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Budget Analysis: ‘Crucial Transformation for meaningful economic recovery’

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By Shaheen Abdul CARRIM, Director RockFin

The 2022/2023 budget has been presented in very special circumstances. Rarely have we seen the economy so stretched.

The war in Ukraine brought in its stride a food and energy shortage while at the same time triggering unprecedented inflationary pressures This comes at a time when economies, particularly those of developing countries are  exhausted coping  with the Covid-19 pandemic. 

Quite justifiably, the Minister of Finance, Dr Renganaden Padayachy tried to demonstrate the adage ‘caring government’ through the social measures he highlighted.

An increase of the universal pension, allowances for low- and middle-income earners, social housing and a reduction of taxes will surely help in meeting these objectives.  

Clearly, the Industry that was most hit during the 18 months of lockdown was tourism. The industry is recovering.

Where there is still debate on whether the one million arrivals target will be reached, operators are optimistic that revenues will exceed pre-covid levels.

The manufacturing and construction sectors are doing well which all led the Minister of Finance to announce an ambitious growth rate of 8.5% for the budget period.

As the economy picks up, foreign currency starts to flow back in the country again, the rupee can be expected to stabilise potentially relieving inflationary pressures.

Mauritians will have to develop an entrepreneurial mindset to make full advantage of facilities that are already available”

With an 11% contribution to GDP, the financial sector remains a key pillar of the economy. The sector also supplies the country with thousands of high earning jobs.

Our International Financial Centre that showed resilience during the pandemic has now gathered more momentum with the jurisdiction exiting the FATF grey list and EU black list.

It was now high time the sector be given the means to maintain this status. For this the budget attempts to address the structural mismatch inherent to our labour force.

On one hand there is unemployment and on the other highly specialised sectors like finance are faced with shortage of qualified manpower.

The extensive training incentives in AMLCFT announced by the minister of finance should go a long way in bolstering the standards of compliance in Mauritius.

Moreover, a Financial Crime Commission will be set-up to ensure an effective coordination in the fight against financial crimes. 

Looking at the direction in which the economy is heading, compliance will continue to gain in prominence.

During the past years, hundreds of smaller sized start-ups thrived. Major efforts are also being made to boost SME. The spectrum of measures announced in the 2021/2022 budget, has been maintained this year.

With the redefinition of SME categories, 142,000 more companies will now be eligible for these schemes. 

While management and compliance standards of these companies can be determinant for the future of business, we do understand that not all firms have the means to put in place the required frameworks.

This is where specialist firms like Rockfin come in. Our contribution to the sector has evolved over time and we now work in symbiosis with companies to create professional management and compliance processes inhouse.

The next few days will tell if the 2022/2023 budget has lived up to expectations. In any case, it gives aprized place to the social agenda, while at the same time placing a formidable responsibility on the shoulders of the population.

Mauritians will have to develop an entrepreneurial mindset to make full advantage of facilities that are already available.

One such test will be our ability to address use the incentives the Minister of Finance announced on the outset for Mauritius to reduce its dependency on food imports through the promotion of local products. 

This is the now the crucial transformation the country requires for a meaningful economic recovery. 

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