Sithanen Toohrooh Crosses £100 Billion

Recall that the Sithanen Toohrooh (ST) is the cumulative difference between the GDP that was supposed to be generated by the 15% flat tax and its actual number. Given that we never grew at the expected 8% rate promised by Dr. TINAnen during the past nineteen years – average growth rates between 2006 and 2024 is 3.4% or less than half the target – except in one year and that too only because the economy had contracted by nearly 15% in 2020 due to Covid it has steadily been increasing since 2006 and together with some of the most catastrophic policy decisions ever have fairly disintegrated our great and beautiful country. So much so that the ST reached Rs6 trillion in 2024 rupees a few weeks before voters produced the third 60-0 of our post-independence history.

Clearly and as the chart confirms most of that GDP gap happened on Pravind Jugnauth's watch (almost 78% of it) with SAJ accounting for 8.5% (Roshi Bhadain was in government during this time) and Navin Ramgoolam 13.5% of the total. For ease of calculation this breakdown assumes that SAJ, PJ and NR took over at the start of 2015, 2017 and 2025 which is not exactly a lot of violence to the facts. To be sure the shape of the chart depends essentially on the tax structure and given that all three PMs since 2006 have stuck with one that was unsustainable and overall very regressive it would not have made a big difference if the order of their stints was altered. It would still have been 20 years of extreme voodoo economics or if you prefer Shaitanomics.

The annual £90m we've apparently been contemplating to receive for the Chagos Islands will not matter that much even with the front-loading because it will be inconsequential compared to the ongoing damage caused by the ruinous tax structure. The current PM who wanted a fourth term so as to leave a legacy – it's atrociously negative after three just like PJ's is after eight years as PM – should have presented a budget at the end of last November or early December with a sustainable tax structure to dramatically slow down the fiscal rot and let Mauritius start being Mauritius again. This would have prevented the ST from increasing by about another Rs500 billion by the end of next month and NR's share of the mess to 20.4%. Add another half a trillion rupees till the close of 2025 if the June 5th budget keeps the same regressive and ruinous tax structure and see Ramgoolam's share of the ST rise to 26.2%. More if the new doses of voodoo economics in ADC's electoral manifesto are implemented.

Of course the Rs6 trillion ST translates into Rs1.2 trillion of revenue missing in the government coffers – which would have meant zero public debt right now plus Rs500 billion growing in a nice sovereign wealth fund if all we could have managed was the preservation of capital – assuming the latter accounts for a conservative 20% of national production and a private sector GDP shortfall of Rs4.8 trillion.

For sure the mile wide support the government received six months ago was only inch deep and that in many fields Mauritius has been in junk territory for many years. If common sense doesn't make a big comeback in a few weeks the risk that the social elastic will snap will keep on increasing from its already and unnecessarily very dangerous level.

How Our Offshore Treaty Risk Became a Much Bigger Problem

With 640m multidimensionally poor people in India in 2005-6 and the internet making millions a lot smarter it was natural that the pressure to renegotiate the DTAA with Mauritius would increase significantly. So it was sheer stupidity for one bean-counter to flatten our tax structure to a rate (15%) that has caused serious damage to our economy in order to build a facade of low-tax jurisdiction. Besides we never voted for this crap aka Paglanomics or if you prefer Shaitanomics in 2005. Killing our savings culture was not exactly another smart move. Neither was gifting a sunset industry €138m — its weight in the economy was more than six times smaller at the end of 2018 (0.5%) than it was in 2005. Add the severance of the link between what we pay for oil and what it costs on the world market and stupid hire-fire laws to understand why we’re heading into a wall. 

And a few days ago he uttered more rubbish including that without our Global Business (GB) sector — this is where he’s been working for many years — our currency would maybe have been trading at Rs50 to the USD. Scare tactics by Dr. TINAnen. But as the chart shows it took only five years from the inception of that sector for our rupee to lose a quarter of its value and a further five to shed almost another 25% of the average value it had in 1992 — an index of the dollar value of our rupee is used so that when the curve is going down it means our rupee is losing value with respect to the USD, makes it easier to visually estimate its percentage changes and we’ve added two horizontal lines to show two values of our rupee relevant for our discussion here in the format you’re used to seeing it. 

This chart will also help put the myth that Ringadoo was a bad Minister of Finance because he devalued the rupee by 30% and 20% in a better perspective. See our rupee lost 55% of its dollar value between 1992 and 2015 in an economic environment that was incomparably better. In fact we would probably have hit another dismal low had there not been a BoM Governor who knew what he was doing between 2007 and 2014 to resist energetically an incompetent Minister of Finance who when asked why the rupee had been depreciating rapidly replied that it had not depreciated for a long time. For sure current trade imbalances reflect to a great extent the generalised policy-making failure of the past dozen years. Our rupee will enjoy better days as soon as we get our act together. Just like India who had by 2015-6 reduced the number of poor people by 271m.

What The PM Should Do About The CWA

Put the names of his deputy, the chairman of the CWA, the other board members and that of the General Manager on little pieces of paper in a jar. Then every week take a couple out of the jar and immediately fire and/or replace them. Then listen carefully to the kind of sounds that comes out from the new board and the parent ministry in the following few days. If common sense is back – that is the unpatriotic and stupid ideas of raising the price of water and paying for its management by a private firm are cancelled – stop pulling out new names. If it is not take out a few more.

There is of course no reason why the whole process cannot be completed in a few hours. 

What an Average Performance Would Look Like

For Mauritius. 5-6% real GDP growth, a stable currency of Rs25/USD and progressive taxation. Energy costs sensitive to decreases and increases in international prices. Unemployment brought down to 6-7% once it is measured properly. Underemployment heading south too. Savings reverting to average pre-Shaitanomics levels of 25%. Productive investments encouraged. Speculative investments discouraged. Reducing national frustration with some basic policies. Like proclaiming beaches as public spaces. Not deproclaiming any beaches. Preserving the views of Mauritius. Waging total war against diabetes. Not doing anything blatantly stupid like signing TISA. That too behind our backs.

And what would an economic miracle look like? I guess lowering the retirement age to 55 or less. Definitely a surging currency: a good start would be an average 2% annual appreciation against the USD from the base above. Along with higher growth rates. Plus an infinite number of thoughtful little things.

Miracle not happening for sure. In fact an average performance looks increasingly out of reach. There's too much ambient stupidity. But that can be reduced. Like by releasing the water sector reform report of the World Bank. For a start.

Oxfam Warns Unjust Society Not Sustainable

The recently published report has a number of interesting stats including:

1. 1% of the world's richest are wealthier than the remaining 99%
2. 8 men are as rich as the planet's 50% poorest
3. income growth for the bottom 50% has been zero over the last three decades while the top 1% have enjoyed a corresponding increase of 300%
4. it takes 10 years for the poorest person in Vietnam to earn what the richest person there makes in a day

The report also highlights how politics may be highjacked so that rules are written in favour of the 1%. I guess a bit like the Sithanen flat tax which has caused 22,000 Mauritians to be thrown into poverty over the first five years of Shaitanomics while incomes for the bottom 10% have risen five times slower than the corresponding income for the top 10%. There's also a trillion-rupee GDP shortfall and the very dumb policy of 'competitive depreciation' which has quickly dumped us into a recession -- in USD terms -- a mere three months after the December 2014 polls.

Pravind Recaps Shaitanomics

Eski Dev Virahsawmy Ti Pe Dodo?

Dernye 5 banane? Parski ala seki linn dir dan en interviu le 19 fevryer: "il n'y a que deux personnes qui ont tente de toucher a cela (l'etat-providence). Paul Berenger et Pravind Jugnauth. Notamment, quand ils ont enleve la pension universelle aux vieux. Et quand les elections sont arrivees en 2005, je sais que tout les vieux ont eu leur moments de vengeance."

Nu kamwad ki en vakans prolonze dans Tunis la ki ti fer alors, hein???

Shaitanomics Failed To Deliver Robust Growth

As shown in the above graphic, growth rates between July 2005 and April 2010 were on average very similar to those of the best-managed-country-in-the-world vintage: 4.33% vs. 4.41%. And that's going to make it way easier to show how Mauritius wasted another 5 years.

STC Hedging Mess is Rs1.7 Billion Bigger

So we were told a few weeks ago. That's 57% more than the huge Rs3 billion figure supplied in Parliament two years ago. And quite fishy too because the STC doesn't have any price risk to manage: it just passes it on to us through the APM. Besides, two years that's an awful long time for so many eyes to be fooled.

My hunch is that the STC never had any billion-rupee hedging losses but that we were forced to pay abusive gas prices to make up for the fiscal shortfall created by the Sithanen-Mansoor's flat tax experiment given that the proverbial robust growth rates never arrived. 

This aspect of Shaitanomics has already played a part in preventing us and our economy from participating in the global rebound underway by making a dent in our overall competitiveness. And Pravind Jugnauth's intention of increasing excise duties on petroleum by 10% will make sure it will have another one to play in keeping us in our economic slumber. He should instead increase the special levy on banks or nudge corporate taxes upwards.

All of this doesn't look good for Mo Ibrahim's poster child for governance, does it?

Budget 2011: Reality Check!

The Bumper Crop That Wasn't

You already know what Shaitanomics did to our savings rate. Here's something else to confirm that you've been taken for a bean-counting ride for too long.

On December 13th 2005 given that the economy was looking good in Brazil the Lula government announced that it would be paying back its USD15.5 billion IMF loan in advance. Argentina followed suit a couple of days later with a similar announcement. That's also what Lutchmeenaraidoo did in the 80s after he bewitched cyclones into avoiding Dodoland.

Compare this to Mauritius contracting billions of rupees of Bretton-Woods debt during the so-called bumper crop. That too after receiving tens of billions of FDI.

Mansoor Circular Misleading Nation

In it the Financial Secretary (FS) is saying that he was expecting our economy to ride on the coattails of a rebounding world economy. That of course made sense to him and to his university buddy as they had been attributing some of the worst growth rates in decades our country has clipped to unfavourable international factors only. Now that the world economy is growing faster than Mauritius Mr. Mansoor has had to come up with a new set of external culprits to justify a fresh round of unnecessary budgetary cuts. So as not to look too silly.

But the above equation reminds us that the FS is not telling the whole story. Indeed the amount of money our government collects depends not only on the size of the economy (GDP) -- and therefore indirectly on its growth dynamics -- but also on the average tax rate. Flattening our progressive taxation system to 15% besides creating a lot of social injustice crucially depended on the arrival of higher growth rates if we didn't want to end up with the worst of both worlds: more debt and getting nothing much accomplished.

We never got the required robust growth rates. We know we couldn't. We only contracted more debt and our problems in 2010 are worse than what they were 5 years earlier.

Les Politiques Toxiques De Sithanen Perdurent Avec Mansoor

Mansoor's No. 5 Circular of 2010

Ce Qu'il Faut Savoir

About the empowerment fund is that it has been a resounding flop and is a component of Shaitanomics. You can think of it as a sister to the aborted Mansoor plan. All of this of course has ensured that five years have gone by and we're pretty much stuck with the same old problems.

Not exactly what you would call progress.

Manou Back From the Dead As Rupee Sent To Hell

That's right. As of May 25 our rupee, as the table shows, had three of its 10 worst days in a decade against the greenback between May 17 and 19. That was enough to make May 19, 20 and 18 the last days of the three worst 3-day periods of the MUR/USD exchange rate since the world survived the Y2K bug. And you don't have to look elsewhere for the worst week in 10 years either: it's the five trading days ending May 20 when the USD appreciated by 5.10%.

Ti tann dir pa pu donn bibron dan godi...