Thursday, November 19, 2009

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.

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