Bérenger Says He’s the Real Miracle Man

And not Lutchmeenaraidoo because he did all the work after the 60-0 in 1982. This is another funny statement from him because he was Minister of Finance for only nine months and if you read Cuttaree’s Behind The Purple Curtain you can’t fail to notice that about the only thing they were busy doing until March 1983 was fighting each other inside the alliance. This of course leaves even less time to do good work. Furthermore if a neophyte in 1982 can create an ‘economic miracle’ with one budget surely he will be able to do at least as well if he ever returned as Finance Minister later.

The trouble for Bérenger is that he did return as Finance Minister in 2000 and got the chance to present not one but three budgets. And what did Cuttaree have to say about the state of the economy after those budgets? Something very interesting: “Nous sommes en urgence économique. La situation est sans précédent.” It was a period in which almost twenty-three thousands jobs were lost in one industry alone in a few years. Mr. Bérenger of course described the situation differently dubbing Mauritius the best managed country in the world. What else to expect from a party with more than a little penchant for self-aggrandisement?

Knowledge about the economy is not something that the MMM seemed to have got better at since. Reza Uteem, their shadow Finance Minister, was heard a couple of years ago on a radio saying that the offshore sector needs a stimulus package. The MMM has also set saving the dead sugar industry as a top priority in its electoral manifesto. It doesn’t do well on other important national issues either. 

Fact-Checking A Few Sithanen Statements

He said recently that his flat tax had increased government revenue by 20% in the first year of its implementation, that it had attracted a lot of investments from abroad, produced growth rates of more than 5% and had created 10,000 jobs per year. 

1. Government revenue may increase if growth is better or if you increase the tax rate or tax more things. Growth had increased in 2006 because the economy rebounded after the big textile contraction. He should tell us by how much revenue increased in every year since his flat tax was implemented. Besides the main reason to slash top tax rates to 15% was to get 8% growth rates. As chart shows we never got those growth rates even in the decade following the end of the Great Recession – just check how many consecutive years we didn’t even get half of that. And this will cause a government revenue shortfall approaching Rs360bn at the end of the year. 

2. We surely got a lot of FDI (Rs189bn between 2006 and 2018) but this pales in comparison to the Rs570bn savings missing after he killed the savings culture. And the FDI has mostly been speculative ensuring that thousands will not be able to become home-owners. 

3. Finally what kind of jobs are we talking here? Definitely not good jobs. Otherwise growth rates would have been higher, savings would have rebounded and there would never had been the need for the controversial stimulus package.

Pourquoi Ne Pas Echanger Lutchmeenaraidoo contre Sithanen?

La Crise Financiere A Bon Dos

Souhaitons Que Le Stimulus Package N'entraine Aucun Abus

Moody's Downgrades 15 Big Banks

Because of the tail risk -- the likelihood of huge losses -- that their capital market operations exposes them to. They also got slammed for the opacity and complexity of these activities. Opacity? Hmm, this reminds me of how opaque the irrelevant stimulus package was at the beginning before rapidly becoming redundant.

Have a look at the interesting report which some claim is five years late.

Kozelidir Free Guide To Understanding The Infamous Stimulus Package

We did not need one in the first place as our banks were making record profits and did not have toxic assets on their balance sheets thanks to the relative primitiveness of their operations. Besides what was marketed as proof that the Sithanen/Mansoor reforms had been successful was merely a flash in the pan. The trouble we got into here was instead due to the work of a White Swan.

The ASP, for sure, could have been more transparent. But it didn't take long before it became redundant.

Claims of it saving as many as 4,700 jobs are easy to disprove while MPs now want hear from Mansoor.

And a lot of people want to hear from Cader.

MPs Want Answers From Financial Secretary

About the Rs340 million of public funds that were injected into Infinity BPO via Sithanen's infamous stimulus package. See, BPO is a growth industry so technically it should be the last quarters from which request for government aid should have come from.

Which would explain why MP Deerpalsing has asked, albeit belatedly, for the monitoring committee of the ASP to explain how they've been... monitoring these significant public monies that were apparently invested to save... jobs.

Pourquoi Ne Pas Apprecier La Roupie De 60%?

Alternative Views On the Stimulus Package

Just When We Needed The Audit Report The Most

L'Express reported a week back that the report is late because the Audit boss doesn't know if he has to issue two reports or one. Some dilemma, eh? Who cares about whether hot glue is still available or if they've got a big enough stapler in there??? Just get it out on the net. Please.

The audit report is not really about format but more about how much of our money government has wasted. And  this year it will be more than a little bit interesting to see what they'll have say about the extremely controversial stimulus package.

Poll Finds That Stimulus Package Did Not Save 4,700 Jobs

As the above shot shows, 81% of the 27 respondents don't agree that the stimulus package saved 4,700 jobs. It's also kind of absurd to have a stimulus package when we're told that the economy is creating 10,000 jobs per year, right?

The Kind of Year 2009 Should Have Been (End)

July: You now know that texting is as bad as drunk driving. And that the great little country ain't dead yet. You should also doubt and discuss and start writing in our sexy language.

August: We should have been quite concerned about the ability of the economic reform to produce results. And paid a bit more attention to search results.

September: Ramgoolam should have shown he's a little bit more serious about MID and we should have adopted an economic constitution. We should not have forgotten how rich we are and why his airness is above the rest. And you should never cross a Nepalese bridge without our free guide.

October: We should have allowed miracles to immediately enter our lives and started to Samba.

November: Ramgoolam should have appointed new board members at the central bank and cancelled the tax on savings.

December: Maybe you should have been less surprised about couples breaking-up. Ramgoolam should have ended MEXA's blackmail and understood that the stimulus package did not save 5,000 jobs. Teachers should not have been inspired by MEXA.

Read the start of the review.

The Kind of Year 2009 Should Have Been

January: Berenger should have allowed Lutchmeenaraidoo to head the MMM. Oil prices should have come down by 25% to give our economy a breather. And our banks should have collapsed because there was a stimulus package ready to save them.

February: Board of MK should have been replaced with prudent persons while MP Dayal should have yelled for fact-finding committees over the STC and MK hedging scandals. Mansoor should have resigned from two more places and Hu should have been asked to stick around for good. Ramgoolam should have allowed his star candidate to run for office.

March: You should have ordered Mallaby's excellent book to get a good grasp on the World Bank. And you now have no excuses about not speaking up.

April: Our island should have sunk with all the terrible weather. No link was established between sporting the ancestor of havaianas and poverty-reduction. The Mauritian people should not have been kicked like that.

May: Island's international standing should not have been damaged. Government should have known better why firms die and get some hostage-negotiation training. Budget should have attracted a 1000 times more interest. We should have been spared those dead bones and external factors should have gotten their act together.

June: Work on fixing our balance of payments problems should have begun. Government should have improved the job dynamics in our economy. The King of Pop should have stayed a little longer.

Read the rest of the review.

Why The Stimulus Package Didn't Save 4,700 Jobs

First of all Sithanen claims that the economy has created some 40,000 jobs since July 2005. That's roughly 8,000 jobs per year. If our economy is creating jobs this fast then we didn't need to save any because it would have created 4,700 jobs in 7 short months -- about 700 jobs every month.

Secondly, did these companies need to be saved? Does not paying your rent for several years although you operate in a booming industry related to the global financial meltdown?

Thirdly, didn't we hear a few greedy bosses wanting stimulus money but indecently saying at the same time that they didn't guarantee they could save any job. We've also heard worse than that.

So for all of this I am not buying into the argument that the stimulus package saved nearly 5,000 jobs. You shouldn't either.

Stimulus Package: The Timeline

Mauritius Rich Enough to Solve Traffic Problem

If we assume for just one second -- though I fully understand that this could be a leap of faith for most of you -- that the Rs25-30 billion rupees Sithanen says we need to fix the traffic problems are correct then we don't need to borrow one cent from abroad because we are rich enough to do it with our own cash.

In fact if government had started to put money to solve this important problem back in 2005 our traffic problems would certainly have been reduced to more reasonable levels. See, the audit report tells us that about Rs5 billion is wasted every year or Rs25 billion over a 5-year period. So that if we had managed to cut a quarter of that waste and add the Rs5 billion gift that Sithanen wasted on the dead sugar industry and the Rs3 billion that were mysteriously lost at the STC that would have provided us with about half the amount he's looking for. Government could then have budgeted an equal amount in its capital budget spread over 5 years. After all, Sithanen did brag about putting Rs14 billion in an opaque and useless stimulus package, right?

Of course as the traffic would have become more fluid we would have saved on petrol consumption and pollution while seriously improving living standards of almost everyone at the same time.

But almost absolutely nothing was done to make this problem any smaller in spite of what a fiery Ramgoolam promised exactly a week before the last time we voted him into power. Berenger is certainly not any better. He promised us that a metro was on its way for five whole years. Talk is cheap. We need new leaders.

How Can a Casino Lose Money?

I don't have an answer to that. What I do note though is some kind of give-your-public-institution-a-bad-name-and-hang-it disease that has been afflicting our country for too long. Take the CEB for example. It was declared absolutely dependent on private capital about a decade ago and found guilty of all kinds of sins one of which apparently seemed to have found its way back into the 12th report the NESC has just released.

A craving which eventually translated into higher electricity prices for us and a once-in-a-lifetime opportunity to seriously degrade the competitiveness of Mauritius Inc. That situation was so ridiculous that it even got a gullible Ramgoolam to do his chess-thumping routine nearly two years ago. What he termed a historic agreement then has still to make iota of difference for a super majority of voters.

Same issue at the CNT. How can it not be profitable? Well if you had a look at the types of buses that they've been putting on the roads for ages compared to the types of cars that they've been allowed to purchase you could be getting closer to a hint.

We know for a fact that the private sector doesn't have a monopoly over common sense or good management for that matter. We've seen proof of that again with the recent and controversial stimulus package: it seemed to be such a marvellous thing as long as it remained opaque. But the private sector can take some comfort in not having designed such an absurd scheme.

What's next? The privatisation of the anti-drug and smuggling unit?

Suddenly, the Stimulus Package Becomes Redundant

In Le Defi+ today Darga was saying that they have literally stopped getting requests for funds from Sithanen's controversial stimulus package. In fact no money has been dished out for a 72 full days. Unlike in the beginning when public funds were being distributed in a very opaque fashion.

Of course that's another major failure for Doctor Sithanen who seems to have administered the wrong medicine, again. And another reason to seriously doubt Ramgoolam's ability to solve real problems.

Did We Need One in the First Place?

An additional stimulus package that is. I don't think so when you realise that our two largest banks have cashed in record profits in 2008: Rs3.7 billion and Rs2.1 billion for MCB and SBM respectively. That's an increase of 53% and 41% over the preceding year and twice their 2005 levels. I've already addressed why our banking industry has been spared (read this). So there's no trouble here unlike what has been going on in the United States and in the UK.

What we need instead is a government that solves problems. And that's the most important yardstick to measure the performance of any country. For instance previous governments did defuse the demographic bomb, implement free education and create the middle class. We need these kind of governments and not governments that have substituted brilliant work with dumb MBC reports.