Monday, November 30, 2009

Street-Level Board Members And Weak Rupee: Any Links?

It's not a secret that Bheenick has held firm against completely outlandish requests from a few greedy and crazy exporters to brutally depreciate our rupee over the last couple of years. There are now some fresh new demands to let our currency head south.

And they come on the coattails of rather bizarre behaviour from a group of board members who seemed determined to undermine the Governor.

Is that a coincidence?

Sunday, November 29, 2009

Should I Read The Budget?

In a few days it will be two weeks since the budget was read by the Minister of Finance. I still haven't chewed it. And I don't feel any urgency of going through it either. And many of the people I've talked to seem to have come to essentially the same conclusion: it's not going to make our lives better.

That doesn't mean you're not gonna hear from me. Far from that. I've got a lot of interesting posts coming your way. So stay tuned!

Lutchmeenaraidoo To Hire Best and Brightest

Irrespective of their political bent once they're in government. So he said in an interview yesterday. That's kind of refreshing to hear. And that's very different from what Navin Ramgoolam has been doing since July 2005: getting the worst from the MMM to play (or is it to not play?) important roles in the running of Mauritius.

No wonder our country has gotten itself into such a bad shape.

Friday, November 27, 2009

Free Optical Test

Just came across this amazing new site to check if your eyes are working. Not only is it a great site but it's also totally free!!!

Thought I would share this with you.

How Ramgoolam Can End the Conflict at The BOM

1. Ask Sithanen to step down as Minister of Finance on account of the worst economic performance for any government in 25 years and for bringing the savings rate to a 30-year low.

2. Randomly replace enough of the Board members who organised a press conference at street level yesterday so as to bring a little bit of sanity to the Board of the Central Bank.

3. Sack Bheenick and appoint an idiot who will depreciate our rupee sufficiently for people to take to the streets.

Wednesday, November 25, 2009

How To Find Out if You Are Biased

Here are a few pointers.
  1. You don't want to find out how Rs3 billion was lost at the STC.
  2. You don't want to know how the STC ended up paying the subsidies on rice and flour after these were initially cancelled.
  3. Only one or two sections of the Bank of Mauritius Act interest you. You never heard about article 5.2a although you are aware that people have become poor in our country.
  4. You find it normal for someone to say that his room for manoeuvre is small although a few days later he announces that he has Rs5.3 billion more than expected.

How You Know the UK is Serious About Fighting Poverty

Easy. You simply have to read one of the letters its Minister of Finance sends to the Governor of the Bank of England every year to reconfirm the inflation target of 2%. Click the image below for one of those.

Are Opinion Leaders Failing Us?

In a bid to contain mass deception, David Sirota, the author of “Hostile Takeover” and “The Uprising” warns:

"When hostility to intelligence and to the basic process of thinking itself emanates from the very professional thinkers who lead the nation’s intelligentsia, it’s a sign our country is becoming the ignorance-deifying idiocracy we should all fear."

Monday, November 23, 2009

Why The Debt-to-GDP Ratio Has Fallen

For sure it didn't happen by reducing wastage levels. Nope. That we know from reading the damning government audit report year after year. Instead, the Finance Minister did it mostly by never spending many of the billions he had budgeted over the last 4.5 years in typical bean-counting tradition:

1. The Empowerment fund has spent only Rs800 million over a 3-year period instead of the 1-billion-rupees-a-year pledge. That's Rs2.2 billion 'saved'.

2. By making us pay Rs3 billion for an apparent hedging mess at the STC through much higher pump prices than would warrant prevailing oil market prices.

3. Announcing 6 Rs1-billion funds in the June 2008 budget (Food security fund, Human Resource, Knowledge and Arts fund, MID fund, etc) but spending only a small fraction of them.

4. Not spending enough of the last 4-5 capital budgets.

5. Repackaging paragraph 271 as an additional stimulus package and setting aside a few more billions which were never to be spent.

6. VAT of 15% was kept on oil prices throughout the period they went all the way to USD147 a barrel. For instance VAT receipts on oil prices doubled from Rs1.65 billion to Rs3.3 billion in 12 short months from 2006 to 2007.

7. Depreciating our currency.

Sunday, November 22, 2009

Rezistans ek Alternativ 2-0 Government of Mauritius

At last, some good news in the land of ti-lipie lor gro-lipie. The submission of Rezistans ek Alternativ that categorising candidates into four and rather arbitrary ethnic groups may not even have an elementary legal grounding has now been declared admissible by the UN's Human Rights Committee. That's after Justice Balancy ruled in favour of the political organisation some four years ago.

Although our Government has now six months to submit its position to the Committee and drag its feet a little longer, the right thing for our parliament to do would be to immediately chip that obsolete section off our constitution.

Friday, November 20, 2009

Poll Blames Minister For Brutal Drop in Savings

As a snapshot of the results shows, some 88% of the voters thought the Minister of Finance was mostly responsible for the large and alarming drop in the savings rate to a 30-year low of 12%. 3% placed the blame on the Governor's shoulders while 7% had none of them responsible.

True the sample is quite tiny at 26 votes. Still, that's only 4 less than Pluriconseil's 30. Besides Pravind Jugnauth lost his seat by a mere 38 votes in 2005.

My First Impression On the 2010 Budget

Just like last June I didn't listen to the budget speech live. I don't think I will until they have it subtitled in English. I haven't read it either. I've only scrolled down the document for about one minute last night. Which is why I had to turn down a few requests for opinion pieces since Wednesday.

But I've already seen the same truckloads of lies and misleading statements in there. It seems to be a copy paste of the same crap that we have been served for the past 4.5 years.

Mauritius, don't you think we deserve way better than this?

Thursday, November 19, 2009

Meet The Misery Index

It's already tough when you're facing high inflation. Now just imagine that you're without a job as well. It becomes hellish and it's the reason why Arthur Okun suggested back in the 70's that we add the two together to come up with his Misery Index. And why inflation targets have become so popular since 1989.

Computing it for Mauritius yields interesting insights. It hit a 10-year high of 20.5% at the end of 2007 and stayed almost put at 20% a year later. That's close to double the level when Ramgoolam lost power in 2000. Federation 2 had also a much lower average than the supply-side folly of Sithanen: 13.3% vs 19.4%. That is Sithanen's new model produced 46% more misery.

Making Sense of Sithanese

How serious is the Minister about eradicating poverty?
Simply check the cumulative rate of inflation -- the worst enemy of the poor -- as well as for the presence of explicit inflation targets. Federation 2 took 4.75 years to clobber the population with the high rate of cumulative inflation of 23.90%. Sithanen was in a hurry. He took only 2.89 years. And he has systematically violated article 5.2a of the Bank of Mauritius Act by not providing any inflation targets.

Minister's central objective was to set the stage for robust growth.
That didn't happen. His average will be around 4.3% by the time we go to vote next year. That will be the worst performance in decades. The numbers don't change that much if we exclude the last 12 months.

He's gonna brag that his reforms have brought in Rs34 billions of FDI.
Whilst it's true that we've received a lot more FDI, these big inflows have not benefited a majority of the population because they've been mismanaged. Just ask or look around. Better still, check the national savings rate. It's currently hovering at a 30-year low of 12%. Besides, did you know that the average growth rate of Sithanen his first time around (September 1991 to December 1995) was 1.0% higher at 5.3% although he got only Rs1 billion of FDI over 4.25 years?

Thanks to the Sithanen reforms, Mauritius is now the 17th best place to do business.
The Doing Business rankings measures red tape and nothing else. Even the World Bank doesn't trust it, so why should we? Furthermore, did you know that Mauritius clocked a 23rd spot in the 2005 rankings -- before the reforms had actually begun -- but 9 spots lower at 32nd in the year of the early harvest and six spots lower at 29th in the year of the bumper crop? And if we gained a few spots this year it's mostly because we've made firing workers easier and gamed the index by passing a rank-raising law. Expect wild swings in our rankings in the years ahead.

Sithanen Delivers Worst Growth in Decades

Although the delivery of robust growth was his main objective. Guess, it's one reason for voters in Belle-Rose/Quatre-Bornes not to send him to parliament again.

Saturday, November 14, 2009

It's Not Getting Better, Is It?

MK reports that one yield statistic has reached a record level. Is that an indication of better management already? Not really.

See, they lent out one of their planes recently -- for which they self-congratulated themselves -- so that they are offering less seats to and from the land of c'est un plaisir. That should lower the number of empty seats aboard each time one of their planes takes off, right?

Well, it also depends on how traffic is doing. Although traffic fell over the past little while, it hasn't fallen enough so as to depress yields as much as renting that plane has increased it.

Thursday, November 12, 2009

1.4% Decline in Savings Was Termed Bleak

In his Insider's View published back in August 2005 the Finance Minister lamented that our national savings rate had dropped from an average of 26.0% in the first Navin Ramgoolam government to 24.6% under Federation 2. He goes on to say (see paragraph 17):

CSO is forecasting a very low savings rate of 19.5 per cent for 2005. Here again, we must be utterly concerned. Firstly, because as a nation we are consuming at a faster rate than we are producing. Secondly, because the savings rate is below the investment rate. This will exert demand pressures on prices and will have an adverse impact on the current account of the balance of payments.

Fast forward 4.25 years and the savings rate is now at a 30-year low of 12%. I haven't heard him on that yet but I wouldn't be surprised he's so shattered that he can't find the right words to express his anguish. But I also wonder how all this happened. Any clues?

Saturday, November 7, 2009

Ramgoolam Gets His Own Blog

Actually it is supposed to be the official website of the Labour Party but you wouldn't be able to tell the difference. It's Ramgoolam all over the place: son and father.

The section on the party's impressive achievements pretentiously attributes everything to SSR. There are absolutely no nuances. It's like attributing the development of the entire field of Mathematics to Newton. Gauss never existed. Or Einstein did everything in Physics. Richard who?

Navin's pic is in the header to the right of the party's logo and its payoff line au service du pays depuis 1936. I didn't know he'd been serving us for that long. No wonder he admitted years ago that he was going downhill.

Stimulus Package: The Timeline

Thursday, November 5, 2009

The Ultimate Red-Tape Machine

That would be a fitting name for the Empowerment Foundation which had blazed some new trails last year by... changing its name from the Empowerment Fund. That's because after 3 years in operation it has spent only Rs800 million instead of the Rs3 billion pompously announced by you know who. That's barely more than a quarter of the budgeted amount in case you're wondering.

The unspent Rs2.2 billion has gone towards reducing the deficit and debt-to-GDP ratio as per standard bean-counting practice. For sure it hasn't meant lower wastage levels. Nope. The damning government auditor's report constantly reminds us that this is yet another area where Sithanen has miserably failed to deliver - he referred to it as the bloody report in 2005 and promised to wage war against the Rs5 billion that's wasted every year.

It would be also interesting to find out about the administrative costs of this foundation and compare them to traditional public service delivery.

How Were The Economic Seas in 1995?

That would be an interesting question to put to Rama Sithanen. Because that was one of the two years in which we sent a new government to parliament with the power to corrupt absolutely.

While the global economy was in a tailspin in 1982 conditions were incomparably better at the end of 1995. For instance Bill Clinton was getting ready to grab four more years at the White House in the following year.

But that didn't prevent Sithanen and friends from scoring less than 19% of the votes.

Savings Rate Collapses Brutally

It has hit a 30-year low of 12%. How did we drop from an average savings rate of 26.4% between 1990 and 2004 to such a low level? Who's to blame? Bheenick or Sithanen?

Sunday, November 1, 2009

IELS Saying Incinerator Doesn't Make Sense

In a piece recently published in the Forum pages of Le Mauricien Karim Jaufeerally, the President of the Institute for Environmental and Legal Studies, highlights the shortcomings of the project including:
  • serious health risks exist because Mauritius is not exactly a world-beater as far as the enforcement of environmental standards go
  • the incinerator will burn 3/4 of the 400,000 tons of waste we produce per year although 1/2 of the latter quantity is green waste
  • a penalty will be levied if less than 300,000 tons of waste is sent to the incinerator which kind of removes any incentives for us to produce less waste -- see I told you the MID project should probably be renamed MIP (Maurice Ile Palabres)
  • a purchase price of Rs5.71/Kwh for the electricity produced by the incinerator which would be more than 60% that of the IPP contracts -- an abusive price that Ramgoolam has promised to review for about two years now
  • a tipping fee of USD39 per ton of waste
What do you think of all this?

The Economic Weather Under Federation 2

Sithanen likes repeating something the Prime Minister said in parliament back in April: In 2005 there was no recession, the sea was calm, the sky was blue and the sun was shining. That statement is not quite true as we've demonstrated before.

Indeed in 2005 our textile industry contracted by 14.7% after shrinking by half that amount in 2004. One of the causes of this severe recession in that industry -- about 25,000 people lost their jobs over a 5-year period -- was the expiration of the 30-year old multi fiber agreement. And given the weight of that industry in our economy (8.1% in 2004) its performance in 2005 was negative enough to drag GDP growth by about 1.2%.

Contrast that with the effect of the global recession that started about a year ago. The fact that it didn't affect Mauritius as much as the textile recession shouldn't have surprised us. Our banks have been churning out record profits and unlike in the US our financial system was not on the brink of collapse.

So, what you have to take away from this is that something affecting one of our main industries can be more devastating to us than a global crisis hitting many rich countries.