Realist, with a hint of creativity
The Minister of Finance started his speech with some impressive figures: an expected GDP growth of 4.1% for the year 2018-2019, a decrease in the unemployment rate to 6.9% in 2018 and a forecasted inflation of 3.5% for the year. Although these figures seem to demonstrate that the Mauritian economy is more resilient than expected, the Budget could have been bolder in ensuring the survival of traditional activities such as the agricultural economy and the manufacturing sector. Nevertheless, measures to foster the import substitution industry, revive export-led production and equip our youth with the right skills are innovative in their unconventional approach.
Catering to the needs of the many is no easy task and a National Budget is indeed a balancing act which can sometimes be perilous. Against all odds, Pravind Jugnauth has succeeded, in his third Budget, in consolidating the fragile social fabric with several measures that target the low to middle income earners whilst at the same time trying to envision economic prosperity based on the emergence of new fields. These new sectors should help the country realise its ambition to become a high-income economy by 2030.
One of the main areas of focus to achieve this is a new fiscal regime announced by the Finance Minister. Henceforth, individuals who earn Rs 305,000 to Rs 650,000 annually will benefit from a 10% income tax rate down from 15% previously. Such a provision will ensure that middle-income earners have more cash in hand to sustain their spending and increase their purchasing power.
The phasing out of the GBC 2 is another milestone in the quest to boost the country’s potential as a reputable international financial centre. This removes the cloud which has been hanging over the jurisdiction and restores confidence in our global business sector.
The foray into new growth avenues laid out in this 2018-2019 Budget is also noteworthy. Mauritius has for long relied almost solely on traditional sectors which, without the protective nets of yesteryears, are slowly dying a natural death. Sowing the seeds of the future on artificial intelligence, blockchain technologies and FinTech is indeed a bold move. If properly implemented, this can propel Mauritius further along its transformative journey.
As Pravind Jugnauth, the Minister of Finance, gears up for his last budget, it would have been surprising had he not delivered one with populist measures. Decreasing fuel and cooking gas prices, unchanged alcohol and cigarette prices and the status quo on the CWA are certainly all popular giveaways! Although it might not be obvious at first glance how revenue is being generated, this budget is delivered with a sense of realism, a hint of creativity and builds on past measures to sustain future growth.
The Government has laid down the foundations for Vision 2030 in the true spirit of “LAME DAN LAME”. It is up to all actors of the economy to rise up to the challenges and demonstrate their willingness to contribute to the country’s goal to reinvent its economic model.