If only it were that easy. A little trick of accountancy and poof… reality can be altered at a whim. All governments wish for that power but none really succeed. When a government demonstrates too great a felicity for numbers, sooner or later reality delivers a slap in return. Such is the case for our public debt numbers or economic growth projections. The MMM leader, Paul Bérenger, is right to call out the government on this. Creating little special purpose vehicles, off-the-books companies and guaranteeing the loans of other companies, just so that the true magnitude of the scale of public debt can be hidden away by an accounting trick can only succeed for so long. Before long, this will result in a huge crisis of confidence: foreign investors, local business, international agencies and the people themselves will recognise these figures for what they are: total bunk.
But at the same time, we have to admit that this appetite for cooking numbers is nothing new. And the government’s reach towards public debt and economic growth projections has only taken place because in other places they have been able to cook the books seemingly without consequence. Let’s take unemployment for example. For years now, this and previous governments, have boasted of delivering an unemployment rate hovering around seven per cent (six per cent is considered full employment). How did they accomplish this miracle? Simple. Rather than create jobs, they simply watered down the definition of what employment means. As it stands now, according to Statistics Mauritius, if you are paid for one (yes, only one) hour of work in a week, the government counts you as employed. Now everyone knows the unemployment figures are rubbish. That’s why job-creation is always such a hot-button political issue in a country that, on paper, is nearing full employment! Business does not care much because it knows the truth, the government likes it because it gives them a chance to boast, and the opposition does not make a fuss because they too rely on these numbers to boast when they are in government. And so the sideshow about unemployment numbers goes on.
Or take housing. The government boasts that 89 per cent of Mauritians are homeowners. A level of property ownership that surpasses most developed countries. In the US it’s 64.2 per cent. So how did tiny Mauritius outclass the mighty US? Simple. They simply changed the way that homeownership is defined. So, instead of asking in whose name the title deeds are, or whether you can use the property as collateral for taking out loans (the real markers of ownership), Statistics Mauritius simply asks: do you pay rent? If not, congratulations, the state officially lists you as a homeowner. In truth, however, there is a major housing shortage, most families live on slivers of land – ‘lakaz zeritye’ – constantly being parcelled, new storeys added and sub-divided amongst generations. All these sardines in tins – living cheek by jowl and constantly bickering – are ‘homeowners’. To see just how serious the problem is, a quick glance at the courts would suffice. They are groaning under backlogs of cases concerning fights between heirs to bits and pieces of land, or families disputing who can build where on tiny, cramped little patches here and there. In the meantime, a government-inflated property bubble makes decent housing increasingly out of reach for most.
But fiddling with these numbers was largely ignored because after all, it only concerned the poor and the middle class. But allow the government to get away with cooking the books in one place and inevitably it will try to do the same trick somewhere else. That’s just the nature of the beast. Hence, today we find such creative accounting when it comes to public debt.
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