"Ousting Jugnauth is necessary but not sufficient.

The current system also needs to be ousted”

Interview: Kugan Parapen, Economist

* ‘People do not see a future in Mauritius for themselves nor for their children. They have serious concerns. Worry we should’

* ‘The electorate is hungry for a real change and I do not see how a PTr-MMM-PMSD alliance actually delivers the profound change desired’

Kugan Parapen is forthcoming as usual in sharing his views concerning both the economic state of the country and the political necessity for change from an MSM government. The former should give real cause for worry as the electoral war-chest spending in the next budget is likely to leave the country high and dry with depleted reserves, persistent inflation and few new economic pillars. As for the necessity of political change at the next general elections, Resistans ek Alternativ has pleaded for a unified Opposition front and a real program of reform of the economy.

Mauritius Times: What’s more disquieting about the situation prevailing in the country presently? Is it politics and its habitual villains, or is it about the mis/management of the economy?

Kugan Parapen: In view of what is happening in the country, one would have to say both. In any case, both are intertwined and, to some extent, interdependent. However, while the political arm is hurting opposing forces, the failing economy is hurting everyone, both pro-government and pro-opposition camps. All in all, each and every citizen of our country has something to worry about at the moment and that certainly does not add up to a feel-good factor.

* More precisely, how do you see the Mauritian economy doing right now, and where will that lead us to?

If, as the Minister of Finance and his acolytes, we take a short-term view of the economy, then there are definitely a few reasons to be positive. Granted that Mauritius has had one of the strongest economic growth periods in its history, is that a sufficient reason for the Minister to indulge in such a pathetic self-glorifying act? Would a boxer who has been knocked out be ecstatic about the fact that he has been able to stand back on his feet? Or would he have been relieved?

By all accounts, Mauritius is slowly but surely getting back on its feet. It’s a relief, not an accomplishment! The strong economic rebound witnessed in recent months has to do with the recovery the country has experienced, especially since the tourism industry has reopened. Do you know that the country has still not fully recovered from the Covid-19 related shock? Indeed, the economic output in real terms (i.e., adjusted for inflation) is still below the peak we were at the beginning of 2020.

As per the June 2023 edition of the World Economic Prospects by the World Bank, global economic growth stood at 6.0% in 2021, and halved to 3.1% in 2022. The forecast for 2023 is only 2.1%. This clearly shows that the post-Covid-19 recovery growth rate is unsustainable. One might argue that the growth rate for Mauritius for 2022 was much higher than the global one and hence Mauritius might be going through some miraculous exceptionalism. The long-awaited economic miracle may be? Unfortunately, that is simply not going to be the case. We need to remember that social restrictions, especially the closure of the country’s aerial space, were in place for significantly longer in Mauritius than in most countries. As such, the economic recovery in Mauritius was unsynchronised and delayed.

Which brings us to the budget and Padayachy’s whimsical forecasts. While most international institutions forecast a return to trend growth as from the second half of 2023, the Minister of Finance is predicting the same rate of annual economic growth for the financial year 23/24. Could he be right?

We had warned that the MSM was building a political war chest when they raided the coffers of the Bank of Mauritius post-Covid 19. And that has indeed proven to be the case. A significant chunk of the funds transferred from the Central Bank to the central government have not yet been used and have now been earmarked in the last budget to be deployed for significant infrastructural undertakings by the government in the next twelve months. Interestingly, these funds are being deployed as we close in on the end of the mandate of the incumbent government.

While we do not expect the economic growth for the forthcoming year to be anywhere close to the projected rate by the Minister of Finance, we do see a case for growth to remain above trend in the next twelve months if the government manages to execute its projects in time. But the more interesting and pertinent question on our mind remains unanswered – what happens when the political war chest of the MSM is emptied? Read More… Become a Subscriber

Mauritius Times ePaper Friday 28 July 2023