• Objective of reducing public debt to 60% of GDP within 4 years
  • Measures will be taken to counter the inflationary tensions that will be generated by the Budget
  • Severe action against traders in the event of artificial price increases

Renganaden Padayachy reviewed the philosophy as well as the main measures of his fifth Budget during the now traditional “Budget Breakfast” which was held on Saturday June 8 in Ébène. The Minister of Finance also announced his short and long term objectives.

The vision of the Budget according to Renganaden Padayachy: “It is a Budget with a vision. Moreover, we titled it 'Tomorrow is ours'; 'Tomorrow is ours'. Of course, a Budget extends over a year, but we have seen further. We are improving our economic and social environment, while taking into account certain priorities. We work to help those who need us most. It is a Budget that looks to the future with measures in the short term, but also in the long term. »

Inflationary tensions

Renganaden Padayachy is under no illusions. He says he is aware that the Budget can encourage inflation. “Of course there will be inflationary pressures. Increasing public spending can lead to inflationary pressures, but we will take actions and measures so as not to exceed the scale set for inflation which is 2% to 5%. We will work for a gradual decline in inflation,” he says.

These measures on the agenda to counter inflation

Ensuring there is no artificial price hike “We will carry out price checks on products. Let me be clear, the Minister of Commerce and the Prime Minister have also said it, we are going to be very strict with operators in mass distribution if they increase their prices. We will closely monitor what is going to happen to prevent there being an artificial increase in prices,” specifies the Chief Financial Officer. Note that in the annex to the Budget, it is indicated that the law will be strengthened to deter bad practices.

The introduction of “mark-ups” if necessary

Renganaden Padayachy gives the guarantee that the authorities will ensure that the additional income which will enter the pockets of Mauritians “is not eaten up all at once”. “We have the necessary tools like the 'mark-up' that we can put in place to calm unreasonable desires,” he warns.

The Minister of Finance's forecast on inflation

The rate will remain in the 3% to 5% range for the next six months and will continue to fall next year.

When measures rhyme with additional growth

The budgetary measures will generate 3.8% additional growth, indicates Renganaden Padayachy. “We have evaluated the impact of the measures we are taking. Certainly, certain measures do not bring growth, but have a social and human justification. Likewise, the economic results of environmental measures will not be seen immediately, but over time,” he added.

Reduce the public debt ratio

The government plans to reduce the public debt below 70%. How does he plan to proceed? “The growth trajectory will bring more revenue and income. The more wealth we have, the more the debt rate will fall. The answer is as simple as that,” says the Minister of Finance. He clarifies that he is not pursuing a policy of reducing debt, but of increasing wealth. “If the debt increases, growth also increases, because this debt is used to develop the country and improve our infrastructure. Some say that every child is born with a debt on their head. However, even before the child is born, we give money to his mother to improve his living conditions,” he points out. That said, he continues, the government has the firm intention of lowering the ratio of public debt to GDP, because the country has stronger and sustainable growth. “We will reduce the public debt to 60% of GDP in the next mandate, i.e. in a maximum of 4 years,” he predicts. He specifies, however, that the amount of debt will not decrease. “No government has lowered the amount of debt. To achieve a budget surplus, we will need taxation of 30% of our GDP. Which will stall our economy. We prefer to let our economy grow,” he says.

Pension: his opinion on…

…targeting: “The IMF recommends ending the pension at age 60. The institution does not understand the functioning of Mauritian society. The most important thing for a country is trust. If trust is not there, there will be no spending, no investments. The Prime Minister does not believe in targeting the pension. We do not want to save money on human distress. The old age pension is at 60 and it will remain at 60. The pension we give does not allow you to eat caviar, but it allows you to live better! »

…payment in two installments: “It would have been irresponsible to grant an increase of Rs 1,500 straight away. We must see our ability to pay. If we had done so, we would then have had to revise the CSG allocations downwards. Granting Rs 500 initially is more reasonable. As it is a one-year Budget, we have decided to pay the other installment in January, because we want to do so. »

…pension payment over time: “Growth will continue to grow year after year. Which will generate more income. Of course we will have more people retired, more pensions to pay. But what do you want? Are we letting our elders fall into poverty? In 2014, the pension was Rs 3,643. Which represented 40% of the poverty line. It is not a question of politics here, but of humanity. When we decide to increase the pension, it is by taking into consideration the poverty line. We are heading towards a 'trillion economy'. We will thus have more income to pay the pension. »

Padayachy’s rant on “brain drain”

“Mauritius is a free country. There has always been a brain drain, even during the country's Independence. I myself lived abroad for 20 years. Many leave, many also return. But before looking at those who are leaving, I prefer to look at those who remain,” he insists. It's not because there is a brain drain that everything is bad in the country, he adds. “We have the highest growth rate in the world. Unemployment is falling in the country and we have the lowest rate of inequality. We have taken steps to improve living conditions for everyone. It is up to the Mauritian to make his choice, whether he wants to leave or stay. In government, our priority remains those who remain and the most vulnerable. Those who want to leave good luck and thank you for your work. No one is irreplaceable. We are all passing through at any level. The company and the country will continue to roll,” he concludes.

The Reason Behind Equal Opportunity Allowance

“By analyzing the Household Budget Survey, we noted that around 40,000 families – I am not talking about individuals here, but households – earn less than Rs 20,000,” he says. He takes the example of a single-parent family where the mother has just received a pension and her child is under 18 years old.

“She earns less than Rs 20,000. We wanted to ensure a minimum income for households too. Hence this allowance so that the person reaches a level of Rs 20,000, which is, for us, a minimum subsistence level. It is our philosophy to target these people. We will not hesitate to make tax reforms to improve our socio-economic environment,” he points out.

He also said

“We did not lower the price of fuel, because that would have been a populist measure. »

“The middle class benefits from the Budget in terms of tax relief on cars and houses. Middle-class families can also consider having children and will benefit from the measures we are proposing for this purpose, not to mention the most progressive tax system that we introduced in their favor last year. We still have a lot to do in the future for the middle class. »

“Our philosophy is based on people. Human capital must be valued by
giving him a reasonable salary. It is this increase in income that will lead to improved productivity. »

“We have the means to finance these measures, because economic growth is there. We are working to adapt our economic and social policy with a view to having a high growth rate. »
“While we wait for the number of children per couple to increase in the country thanks to the measures we are taking to increase the fertility rate, we must resort to foreign workers. This is what will allow us to ensure additional growth. Let us not forget that we also owe the country's first economic miracle to the contribution of foreign workers. This must be taken into account! »

“The increase in our wealth did not happen like that, it was the government which put in place a series of measures to achieve this. »

“The Budget affects all segments of the population, with priority given to those who need our help. Let those who describe the Budget as electoralist, as 'labous dou', let them do it! »

“My main priority is the job market. We are doing everything we can to make the labor market more flexible and better. Hence reforms to attract talent to come to the country. »

Good to know

Report on salary realignment soon ready

“We are working on the relativity of salaries in both the public and private sectors. Let the professionals do their job,” says the minister. Meetings are on the agenda between the private sector and the ministry on this subject. The report will be presented soon.

A report on families living in extreme poverty in preparation

The National Empowerment Foundation is currently working on a report aimed at determining whether the 7,000 families living in extreme poverty in the country have seen an improvement in their living conditions. The report will be finalized this year and should be presented in 2025, says the Minister of Finance.

The sale of certain state assets is no longer relevant

Economic dynamics have changed the situation. It is in these terms that Renganaden Padayachy explains the government's decision to no longer move forward with the sale of certain state assets. “We will use these institutions to generate more revenue,” he says.
Smith, Keynes, Friedman

During the question and answer session on the 2024-25 Budget, the Minister of Finance dwelled on certain economic theories. “All analyzes and theories follow two visions, that of Adam Smith and John Maynard Keynes. That said, we must not remain static, because the economy is dynamic and evolving. I believe in supply and demand. As Minister of Finance, you have to find the right balance between the two. If we only listened to Milton Friedman, the country would have gone bankrupt during the COVID-19 pandemic. The only nice measure he is proposing is the 'negative income tax',” he emphasizes.

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