65th Year -- No. 3592 Friday, July 10, 2020 www.mauritiustimes.com facebook.com/mauritius.times 18 Pages - ePaper MAURITIUS TIMES “Corruption is a cancer, a cancer that eats away at a citizen's faith in democracy, diminishes the instinct for innovation and creativity.” - Joe Biden, former vice president of the United States Interview: Rama Sithanen - Former Finance Minister “Economic contraction will be over 13% in 2020 and we will not return to a pre Covid-19 situation before 2023 or 2024” ‘ICAC has an opportunity to show that it can bark and bite, that it has the capability of unravelling the massive CEB-BWSC corruption case’ ‘Too many suspect cases revealed both locally and internationally have remained unresolved. This gives the impression that we are simply biding time’ + See Pages 8-9-10 Keeping Mauritius Covid-19 free Projet de loi des finances Le conservatisme néolibéral l'emporte sur la justice fiscale By Mrinal Roy + See Page 4 Wake up calls from the FATF & EU Le pays est prisonnier d'une structure fiscale désuète. Et sans revenu fiscal suffisant, l'Etat est obligé d'emprunter pour financer un train de vie artificiel By S. Callikan + See Page 5 Par Aditya Narayan + Voir Page 3 Mauritius Times Friday, July 10, 2020 www.mauritiustimes.com Edit Page facebook.com/mauritius.times 2 The Conversation Continuing Slide Downwards Coronavirus recovery – the new he Audit Report that is released every year comes with a measure of economic thinking we need predictability. This refers to the to the long list of irregularities that the TDirector of Audit signals in his examination of various expenses incurred he International Monetary Fund (IMF) is record-low interest rate levels, and large-scale by the Government for the proper running of its different services and infras- calling the coronavirus-induced economic asset purchases through quantitative easing pro- tructural projects undertaken in different sectors. It has been the same story Tcrisis “the Great Lockdown”. The phrase grammes. through successive governments down the years: delays in completion of pro- mimics the Great Depression of the 1920s and the But based on the experience of the past jects to substantial project cost overruns, irregularities in procurement proce- Great Recession that followed the 2007-08 global decade, it’s hard to say that economic crises are dures and award of contracts; favouritism of various kinds in various sectors financial crisis. But, while it is tempting to maintain truly abnormal. Heterodox economics, an approach and at different levels to political protégés, etc. linguistic consistency in naming the present crisis to economics that I belong to, says economic crises the Great Lockdown, this term is misleading. are an inherent feature of capitalism. The brief of the Director of Audit is to make observations and comments on The Great Lockdown suggests that the root The dominant paradigm survived the Great the management of public funds in the country each year. The objective is Recession. Some government spending was clearly to give wake-up calls to the government of the day and induce it to take cause of the current economic depression lies in the negative impact of the pandemic. But the extent allowed to stimulate the economy after the crisis. the remedial measures required so as to improve the efficient financial ma- But then, in 2010, this was replaced by a decade of nagement in the public sector – hoping that the shortcomings pointed out and of the economic malaise cannot be attributed solely to the coronavirus. austerity, which had a devastating impact on socie- that result in waste and inefficiency at the level of certain concerned depart- The record rates of unemployment and the dra- ty. In the UK, for example, years of underfunding ments will be promptly addressed. It is not only the scale of financial adjust- matic decline in economic growth are direct out- have left the NHS barely able to cope with mana- ment that catches attention for the sloppiness with which different ministries comes of policy choices promoted by the dominant ging the pandemic. have engaged with work allocations and questionable procurement exercises, economic paradigm the world has had since the Just like the Great Recession in 2007, the coro- which come at a high cost to the taxpayer. The aim is to minimize such occur- 1980s – one that says free markets are the best navirus pandemic has exposed the contradictions rences which smack of inefficiency and are not in accord with good gover- way to organise our economic lives. It promoted of our so-called advanced economies that lead to nance. interests of the financial sector, discouraged invest- crises. Private sector indebtedness, persistent Judging from what the opposition parties and the press have been drawing ment, and weakened the public sector’s capacity to income and wealth inequalities, dependence of the attention to these last few weeks in relation to the procurement of pharmaceu- deal with the pandemic. labour market on insecure forms of employment, the prevalence of oligopolies where a limited few tical and related products prior to and during the confinement period, it looks The coronavirus recovery ahead requires a control markets – coronavirus is not the root cause like the next Audit Report for the current financial year will again make for new way of economic thinking – one that puts the of our economic problems, merely its catalyst. depressing - and even shocking - reading. A document recently tabled by the wellbeing of society over individual success and But it’s still unclear whether the pandemic will Ministry of Health which gives a list of goods purchased under Budget fundamentally challenges what is valued and finan- provoke a new way of economic thinking. 2019/2020 in connection with Covid-19 reveals the supply of these various cially rewarded by the economy. Today’s economic policies have their roots in Coronavirus seemingly fits the mainstream narra- goods to the health authorities, via the State Trading Corporation, which has tive of crises being caused by an “external shock”, cost the Exchequer some Rs 1.5 billion during a three-month period, beginning the thinking of the 1980s, which blossomed in the 1990s. It is based on the idea that, in the short run, which is unrelated to the structure and functioning from March and up to June 2020. We thus learn of business houses unregis- of the economy itself. tered with the Registrar of Companies, hardware stores, as well as some com- the economy is characterised by market imperfec- tions. These imperfections may lead to crises if But the underlying causes which make this cri- panies in this pharmaceutical sector having supplied goods amounting to hun- external shocks – like a global pandemic – hit sis so severe – like inequality, insecure employ- dreds of millions of rupees which, in some instances, would have been facili- because income, spending, and production levels ment, market concentration – are direct outcomes tated through the instrument of Emergency Procurement. What is striking are in the economy unexpectedly change and many of the mainstream approach to economic thinking the names of protégés known for their closeness to the political heavyweights. workers become suddenly laid off. and policy. The sluggish recovery after the Great Given the scale of this rot in the system, the opposition has called for the But this paradigm believes that such imperfec- Recession in 2007, evident in persistent producti- institution for a commission of inquiry into these procurements, as it did in the tions are easily solved by temporary government vity problems, low growth rates, unresolved racial case of St Louis Gate. And, once again, it is very unlikely that the Government interventions. It assumes that people make mostly inequalities and increasing wealth disparities in will accede to that request, preferring to commit the inquiry, if any, to ICAC. “rational” decisions based on a mathematical many high-income countries, is a testament to the Much has been aired about ICAC and we can only reiterate with other model of the economy – so a limited amount of ineffectiveness of the dominant economic para- digm. observers what has come to be seen as the obvious, namely ICAC’s inability government spending and interest rate tinkering to unravel the big cases that have been confided to it. It has missed several can bring the market back to normal. In the long Unique opportunity opportunities to prove itself and turn around its poor image and regain some term, this is meant to result in a healthy equilibrium We face a unique opportunity to fundamentally credibility. One more case to its charge will only burden it further and most like- where all people who want to work are once again rethink the priorities of economic policy and the ly spread thin its resources so that it may be a foregone conclusion what the able to find a job. thinking that underpins them. Responses to the outcome is going to be. These ideas are the building blocks of main- pandemic show that governments have the means stream economics and have had a decisive influ- to invest in healthcare, education, and research. However, the larger issue here goes beyond ICAC. It is that the virus of ence over economic policy in capitalist countries And to support workers and small business. These favouritism and corruption that seems to have so infiltrated our polity that it since the 1980s. Keeping inflation in check has policies help many people achieve financial securi- appears as the new normal way of proceeding in running the affairs of the become the top priority of economic policy in recent ty, which increases private spending levels and country. We are already on blacklists and our global business sector is la- decades.