2022-23 Budget Musings

The effect of the budget measures can be transient if government does not in parallel also rigorously ascertain that there are competent currency stabilizing measures in place, a more rigorous price control and price competition in the market

By Mrinal Roy

Finally, government has woken up to the urgent need to directly support the income of people to alleviate the increasing difficulties and hardships faced by them to make ends meet in a context of continuously escalating prices of food and basic existential needs and the sustained erosion of their purchasing power fuelled by the unchecked depreciation of the Rupee. The various measures proposed to raise the income of pensioners, the disabled and the vulnerable as well as government employees and the self employed, etc., will provide a welcome relief to consumers and allay the growing angst in the country.

However, the effect of these measures can be transient if government does not in parallel also rigorously ascertain that there are competent currency stabilizing measures in place, a more rigorous price control by the authorities and price competition in the market to protect consumers. This is crucial as any visit to diverse supermarkets shows that the prices of so many basic consumer goods such as cereals, milk, cooking oil, basic food items or sanitary products, etc., are uncannily similar.

In line with IMF directives, there were thankfully no exceptional transfers by the Bank of Mauritius to the government or opaque MIC funds to prop up the private sector and conglomerates for the 2022-23 budget. The Minister of Finance judiciously spoke of building back our depleted reserves. Finally, financial rigour seems to prevail after the IMF’s scathing indictment of such contested practices last year. What about accountability of those responsible and a transparent fact sheet on MIC funds and exceptional transfers received and used in the past year?

Drain on scarce resources

Despite committing an unprecedented Rs 11.7 billion over three years for a National Flood Management Programme last year to provide for effective drainage systems in identified flood prone areas, the 2022-23 Budget speech states that the people continued to face hardships due to major floods in different regions. An amount of Rs 3.8 billion is thus earmarked in 2022-23 to continue the National Flood Management Programme in an extremely long list of more than 100 locations spread over all the constituencies in the country and Rodrigues. This situation raises questions regarding technical expertise and understanding of the dynamics of water flow, engineering and design as well as workmanship and cost effectiveness of contractors. The country cannot afford to annually sink billions of Rupees of scarce public funds in drainage systems which repeatedly fail to resolve the problem of flooding.

The forecast of a growth rate of 8.5% is highly dependent on the performance of the tourism sector and a tourist arrival figure of 1.4 billion during the fiscal year and the yardstick of an additional growth rate of 0.6% per additional 100,000 tourists arrival. The vulnerability of an economic model highly dependent on the tourist industry and the construction and sale of high-end villas to foreigners was exposed in 2020 and 2021 during the Covid-19 pandemic. The crying lessons of an inordinately high dependence on these sectors have patently not been learnt.

Actual revenue

Despite strapped finances, the 2022-23 budget expenditure of Rs 172.9 billion is materially higher than the revised 2021-22 expenditure estimates of Rs 161,618 billion. The 2022-23 revenue estimate of Rs150 billion is also significantly higher than the revised 2021-22 revenue estimates of Rs136.485 billion. The budget hinges on actual budget revenue. It will determine the actual budget deficit at the end of the financial year. Read More… Become a Subscriber

Mauritius Times ePaper Friday 10 June 2022