● <B>The poverty situation</B>

Poverty is a worldwide phenomenon which is a challenge not only for policy makers but also for the field operators and civil society. It is inherent in most countries and affects both rich and poor nations across the globe, though at varying levels and with different root causes and intensity. The tables below show the share of the population below the income poverty line of $2 a day for middle income countries and also below the relative poverty line which applies to high income countries.

2. Mauritius is one of the few countries with the least poverty level measured either by a poverty line of $2 a day, which applies to middle income countries or by the half-median household income applicable to developed countries. There is no absolute poverty in the country and even relative poverty is very low by all standards. On the basis of $2 a day and as per data available from the Household Budget Survey (HBS) of 2001-02, the proportion of poor people is estimated at around 1%. This compares favourably with all other developing countries among which Mauritius tops the list and it is also far ahead its African neighbours as shown in Table 1.

3. The poverty level is low even when compared to that of many developed countries, as shown in Table 2. Mauritius is better off than, UK, Australia, Ireland and the United States, which all have a higher proportion of poor people below the half Median Household Income. Based on data from HBS 2001-02, the relative poverty level is estimated at only 8%.

   Thus, the Mauritian relative poverty situation is not an alarming one. But it needs to be appropriately addressed to improve the lot of those relatively few who are benefiting the least from the socio-economic progress made over the last two decades.

● <B> Poverty and Growth</B>

4. The lesson from the last 50 years, including that of Mauritius which recorded an average annual GDP growth rate of 4% between 1975 and 2005, is that economic growth is the most powerful way of pulling people out of poverty. GDP growth creates higher incomes, which help people save, invest and protect themselves. Higher family incomes imply that children can go to school rather than have to work. As the economy grows, government can raise the money required to finance and uplift public services. Poverty can thus be significantly reduced over time as shown in the table 3 and figure below.

5. In fact economic growth has enabled a number of countries like India, Uganda, Brazil, Vietnam and Tunisia to reduce their overall poverty levels and offer wider 5. 5. In fact, economic growth has enabled a number of countries like India, Uganda, Brazil, Vietnam and Tunisia to reduce their overall poverty levels and offer wider opportunities to the people. Over recent decades, China has experienced rapid growth of around 8% annually, resulting in a marked improvement in its Human Development Index, which has increased from a low of 0.560 in 1980 to 0.768 in 2004.

6. It is therefore crucial for all countries, including Mauritius to adopt policies and programmes which will lead to sustainable and higher economic growth to improve living standards, provide greater opportunities for everyone, assist those who really deserve it and thus reduce poverty. These are the primary objectives of the last two budgets. GDP growth had slowed to around 3% over the period 2002-2005, while the economy was growing at an average rate of 6% a decade ago. This resulted from the combined effects of recent trade shocks, high oil prices and especially the internal structural imbalances and rigidities which hamper investment and development.

7. Such a situation warrants drastic measures to set the stage for rapid and robust growth. The 2006-07 Budget marks the starting point of a clear and credible medium term reform programme that will help to build strong macro-economic, institutional and social underpinnings to drive the country to a new higher growth path required to bring significant improvement in living standards.

● <B> The Reform Agenda</B>

7. In view of addressing recent macro-economic imbalances, a series of measures have been adopted over the last of two years to set the stage for robust growth while providing adequate support to the vulnerable groups. The reform programme turns around four pillars, namely:

● Consolidate fiscal performance and improve public sector efficiency

● Enhance trade competitiveness

● Improve the investment climate to rank Mauritius among the most investment and business friendly locations in the world; and

● Democratize the economy through participation, social inclusion and sustainability.

8. In line with our history, which is all along marked by the spirit of solidarity towards the needy, the 2007-2008 Budget proposes a series of specific measures to lend support to the poor, such as:

● Training and re-skilling to empower the unemployed, the women and the youth

● Greater housing facilities to low income groups

● Special assistance to children, orphans, widows, and those who are handicapped, in distress and all hardship cases: and

● Micro-financing for self-help and community development projects.

9. The policy focus is on five major fronts, namely:

● Widening the circle of opportunities so that the recovery is shared by all

● Ensuring greater solidarity for those who cannot help themselves

● Facilitating business and promoting creativity

● Investing massively to maintain, rehabilitate and build up public infrastructure; and

● Maintaining fiscal discipline