth and innovation in a modern and brighter future for the whole nation knitted together. The first principle dwells upon the need to reinforce the existing pillars of the economy and focuses on fostering the spirit of innovation in our youth, increasing their productivity through upskilling and talent-enhanced measures, and stimulating one of the key factors of growth which is private investment. The productive sectors of our economy are vital for the achievement of growth in the medium to long-term and the Prime Minister has taken some valid measures in conjunction with the specificities of each of the following sectors and with an embedded philosophy of democratisation: sugarcane, non-sugarcane, manufacturing, ocean, cooperative, tourism and financial services. The challenge remains in the latter philosophy being able to crystallize in practical terms based on the exigencies imposed by natural justice, fairness and transparency.

The recent visits by African statesmen should necessarily usher a new era for bilateral cooperation and in this respect the budget specifically addresses the issue by allowing and giving proper incentives for our economic space to broaden and diversify. All this would not be achievable without having the proper infrastructure to enable our aspirations to bear fruits in future. Amongst the accompanying measures are included the revamping of our infrastructure throughout the island and the modernization of our seaport as well as the upgrading of the airport terminal. The public sector will also undergo a healthy overhaul in that the role of Government in the economy will be reassessed and the efficiency and delivery of public services will be ameliorated and digitalised.

One of the various themes of the budget which is quite commendable includes the promotion of gender equality and empowering of women at work and in society. For instance, Public Companies and Statutory Bodies will be required to appoint at least one woman on their board of directors. The country does not exist in a vacuum and cannot ignore certain basic laws of nature in relation to either the safety of its citizens or the impact that our actions may engender in relation to the environment. The budget specifically addresses those two issues and measures will be taken accordingly, through proper legislation, enhanced support from relevant authorities and private sector participation, to mitigate those ailing agents that thwart the advancement of our nation. Also, it is being recognized more and more that Mauritius’ territorial influence and ownership need to be carefully propped up and hence the budget amply provides for infrastructure enhancement and rejuvenation of the outer islands, including Rodrigues and Agalega.

Amongst the budget estimates for year 2019/2020, there are two macroeconomic indicators which are worthy of analysis and reflection. While the projected budget deficit for the coming year has been estimated at Rs 16.9 billion, representing 3.2% of GDP, there is a need to assess whether some items may have been left out especially on the expense side due to accounting of same in other state corporations. If such is the case, then the budget deficit will definitely cross the calculated figure of 3.2%. Secondly, all things being equal, the intended bringing down of the public sector debt to 60% of GDP by end of June 2021 may not be achievable should some financing be accounted off-budget and should the growth rate of our real GDP not exceed the 4% benchmark in 2020 as has been announced in the budget.

The budget exercise is a plan for the future and will surely face the test of time as and when events and predictions unfold. What is crucial for the success and ultimate implementation of all budgetary measures is that all stakeholders, especially those in positions of influence, share the common vision embraced by the Prime Minister in his budget speech. Or else, we will need to make adjustments during the course of time and ‘changer de fusil d’épaule’ before the next budget speech…..

Shamin A. Sookia
Managing Director
Perigeum Capital Ltd