<B>A flat budget</B>

The Hon. Dr Rama Sithanen, Minister of Finance and Deputy Prime Minister, delivered a flat Budget speech with an endless list of micro initiatives and projects (...). Nevertheless, targeted measures were proposed to address hard core poverty (...).

At PricewaterhouseCoopers, we have repeatedly pushed for the opening up of the country to foreign investors and expatriate personnel, simplification of procedures and improved efficiency in public administration. It is evident that the real efforts of the past 3 years are delivering results with the economy?s growth rate (5.5%) and private investment (21% of GDP) picking up. (...) Inflation is the real beast and if not controlled, its effects on the economy will be disastrous. (...) The approach on certain issues, such as investment in education, is nevertheless welcome as it avoids the pitfalls of direct social spending and addresses one on the fundamental causes of poverty. (...) The reduction of duties on some foodstuff will clearly help the poor by bringing down prices but will also put renewed pressure on local manufacturers as imported products will be more competitive. (...) Infrastructure was again at the forefront of the Minister?s thoughts (...). The Minister mentioned a toll ring road around Port-Louis and a toll ?Harbour Bridge?. (...) The Government is also introducing measures to encourage unsolicited PPP proposals (...) and is planning to allow Small Independent Power Producers to connect to the grid. This shall only come about if the CEB or the independent regulator offers a commercial price to operators. (...) We welcome the fundamental change of allowing developers to start taking deposits at the start of a morcellement. Unfortunately, Land Transfer Tax was increased from 5% to 10% and from 10% to 15% on sale of projects exceeding Rs 50m (...). We feel the Minister has erred from his objectives set in 2006. Faced with exceptional liquidity, he opted to give most of it away rather than grabbing this unique opportunity to further reduce the budget deficit and bring down inflation. Elections cannot be too far away!

<B>André BONIEUX</B> <I>Country Leader, PricewaterhouseCoopers</I>