<B> The Form</B>

The 2004-2005 ?Budget Speech? is a very well articulated ?Speech?. But it marks as major difference from traditional Budget Speeches in that it is more like a cameratic Governmental Programme ranging between a series of diagnoses, of intentions, and of proposals and decisions.

<B>The Philosophy</B>

The avowed philosophy of the 2004-2005 Budget that ?our businesses and population must be fully equipped and fully confident as they face the challenges in front of them? is in itself commendable, especially in the context of the topmost stated priority ?to further democratize the economy?.

<B>The context in which the 2004-2005 Budget is set</B>

However, the 2004-2005 Budget is set in a context of visible and palpable Anxiety and of a steady erosion of the overall feel-good factor. It brings us back to basics and reminds us of the smallness and fragility of Mauritius, which is so dependent on, and exposed to external factors. The emphasis on such desiderata as ?discipline? and ?rigour? is a sure indication of the realisation that times have become very hard again, and a national effort is a must for survival until better days.

The 2004-2005 Budget is also set in a context wherein results expected from key sectors have so far, and in real economic and not mere statistical terms, been below forecasts and estimates. The tourism sector has entered a staccato stage. The sugar sector continues to be compressed. The textile sector is reeling. The financial services sector, despite growth, is being stretched to its limits. And the Cyber Island targets look most unlikely to be met in a fiercely competitive world wherein the competitive edge of Mauritius has yet to pass the test of scrutiny. Unemployment on a large scale looms around. People are anxious for their immediate, short term, and long term future, and are particularly worried about the future of their children. Austerity is here with us, and despite the measures, attractive per se, to alleviate the economic burdens of the poor and needy, to fight poverty itself and social exclusion, to soften the hardships of living of the vast majority of the lower middle income group, and not to create disincentives for the producers of goods, services, and wealth, the country has entered a period of economic downturn and uncertainty.

Notwithstanding the foregoing, the 2004-2005 Budget while reflecting the felt need to carry on with ongoing projects calculated to ensure that Mauritius is properly geared to face and meet the modern challenges of competitiveness and innovation, will in our opinion, fall short of pepping up private investments, of generating conditions favourable for the creation of wealth in the country, and of broadening and increasing the economic base.

<B>The Paradoxes of Democratisation of the Economy</B>

While the socialist approach adopted to democratise the economy is laudable, it paradoxically does not even reach near the declared objective of ensuring that ?every citizen has a right to a decent life?.

The poor, the needy, and the economically weak will certainly derive some solace in meeting their commitments with the overall social measures decided in their favour, but they will merely continue to exist without any real hopes for a better future. One example of the paradox of the democratization process is compulsory free education up to the age of sixteen. There is absolutely no doubt that this measure is a major step towards ensuring that youth are mandatorily exposed to appropriate secondary education for the good of the country. Paradoxically, there is also absolutely no doubt that such a measure will place unbearable financial burdens on the shoulders of parents whose children are being targeted.

Further, the democratisation measures announced at length in the speech, instead of broadening investment and beefing up investor confidence, raise many doubts for the present and the future. For example, the proposed tax assessment and collection measures, and the proposed mechanisms for the assessment and collection of taxes, represent a sudden reversal of a process engaged since the last two decades towards simplifying tax assessment and collection. Instead, these proposed measures will be counterproductive, and will in themselves, be a major disincentive to investment and re-investment.

<B>Perception</B>

Despite the statement that, in this Budget, the authorities are not taking from the rich to give to the poor, the lingering perception is that, in a nutshell, it is a Pre-Electoral Robin Hood Budget, though, as stated above, the poor, the needy, and the economically weak will find some solace.

<B> Conclusion</B>

In all honesty, it must be brought out that a lot of positive thinking, and a lot of good and sincere intentions have pervaded the mind and heart of the deputy prime minister and minister of Finance in the presentation of his first Budget Speech, in an imperfect world.

<I>Grant Thornton?s Study Group</I>