Jean-Claude de l?Estrac is certainly right when he reaches the conclusion (l?express 30 May) that ?le pays dérive parce qu?il n?a pas de capitaine, comme le leader annoncé n?est pas au rendez vous, la nation s?est laissé gagner par ses démons guetteurs, de nombreux citoyens n?attendent plus rien d?un régime qui a failli lamentablement à sa mission annoncée de redressement moral du pays? and ?nous suffoquons dans la pestilence de révélations qui dessinent un pays glauque.?

Pravind has a daunting task. The country is in a state of decay. No amount of propaganda can hide the cold truth. The economy has darkened, society is in dire straits, massive frauds remain unanswered, corruption is rampant, drug has reached unparalleled proportion, cronyism is the order of the day, confidence in institutions is at a very poor low ebb.

The Prime Minister has failed to address the challenges confronting the nation even if he is assuming the responsibilities of almost everybody. His ministers speak openly of being humiliated and treated worst than dung. Of late, he has developed an eerie knack to announce when, the Commissioner of Police will arrest people, preferably in front of a profiled audience and when Judges will release others on bail. He informed a Minister, under investigation for alleged briberies, what would be the decision of the DPP. While shouting over rooftop that there is no political intervention and no cover up. Credited with a very good memory, he suddenly decides to enter into an amnesia mode with respect to a drug traffickers? list submitted to him in 1996. This is, sadly, the ?doom and gloom? socio-political backcloth to the 2004 ? 05 Budget.

On the economic front, Government has not delivered on the major objectives set out in its economic agenda. True, inflation has come down from 4.4% in 2000 to 3.9% today. However our major trading partners are posting inflation of around 1 to 2% and in some cases there is deflation.

The difference between promises and delivery is gaping.

?Mr Speaker , Sir, our priority of priorities is to raise the level of employment, both to absorb new job seekers and to gradually eliminate the backlog of unemployed.? (Budget 2001-02).

While around 34,000 jobs have been created since 2000, there are well over 55,000 people who have either lost their employment or joined the labour force, thus leading to a sharp rise in unemployment. In the EPZ alone almost 10,000 workers became redundant in 2003 and the worst is certainly not behind us as evidenced by the laying off of 5,000 employees by Novel. Government is so embarrassed by this joblessness surge that Bérenger disagrees with the official statistics of the Central Statistical Office (CSO). Instructions have been given to change the definition of unemployment so as to paint a less alarming predicament. As a result of this skulduggery, redundant sugar workers have been arbitrarily removed from the labour force, young people artificially not accounted for while many women definitionally consigned to household chores.

?Mr Speaker, Sir, to ensure that these massive investments are sustainable, Government will, over the same period, restore soundness in public finances by bringing down the budget deficit to around 3% of Gross Domestic Product (GDP) by the end of its mandate.? (Budget 2001-02).

Inspite of a massive 50% rise in Value Added Tax (VAT) and some of the proceeds from the partial privatisation of Mauritius Telecoms, Bérenger openly admits that Government will not attain the target deficit of 3%. It has systematically overshot its target every year and is likely to end its mandate with a deficit of at least 5% of GDP.

?As a percentage of GDP, public debt rose from 42% in June 1995 to 49% in June 2000. If left unchecked the country runs the risk of being totally drowned in debt.? (Budget 2002-03).

According to official Bank of Mauritius figures, public debt has soared to a staggering Rs 95.5 billions in June 2003, representing 63.5% of GDP.

Knowing that it will fail to resolve the debt problem, Government has changed the definition of public debt. Similar to what it has done for unemployment. Until last year, public debt was classified as per the normal definition. However a new concept of ?surplus fund?, which did not even exist in 2002 ? 2003 Budget has emerged. The objective is to conceal the blunt truth about public indebtedness. Government has also decided, as from this year, to make the distinction between ?the issue of Treasury Bills solely for meeting Government?s cash flow requirements and the issue of Bank of Mauritius (Bom) Bills for monetary purpose? (Budget 2003 ? 04). Previously, the two were financed by Treasury Bills and accounted for as public debt. Now , the Central Bank will pay for interests on BOM bills and will be liable for such obligations. This has the effect of artificially lowering public debt while raising BOM?s liabilities. And to further confuse people, Government has recently legislated to convert short term debt instruments into medium term ones, with its effect on debt repayment. It is rumoured that based on this new definition and the colourable device, there will be an announcement that public debt as a share of GDP has fallen compared to the disastrous performance of Bérenger since 2000. Of course it will not state by how much the Central Bank has increased debt through the new BOM bills. Nor will adjustment be made for prior year figures to make meaningful comparisons . We shall see!

?One of the priorities of the budget is to create a more friendly business environment to stimulate private investment? and ?the Board of Investment is further considering proposals totalling Rs 20 billions.? (Budget 2001 ? 02 and Budget 2003 ? 04).

Yet investment continues its declining trend. The CSO is forecasting another fall in investment to 22% of GDP in 2004, even if the 22.7% of 2003 was very low in comparison to the 30% necessary to sustain robust growth and cure unemployment . Worst the share of private sector investment in capital formation has shrunk to a miserable 62% as opposed to the required 80%. The PPP remains a joke. It was intended to finance the Cybertower. The private sector has not invested a single cent in its construction.

Economic growth remains lacklustre. The Export Processing Zone (EPZ) will experience its third recession in a row. Output has contracted by over 12% in three years, export earnings have fallen while it continues to shed labour at a ?vitesse horrifiante? as stated by Cuttaree. The sugar sector remains exposed to international challenges inspite of the twin boons of higher harvest and a strong Euro this year. Tourism arrivals for the first quarter of 2004 indicates a very low growth of 1.5% compared to an annual forecast of 5.4 %. The figures for April were bad, registering a decline in numbers. Yet by some magical incantation, Government states that gross tourism receipts has shot up by 40.2%. This is simply untrue as it is impossible for a 1. 5% growth in numbers to cause a 40.2% rise in receipts when tourism nights have remained constant and the effect of the currencies mild. The likes of Beachcomber, Sun Resorts and Naide which are supposed to be the main beneficiaries of this dramatic increase in tourism spendings are stunned as their bank accounts do not show such enormous gain.

There is always a gap between words and actions, between promises and deliveries, between spindoctoring and cold truth.

However it is abundantly clear that on many issues, Bérenger has simply made announcements to capture the minds and hearts of the population only during the course of his live speech. If all the low cost houses promised in the last three budgets were delivered, there would have been no housing shortage. It is clear that the number of low cost houses constructed is significantly below what is contained in the Budget speech. Precisely for this reason, Pravind is expected to announce yet another scheme for the vulnerable groups. It is plain that whatever concession he makes in terms of outright grant and concessionary facilities will be more than offset by the massive rise in steel prices recently approved by Government. ?Un oeuf pour un boeuf?. Similarly for fighting exclusion. Government MPs clapped with ecstasy when the Minister announces the budgetary provisions for poverty alleviation, micro projects, self help schemes and small enterprises. However few realise that the actual amount spent is very low compared to ?l?effet d?annonce? on Budget day. People are sick and tired of being supplied the same menu with respect to social housing and poverty alleviation every year only to realise that implementation is abysmally poor. Unsurprisingly poverty remains a major scar in our society.

Nando Bodha has signalled that it will be Pravind?s budget and that of the MSM. Is there any significance in this statement? While Pravind and Paul are not chalk and cheese, there are fundamental differences between them in style, approach, personality and empathy. This came out clearly in Pravind?s handling of the Tripartite meetings. His attitude stood in stark contrast to the arrogance and the insensitivity of his predecessor who did not even think it was worth his while to meet union representatives.

While his attitude may gain him some sympathy, Pravind will be judged primarily on the content of his budget. Even if the economic fundamentals are poor, he does have some budgetary elbow room and can use it to steer a new course from the one that has failed the country. The 50% increase in VAT was essentially justified on the twin basis of investment in education and in cybertower and for reducing the budget deficit. The 50% rise in VAT will generate a massive Rs 4 billion additional revenue next year. The considerable investment in education and in ICT is behind us. The world economy will grow faster than last year. Likewise for Mauritius with its induced effect on fiscal revenue. Interest rates on the US$, Euro and Rupee remain low with its positive impact on debt servicing. The accounting trickery of transferring some public debt to the Central Bank will certainly help. He can review some of the priorities that were wrongly set by his predecessor. The report of the Director of Audit should give him some ideas on how to reduce waste and to make savings. He can introduce innovating schemes to fund public infrastructure, thus alleviating pressure on the Capital Budget.

There is absolutely no need to raise indirect taxes, especially VAT as the population is still reeling with the 50% rise of 2002. In 2002 ? 03 Budget, Bérenger categorically stated:

?Let me confirm that there will be no further increase in VAT rate in the course of our mandate. On the contrary, we should be in a position to relieve fiscal pressure as from financial year 2004 ? 05.?

Pravind will present the 2004 ? 05 Budget on Friday.

Will Pravind show a ?very good personal chemistry? with Bérenger and deliver on this promise?

Can he raise to the challenge, chart out a new course that will help stop the rot and reverse the descent to Hell? Can he restore confidence that has been sapped? The jury is still out until Friday on whether there will be a difference of substance between Pravind and Bérenger.

With imagination and insight he can also be remembered for some daring policy in two closely related areas. The first is a big bang support to Small and Medium Enterprises to create the conducive environment for the emergence of a new class of entrepreneurs that will fight exclusion and foster inclusion in business while the second is a matrix of bold measures to really democratise the economy. Bérenger was simply cynical with his empty promises and slogans of: ?It must be said loud and clear that it is not in the interest of the Nation to leave economic power concentrated in few hands?, (2002-03 Budget);?A national policy will be formulated to encourage employee participation in the share capital and management of their enterprises?; ?We want a society in which there is a more equitable distribution of wealth and wider ownership of land and other assets.? (2001-02 Budget)

Unsurprisingly, nothing has happened and he has reneged on his promise ?we cannot allow the gap between the haves and the have nots to widen further?.

The chasm has grown. Pravind seems to have demarcated himself from Bérenger on this key issue. Whether it is out of conviction, electoral necessity or pork barreling is immaterial as long as he delivers. Not with panegyric proses but through concrete and tangible policy measures.

<B>Rama Sithanen</B> <I>Former Minister of Finance.</I>

<I>Knowing that it will fail to resolve the debt problem, Government has changed the definition of public debt. Similar to what it has done for unemployment. Until last year, public debt was classified as per the normal definition. However a new concept of ?surplus fund?, which did not even exist in 2002 ? 2003 Budget has emerged. The objective is to conceal the blunt truth about public indebtedness.</I>