Thursday, August 26, 2010

What Killed Many IRS Projects

Depreciating currency and dullness of Mauritian evenings are two reasons we identified last year. Overpricing is a third one. Here are a few more:
  1. Getting someone from the World Bank(WB) as Financial Secretary who promises to adapt WB policies to Mauritius. Investors know very well what happens when government allow Bretton-Woods-formatted cowboys to run the show: they screw up public finances and the economy, people eventually take to the streets and governments lose power along the way. That usually doesn't help real estate values to firm up. 
  2. An eyebrow-raising event: WB opens an office here in 2008 based on totally fallacious arguments. We didn't need a WB office in the 1970s when we went through very turbulent economic waters so how come we needed one 4 decades later when conditions are infinitely more manageable? Investors definitely interpret this as a signal that a few idiots have decided to send our country to the dogs.
  3. Investors were attracted by sexy ingredients that are the foundations for our country's reputation as the poster child of economic development: success in defusing the demographic bomb, rapid industrialisation, progressive taxation, free education and other carefully thought-out components of our welfare state. With the introduction of the Sithanen-Mansoor-Scott-Ramgoolam flat-tax they fear Mauritius may have lost her magic touch and know government will have no money to maintain standards or solve any national problem. Which is essentially what happened over the past 5 years. And that doesn't sell properties.
Guess you've noticed that the policy spaghetti that killed these IRS also killed our savings and made our economy more vulnerable. Things could get out of hand pretty quickly.

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