Foreign specialists and Mauritian businessmen agree on two points. The Mauritian economy is facing tough times and the only way of solving the crisis is to diversify by creating an economy of services. Until this is done, tourism appears as the ?ray of light,? as expressed by the Mauritius Employers Federation (MEF) chairman, Gérard Garrioch. He was one of the speakers ? with Philippe Espitalier Noël, future chief executive officer of Rogers group, and Harold Mayer, the chief operations manager of Ciel Textile and entrepreneur of the year ? at the monthly business forum held by the Jeune Chambre Economique last week.

According to the business leaders present at the forum, the traditional sectors of the Mauritian economy have been facing difficult times for a few months. Sugar and textile will definitely not be able to sustain the economy in its current form for a long time. However, for Gérard Garrioch, this is not a reason to shelve them. The products should find a new ?identity?. ?Sugar cane will be there a long time after oil and coal.? In other words, sugar cane could still be used for other products such as electricity.

Likewise, textile should specialise in high-class products in the opinion of the International Monetary Fund (IMF). According to a study made by the international financial institution in April 2004, the situation of public finance in Mauritius is alarming and only urgent actions will help. The economy must be given a breath of fresh air to reconstruct itself. And the IMF recommends that financial services be used to increase the state treasury. Like the Mauritian businessmen, the IMF believes that tourism will be of great help meanwhile.

The Business Forum pointed out that Mauritius should also show more openness towards foreign investors. If the present government succeeds in attracting investors to Mauritius, this could help a lot, as the latter would bring capital into the country.

Foreign investors to help economy

But Mauritians should no longer be afraid of foreigners and expatriates. They should not see the latter as the ones that take their jobs but rather as those who have money and will help run the economy. Sectors such as the knowledge hub, Information and Communication and Technologies, the seafood hub and business outsourcing are expected to kindle the economy. For that, there is an urgent need for investors.

The IMF for its part is concerned that the country may be entering the vicious circle of debt. The budget has a ?hole? corresponding to 5.4% of the Gross Domestic Product (GDP). In such circumstances, the country is bound to take big loans to finance its projects that will inevitably increase the deficit.

It also warns that the financial situation of the Central Electricity Board (CEB) and the State Trading Corporation (STC) is getting worse. To take one example, which explains this difficult situation, oil prices are constantly rising on the world market and neither company can pass this increase on to consumers (see inset). As a result, the government is bound to look for other means to finance their deficits.

Other threats contribute to the atmosphere of anxiety for the future: the promises made by the government to give free transport to the elderly, handicapped and students as well as the exemption from income tax for those earning less than Rs 25,000. The government may have made forecasts before making such promises but, in such circumstances, one can wonder if it is not getting confused about the real priorities?

Oil prices bound to increase

Despite the fact that the price of a barrel of oil has kept in rising on the world market since last April, the price in Mauritius has remained the same. This is partly why the State Trading Corporation (STC) has so many financial problems. It has already reached a Rs 1.2 billion deficit. An automatic pricing mechanism has existed for a few months now. According to this system, the oil prices should be revised every three months to prevent the country from facing big deficits ? as it is the case now. However, the former government postponed the pricing exercise at its due time (July) for obvious reasons until October. And, for the same reasons, the present government doesn?t want to move the date forward. In the meantime, the price of a barrel of oil has reached 66 $ (against 41 in April) and the price in Mauritius has remained the same. This cannot last! The oil prices are expected to go up in October by 15%, the maximum possible rise.