Tuesday, September 13, 2005

Setting the Stage for Robust Growth: A Note

Nature has established patterns… but only for the most part.

Leibniz, 1703

Welcome to 1st edition of The Jag!, an occasional letter written to and for the beautiful people of Mauritius. I would be glad to have your comments and thoughts via e-mail at density@intnet.mu. Happy Reading!

Sanjay Jagatsingh

Setting the Stage For Robust Growth: Statement by the DPM and Minister of Finance and Economic Development, Hon. Rama Sithanen – A Note.

The much awaited statement was delivered on August 30th and is available at under ‘news’ (by the way, I think the heading should have been ‘new’ instead of ‘news’). I went through the 174 paragraphs of the 21-page document and I provide my comments below.

In a nutshell, Government has declared war on red tape and has decided to set up a Committee to make sure big projects don’t get bogged down. It is definitely good news that this committee is to be chaired by the PM given the very clear signals that Navin Ramgoolam has been sending that the new Government means business.

Government will also set up an Investment Climate Improvement Committee essentially aimed at making it easier to start and run a business. I believe that this along with the ‘principle of silent agreement’ whereby if after filing applications a business entity does not hear from the authorities within a time period it can safely assume that it has been approved is a positive development.

The change in air access policy is also in line with the Government’s contention that quick dividends can be secured in the Tourism industry.

However, I have to note that very little has been proposed for the Financial Services sector in the DPM’s statement. In fact, all of the three little paragraphs concern the offshore sector. Not a single word on developing the local capital markets. Nothing either on Pension reform.

To be sure, Pension reform does not simply boil down to means (or is it mean?) targeting like the previous government had done. And simply reversing this badly inspired policy will not save us from the time bomb we’re sitting on. Pension reform will take years and a good time to start is now. But the benefits will include deeper capital markets and higher GDP growth (up to 2%). For starters, I think the NPF should be re-engineered and provisions should be made to appoint a CEO while the current investment committee should reappear in a new manifestation – as a Board.

The statement should also have contained outcome measures and main drivers of performance. Hope has never been a strategy.

Finally, I would like to humbly recommend to the DPM not to believe everything that the World Bank and the IMF say, let alone seek assistance from one of them for branding Mauritius Inc. Mauritius is not exactly a poor country and I am sure we can afford a couple of great ads on CNN.

Go Mauritius! Go!

No.1 September 2005
© Sanjay Jagatsingh, 2005