Prayag Statements That Don't Survive A Fact-Check

 1. A budget is a country's moment of truth where illusions meet numbers (2026). Nope. The budget is a series of announcements some of which may not find their way into the Finance Act and fewer still implemented. There can also be a fair amount of creative accounting as we have seen in several of the budgets of the past 20 years. 

2. This year's budget more than ever will be a showdown between the reality of numbers and past practices (2026). The economic model of the recent decade of MSM rule is the same model implemented between 2006 and 2014 when Navin was at the helm.

3. This year's budget will say clearly what Mauritius can still afford, what it cannot finance anymore and what must be corrected before it's too late (2026). No guarantee about this as in last year's budget the BRP was deemed unsustainable but the government was planning 14 billion rupees into the construction of new roads when we already have way too many. It also didn't highlight the fact that the 15% flat tax and other unsustainable tax structures never delivered the 8% growth promise. And government didn't update the population on the renewal of the abusive IPP contracts.

4. For too long government has overspent with little regard to economic prudence (2026). The main problem of the last 20 years is the implementation of a low and for the most part flat tax structure which has basically ruined Mauritius. The economy is about 2.5X smaller than what the low tax structure was supposed to generate. It was not either exactly prudent to kill our savings culture so as to finance an unsustainable tax structure.

5. The cost of overspending has never been presented (2026). Since 2006 we've constantly updated the population on how they were being taking for a ride and how the unsustainable tax structure was ruining Mauritius. All of this was backed by numbers. For instance between 2006 and 2024 there has been a GDP shortfall of more than 6 trillion rupees.

6. The impact of overspending by government can be seen in the debt/GDP ratio, deficits and depreciation of the rupee (2026). For one the GDP is 2.5X smaller as expected so we need to take all ratios that use it with a big grain of salt. Budget deficits are also due to a drastically smaller economy. Trade deficits are the results of several terribly bad policy decisions. One such decision are the abusive IPP contracts that have pulled Mauritius down for more than 20 years.

7. We need to distinguish between blind austerity and budgetary responsabilty (2026). At the beginning of his toxic reforms Sithanen said that we need to make two years of sacrifice and then we'll be ok. Killing our savings culture is not what you would call a sacrifice. It's rather sheer economic suicide unless you're aware of an economy that thrives after its savings culture has been assassinated. As a matter of fact last year's budget was precisely that: blind austerity. You steal the pension of our old folks but at the same time you announce that you'll spend 14 billion rupees in the new roads. And you keep mum about the renewal of three abusive contracts but during 2025 you disconnect 21,000 subscribers from the CEB grid.

8. It's not about to abandon the most vulnerable or to destroy the welfare state (2026). This is precisely what has been going on since 2006. For a start have a look at how national income was distributed across the population for the five years which ended in 2012. And it looks as if you haven't heard what Jyoti Jeetun has been saying for a while. Namely that our public health system is a very heavy burden and that solutions will need to be found.

9. A state that spends without counting will end up not being able to help the most vulnerable (2026). The problem with the Mauritian state is that it embarked on a ruinous path since 2006 and this has caused some astronomical underspending including on our welfare state.

10. The next budget is going to be difficult but governing is not about buying social peace with public money (2026). Social peace is a top priority and all governments buy it with public money because having people rioting in the streets is not conducive to economic growth. Ask countries in the Middle East after the Arab Spring. Surely public money should not be spent paying a 35% return to IPPs that don't take any risks.

Padayachy is Two Budgets Late

He should have presented one early in January to put back corporate and personal tax rates on a sustainable and progressive path – raise maximum personal rates to 40% or more and the corresponding numbers for corporates not below 30% – because fourteen years of trickle-down economics were about to send our economy crashing into a wall. As chart 1 shows GDP for 2020 was expected to reach Rs530 billion before Covid-19 appeared on the scene instead of the Rs918 billion needed to keep the regressive tax code. That’s a shortfall of Rs388 billion. 2021 was supposed to be the year our GDP crosses the Rs1 trillion mark. That was not going to happen and our economic output would have still fell short of that milestone by a lot even in 2024. In fact the gaps between the two variables would have kept on increasing with GDP in 2024 less than half where the Sithanen flat tax had promised to bring it.

Why Tax Policy Should Be Detailed in Affidavits

Charity is a cold grey loveless thing. 

If a rich man wants to help the poor, 

he should pay his taxes gladly, 

not dole out money at a whim.

Clement Atlee, Former British Prime Minister

Which affidavits? The ones candidates and political parties in the forthcoming general election will swear before we shortlist them as worthy of our votes. We’ve seen how irresponsible income and corporate tax cuts implemented since 2006 have extensively damaged the economy and the social fabric under three different PMs. While Navin Ramgoolam’s position on taxes during the past five years has oscillated between lowering them further to 13% for women and not raising them should he return to power. This is kind of worrying because it is the most urgent and important thing to do to avoid a significant degradation of an atmosphere that’s already pretty bad. So until we have recall elections and statute referendums we need affidavits and debates on their contents. Because politicians put something in their manifestos and then do the exact opposite.

Why You Forgot 2018 is The Year of The 'Second Economic Miracle'

... je pense que vers 2008 nous pouvons réaliser un taux de croissance de 7/8%.

Rama Sithanen, 2005

54. In this context, some people continue to defend trickle-down theories which assume that economic growth, encouraged by a free market, will inevitably succeed in bringing about greater justice and inclusiveness in the world. This opinion, which has never been confirmed by the facts, expresses a crude and naïve trust in the goodness of those wielding economic power and in the sacralized workings of the prevailing economic system. Meanwhile, the excluded are still waiting. 

Pope Francis, Apostolic Exhortation 2013 

No Miracle in Sight

Half of the fourth year of the Lepep government is almost gone and still no trace of the exceptional economic performance SAJ had promised for 2018. Only growth rates of less than 4% so far and the next two years are not likely to be any different. These are the lowest in decades. 

Plenty to Learn From US Election Process

Americans know pretty much what to expect from the person they will elect as President of the world's second largest economy today. And that's thanks in no small measure to the candidates thoroughly discussing the main planks of their plans and to several independent groups of people scrutinising them. If it's Trump they are aware that the extreme version of trickle-down economics he's proposing – a flat tax of 15% – would add 5 trillion dollars to the US national debt, make 3.5 million people lose their jobs and potentially throw the economy into a recession. If it's Clinton the economy should keep on growing from the middle out and that too without a Great Wall that Mexico would be made to pay for. The fiscal policies of these candidates are also consistent with the DNA of their parties: Democrats don't believe and rightly so that tax cuts for the wealthy work while the Republicans do.

Will the Budget Be a Non-event?

"On ne parachute pas au ministère des finances quelqu'un qui ne sait pas calculer la dette publique et qui ne connaît pas l'impact de la fiscalité sur la croissance...."

Rama Sithanen, 2009

Like last year's and most of the budgets since 2006? Well, it doesn't have to. It will essentially depend on a single decision. But first let us understand how we got into a deep mess for ten whole years.

Old Policy Crap in New Bottle

The last part of the quote above – emphasis mine – summarises pretty much the main economic story from Mauritius over the last decade. While tax rates definitely impact growth rates – and both of them drive government revenue – the relationship is far from being linear. And it depends to a great extent on the relative ability of our public and private sectors to create wealth or make things happen. In the 1980s for example, as Paul Krugman reminds us, American top tax rates were cut from 36.5% to 26.7% over nine years but they never got the growth rates that would have financed those cuts. What they did get though is a Federal debt ballooning all the way from less than a trillion dollars to four by 1992. And two decades later US politicians were trying to clinch a deal hours before Uncle Sam was scheduled to go into default. The Economist summed up the situation as essentially the product of two tax-cuts, two wars and one stimulus package.