Pena Deba Pu Fer Lor BRP Iniversel a 60 an

Amwin mank rol u pena oken problem pu regle dan pei.

2015: The Year in Review

Q1: Gerrard leaves Liverpool. Scrapping point system is wrong. Chinese economy largest for next 5 decades. Singapore turns 50 as LKY dies at 91.

Q2: BOM shuts down Bramer Bank. Say goodbye to our Tamarin salt pans. Two beautiful minds die in car crash. Dracula dead at 93.

Q3: How to thin-slice policy quality. Cecil shot. 5-year olds to get assessment. Journalist forgets inflation. 10 years of blogging.

Q4: Klopp predicts league title within 4 years. Canada gets another Trudeau. PM calls PR a komeraz. Waiting better than massive bat culling. Lomu dead at 40.

Four Reasons Top Taxes Are Too Low

One is obviously the low growth rates that Mauritius has clipped for the past few years: indeed 2015 is looking to be the 5th consecutive year that it will be under 4%. I don't think this has ever happened. At least not since independence. I am sure you remember that one bean-counter promised Bretton Woods-inspired robust average growth of 8% back in 2005. Which was the reason the tax structure was flattened.

Two is that tax receipts have literally stayed flat in real terms over the last 12 months. Indeed the MRA disclosed that it collected only 4% more in the last fiscal year. Which roughly matches the increase in the general level of prices. We've alluded to that before.

Three the MCCI said that more than a third of the businesses it surveyed recently are complaining that Government is not doing enough to improve their businesses. Well, with the silly flat tax Government has ensured that it would have less resources -- and the private sector would have more -- to drive the economy. If nothing much has happened and is going to happen Government should raise top taxes to move Mauritius forward. If we don't want to keep on waiting for Godot.

Finally the flat tax has increased inequality tremendously. You just need to compare the number of people thrown into poverty after Navin Ramgoolam's first and second mandate. We can also have a look at how real disposable income has changed for the richest and poorest 10% of our households for the same periods. That's pretty bad for our social fabric and for better economic growth.

There is of course another reason why top taxes should increase.

Read The Manou Bheenick Affidavit Here

IMF Doesn't Trust Own Currency Valuations

As has been reported by the institution's Independent Evaluation Group (IEG) before. So if the currency models of the IMF have been found wanting I don't see how the Minister of Finance can use them to justify the sneaky double-digit depreciation orchestrated by the BoM. Here's a backgrounder to see clearer.

How Inflation Routinely Kills People

The first way is by making many people poor enough that their life expectancy falls because of degraded living conditions. Besides poor people have a lot less access to the kind of medical options that richer people have. For example because he had a Gulfstream V Steve Jobs was able to seek a liver over a much bigger distance -- wherever his plane could take him in 6 hours -- than someone without a jet.

Inflation is also a key driver of inequality. Especially that we now know that the inflation of the poor is about 3% higher than the headline number. Inequality will bring people to the streets -- like in the Arab Spring and elsewhere -- and clashes may cause loss of lives.

Of course if inflation is very high things can get very ugly. And that too on a horrendous scale. Like in 1930s Germany where hyperinflation helped put a little guy with a moustache in power. And the world eventually went to war: between 50 and 85 million people died in WWII.

No wonder then that Central Banks have been setting inflation targets for more than 25 years now -- roughly the period of time Lutchmeenaraidoo was not Finance Minister. With the blessings of their governments. As inflation is a major reason why politicians lose power. In fact we owe it to Governor Basant Roi for one of the best descriptions of inflation so far -- he likened it to radioactivity. Which makes it all the more interesting to check his inflation record. And compare it to Manou Bheenick's.

Bheenick Dismissal is Inelegant and Silly

Our learned Central Bank Governor was sacked on Friday probably on the basis of an irrelevant section of our excellent constitution. This is kind of inelegant towards a citizen of this country who has been a great Governor. You might want to check how the inflation rate -- the biggest enemy of the poor -- behaved during his tenure. Have a look at the external value of our rupee too. A smoother transition -- like the last three times we changed Governors -- would have been more appropriate for the kind of country we believe Mauritius to be.

And the nearly eight years Manou has been at the head of the BoM has made life a bit easier for at least two groups of people. The first one is an overwhelming majority of Mauritians who experienced the tangible benefits of a common sense approach to managing monetary conditions. The second one bloggers like me who had one less thing to rant against.

He will be a tough -- but not impossible -- act to follow. Because there are many people -- across all party lines -- who have gotten used to the anti-inflation capital he helped build. Despite having to deal with Finance Ministers from very small parties who seemed to be confused about monetary policy -- and many other things. At best. And a Financial Secretary who appeared to have a natural predisposition to establish contact with little green creatures that wear an antennae.

And silly because his successor hasn't been nominated yet. 

ACIM Makes Serious Arguments To MPC

They rightly wanted the repo rate to go up by 15-20 basis points because

1. year-on-year inflation is already higher than it should be and soon hovering between 5% and 6%
2. inflation hits the poor harder
3. the latest household budget survey shows that economic growth of the last five years has not been inclusive

No one in her right mind can disagree with these facts. A few comments on them:

1. one former Governor likened inflation to radioactivity
2. South Africa has calculated that the inflation that hits the poor is 3% higher
3. as expected the flat tax disease has operated like a reverse Robin Hood

Furthermore even the JEC -- not exactly the source of the most progressive economic statements since dinosaurs were wiped out from the face of the earth -- asked that the repo be left unchanged. 

How can you then explain that the Financial Secretary asked for 50 basis-point cut? And that the MPC ended up lowering the key rate by 25 basis points?

Simple: there are way too many people on the MPC and at the Ministry of Finance who don't seem to understand the scope of an MPC. That's unacceptable. Because I am sure that the cost of running the MPC is nothing to be sneezed at. We should be able to count on Mr. Alan Ganoo to find that out for us. And to apply parliamentary pressure so that the MPC works for most of us.

Pourquoi Ne Pas Echanger Lutchmeenaraidoo contre Sithanen?

2012: The Year in Review (Q4)

October: PRB report published. Big B turns 70. Felix goes supersonic. Biden-Ryan debate felt more presidential. Apple launches the iPad mini. Gotham prepares for Sandy's visit.

November: Boolell explains Romney's defeat. Zlatan christens stadium with wonder goal. 44% of poll see sweep for Remake. Jimi turns 70. How you know a politician is a socialist. Killer to strike again. Hard-earned anti-inflation credibility at risk.

December: PM claims large victory in village elections. A good reason for men to quit smoking. Municipal voters send multiple signals. Sitar genius dead at 92. State fails more than 9,000 CPE students. Obama reacts to Connecticut tragedy. Kozelidir Person of the Year 2012 attributed to the CPE student for putting up with a badly designed learning process.
     
Read the review for Q1, Q2, Q3.

La Crise Financiere A Bon Dos

Hard-earned Anti-inflation Credibility At Risk

According to Governor Bheenick as inflation is expected to rise to around 6% by next year. And that's before the ridiculous 3.5% annual depreciation assumed in the recently presented budget. The soundbite also contains interesting insights into how the BOM tried to neutralise the increase in volatility in the forex markets caused by the irresponsible intervention of the National Resilience Fund -- which previously appeared as the Business Growth Fund.

Talk about a resilience fund, eh? It attacks our currency which makes 99% of us poorer. The pompous name is to try to fool us into believing that the extreme trickle-economics implemented since 2005 has worked. It has not.

We know that just by looking at the tax rates and growth rates over the last seven years.

Souhaitons Que Le Stimulus Package N'entraine Aucun Abus

Meet The ABS

In this drawn-to-scale chart, B is the fraction of Mauritius under sugar cane. A is the rest of our island. The corresponding squares in the lower half of the diagram are the contributions of these sectors to our economy: sugar is expected to account for only 1.4% of GDP in 2012.

And S which is barely greater than what we have under sugar cane is Singapore. I've put a question mark there to represent its off the charts economy -- roughly twice the size of our passport.

Clearly there is way too much land under sugar cane. We could start by following Lalit's advice of bizin plant manze lor later tablisman. This will make us more resilient because it will ease pressure off our trade relationship with the rest of the world and improve food security at the same time. And having more of A and less of B will significantly boost the rate at which decent jobs are created in Mauritius. Without the galloping inflation bean-counters are so fond of delivering.

We should also restore progressiveness in our tax laws so that the claim that our PM is a socialist starts to ring true. And to put our fiscal house back on a sustainable path. Finally if we replace sugar cane with trees on a sufficient scale this could help us secure some extraordinary bragging rights: having the world's best air quality. Which will provide Mauritius with a killer tagline: Go Ahead, Take a Deep Breath!

Bundesbank To Accept Tiny Bit More Inflation

From its current level of 2.1%. Which means that the Buba could exceptionally allow price levels to increase to a max of 3%. This should help its European trading partners improve their trade relationships with the continent's growth engine. Think of it as Germany accepting to be a tiny bit less competitive -- by willing to take up a little more inflation than usual and that for a short period too -- to help pull its neighbours out of the current crisis. That will not make the German economy grow faster. Nope. It will more likely, albeit barely, reduce the strong clip at which it has been growing as of late.

Bean-counters, rent-seekers and other clowns who advocate a persistent rupee depreciation should not construe this as a justification for Mauritius to take up more inflation. Our inflation rate is already on the high side. Besides monetary policy has never been a substitute for a blatantly ridiculous land use.

Riots Break Out in Reunion Over Cost of Living

ECB Hike Rates And Hints More on The Way

Main policy rate increased by 25 basis points on Thursday because of upside risks to inflation through second-round effects even though Europe is battling with a sovereign-debt crisis.

Find out more about the Monetary Policy of the ECB.

Repo Rate Raised By 50 BPS To Prevent Second-round Effects

As widely expected, well, save the JEC. BOM's primary objective being price stability it had little choice to raise the repo rate to 5.25% as inflation had been on the rise after Pravind Jugnauth's budget. Besides monetary policy operates with a lag and inflation is like...radioactivity.

Union: Control Price of Basic Foodstuffs

Like milk, cheese, cooking oil and sugar. So asked, Jane Ragoo, spokesperson of CTSP in order to shield the poor from the recent cascade of price hikes. She also asked for an additional compensation and the setting up of a stabilizing fund.

What do you think about these suggestions?

How Important is a Budget Speech?

Depends what you say in it and what you leave out. And what you do the other 365 or so days of the year. There should also be some basic coordination between ministers. See Anil Baichoo comes on TV to announce substantial increases in bus fares -- based on reasons that appear esoteric at best -- after Pravind Jugnauth has presented his budget. Not good.

Besides cost of living is a manageable quantity that can throw all kinds of politicians out of office.