The minister of Finance, Rama Sithanen, can be given credit for at least one move: he had the honesty to reveal to the population that the economy is facing difficult times. Although this is no news – Mauritians had for long realised that the economy was far from the expected boom and this could be why they voted for change – no one had come to the forefront to state the facts as openly as he did last Tuesday in Parliament.

This is probably because the situation is becoming so tough that there is no time for secrets; time should be used for creative change to achieve sustainable growth. Even though a number of observers have been disappointed by the “lack of imagination and new ideas”, the private sector has expressed some satisfaction at the measures announced.

Considered as one of the most influential men in the government, Rama Sithanen was expected to give a breath of fresh air to the economy, to boost investment and make each Mauritian’s life better.

In that perspective, the minister introduced its plan to “set the stage for robust growth.” It should be noted that he did not have sufficient leeway to apply the bitter medicine needed for an ailing economy. Electoral promises had to be kept and other ministers are fighting their own battles on the social front.

By starting his speech with facts revealing the difficult situation of the State coffers, Rama Sithanen implied that he is trapped in a difficult situation and doesn’t have the necessary scope to boost investment and economy in general. “An insider’s view of the economy reveals tougher challenges than we had expected. All major macroeconomic indicators have significantly weakened.” And this is why the measures announced have not met public expectations. There is no innovative concept – as everybody had hoped.

Two pillars of our economy are in danger but the minister is still hopeful. For the textile industry, he has guaranteed that “there is still market potential to be successfully exploited, provided we focus our support on the competitive advantages that are still there.” He announced that Enterprise Mauritius would come to the rescue of this sector by identifying the weaknesses and building enterprise capability. In this context, the government will give similar tax rebates to export processing zones and non EPZ industries.

The minister also assured that “government is putting all necessary efforts to minimise the impact of the impending cut in sugar prices on that industry and on our economy.” The accelerated sugar reform plan should soon be announced.

<B>Banish red tape</B>

As for tourism, the minister showed less openness than was expected. Most people agree that tourism is the only way of emerging from the crisis. This sector could help boost investment, employment… and economy as a whole.

For that matter, air access is a major asset. Although Rama Sithanen had shown a strong will to largely open the sky, he now seems more reluctant. Of course, he said that the air access policy would be reviewed to allow more airlines to serve Mauritius – but only gradually. Corsair will probably open the way for others (see inset).

Red tape is one of the main impediments in investment. Rama Sithanen gave assurance that this would be soon remedied. The principle of “silent agreement” will be implemented. “Businesses will have to receive an answer within a predetermined deadline after filing their applications. Otherwise they could presume that their application has been approved.”

Small and medium enterprises (SME) “stand at the very core of (the government’s) policy to broaden the circle of business opportunities”. To that end, the government will lower the cost of finance to micro-enterprises and SMEs.

Both the review of the air access policy and of facilities for investment have rejoiced the private sector. Opening air access will have a quick impact on hotel occupancy rates, according to the director of the Joint Economic Council (JEC), Raj Makoond. The private sector is globally satisfied with the measures announced, as it is convinced that they will boost the economy. If all measures give the expected results, then unemployment – considered as the government’s “dominant social and economic problem” – should also decrease.

<B>Corsair… on the finishing line!</B>

France will be the first country, which will benefit from the review of air access policy. The Mauritian authorities have already accepted the arrival of a second carrier after Air France. Among the three companies in contention – Star Airlines, Air Austral and Corsair – the latter seems to benefit from the preference of both countries. The airline has asked for two weekly flights but it could well obtain only one. The operations could start in November, which is the start of the peak season. The Paris-Mauritius flight should stop in Nice and-St Denis before landing in Plaisance. The French government will however have to ratify the Mauritian choice.