On the whole, the economy retains relative health, despite the neo-liberal assault, as represented by World Trade Organisation (WTO) rules and the African Growth and Opportunity Act (AGOA). However, all the growth has tended to gravitate towards the pockets of a few. The middle classes have been able to afford luxury goods but not much more. Inequality in Mauritius remains deep in certain areas. Access to the economy resides in a few hands. It is baffling that inequality does not trouble us, since the “Mauritius miracle” (as the IMF refers to it) brought such enormous wealth to the country. The IMF, true to form, congratulates the country for refraining to tax the sugar barons as they made a pile of cash since independence. We must remember that this is the same IMF, which heralded Haiti as its “star pupil” in the Western hemisphere. The teacher’s pet then went on to become one of the poorest countries in the world.

In fact, Haiti is an example of disastrous IMF policies and US imperialism. The country’s economy is basically owned by ten to 15 families. After the bloody reign of the Duvalier regimes (Papa and Baby Doc), underpinned by the US government, a popular revolution brought Jean Bertrand Aristide to power in 1991. But, shortly afterwards, he was deposed by a military junta. However, the brutal regime was even too much for the Americans who brought back Aristide in 1994. But a little deal was done first. Aristide, who had instigated a variety of social programmes to help the poor (thus dubbed a “beardless Castro” by the US state department), had to sign up to the neo-liberal agenda in exchange for US aid money and his restoration to power.

The IMF then forced Haiti to cut tariffs on its rice imports from 35% to 3%. US rice flooded the Haitian market, destroying the livelihood of many people, sending them into abject poverty. While the country was self-sufficient in rice at the beginning of 1990, by the turn of the century, half of the population was relying on US imports. This worked well for the urban population, which benefited from the cheaper rice. But it spelt disaster for the rural population, where 80% now live below the poverty line, according to Oxfam, the development agency.

<B>The IMF concessions</B>

Haiti is an extreme but interesting example of a country’s total subordination to the neo-liberal agenda, which began around 1986 but took off in earnest in the nineties. The first Black republic’s recent history is a warning to Mauritius, if it continues to blindingly acquiesce to the Fund’s every request. Let us take another look at these gentlemen’s recommendations in 2001 after their Article IV consultations (the same ones, which Sithanen brought forward to coincide with his budgetary preparations) with the previous government. The IMF recommended a rise in VAT, which was duly announced in that year’s budget. Bérenger, then minister for Finance, accurately respected his foreign masters’ demands and the tax went up from 10% to 12%. The following year, during the Article IV consultations, the IMF asked for VAT at 15%. Bérenger again delivered. In both mee-tings, the Washington-based organisation demanded the phasing out of customs duties. Thus, last year, this was masqueraded as the ‘duty-free island’ bonanza.

However, there is more cause for concern in the 2001 document. The “Fund” was extremely pleased with the privatisation of Mauritius Telecom and urged the government to continue in the same vein in the area of power and water. It also called for an end to tripartite agreements, but the then-government deemed it too politically sensitive. It seems that Sithanen will deliver on this. This is an indication of how the coming budget will be shaped. It will be IMF-influenced, perhaps very heavily and the population has to brace itself for some shocks. After all, the minister has already massaged public opinion before delivering what will be framed as shock therapy for the economy.

But there is an alternative way to address inequality. The income tax burden falls heavily on the shoulders of the salaried employees, who pay 85% of the total, while the rich “pay little, owing to generous exemptions and deductions,” reckons the IMF. The obvious solution here is to shift the burden on to the rich, which will contribute to the exchequer and prevent the laying-off of social workers. It could also bring state investment in education. The irony is that we would not hear the opposition demanding such changes. If they had a dose of self-respect, they would also think twice before calling Sithanen a stooge of the capitalists. On the other hand, we should always look at Haiti as a stark warning to IMF-led neo-liberal reforms.

<B>Diren VALAYDEN</B> Outlook Correspondent in Dublin</I>