Re-focus the economy on the right track once again

Our priority should be to re-focus the economy on the right
track. The question is whether politics will chart a new course
for the country

The question is whether politics will chart a new, less turbulent course for the country

It might have been over-realistic to expect the country to achieve an “economic miracle” way back in 2015, a slogan that was used during the electoral campaign by the new incumbents of power. Those who are blaming the government for not bringing about such an economic overhaul are out of touch with reality. That was merely an electoral promise, not grounded in sound economic analysis and principles.

An “economic miracle” might have been founded on brilliant international perspectives opening up to us. That was simply not the situation internationally. The world was and still is struggling to get out of the downturn of the economic crisis which hit in 2007-08.

Sub-Saharan African economic growth which had soared to an average 6% pa on the back of the prevailing commodity boom – some individual economies going up to 7% – slowed down to half its rate of growth in 2015 and after. South Africa even went into recession, that is, successive quarters of negative growth. China which had seen a significant spurt of economic growth the past two decades in the double-digit range dipped to 6% or less. Despite its largely diversified economy, it is struggling to resume its past track of achievement.

On the other side, our main export markets in Europe were battling it out against the risk of dysfunction. The euro itself was badly anchored into the economic system, with diverse EU countries growing at disparate speeds and unable to flexibly adjust to external shocks. Europe’s hasty opening to former communist countries of the eastern bloc ushered in a wave of migrant labour moving to other EU countries in quest of better economic conditions. This and rigid rules of compliance made by the EU Commission upset some of the EU members to such a point that Britain decided, through a referendum in 2016, to leave the EU.

Neither the EU nor Britain itself was thus a safe anchor for our exports. As if that were not enough, 2017 turns out to be the year when the EU is letting go of our guaranteed sugar exports to its market. We now have to find our way unaided.

Moreover, a sustained slow pace of international economic growth has brought up more aggressive competitors on international export markets. The latter are themselves under threat of shrinking, were a trade war to ensue due to the various international tensions which have arisen.

This situation called upon us to tread carefully and to put up a serious effort to enhance our system of production, if only to keep a small competitive edge on our side for a few of our export products. Not that this would have delivered an “economic miracle”, but at least it would have allowed us to keep our head above water.

Worsening the situation

Our public-sector decision-makers are aware of the extra effort required to breathe a new life into the economy in such difficult external market conditions. The situation demanded a collective coordinated effort on the part of all stakeholders to peacefully remove distortions that had cluttered up economic performance or had put it at high risk, if only because external conditions were not quite promising. We had to put our best resources in the right places to cope with the situation and take the required constructive decisions to tide over difficulties.

What happened actually was not precisely this. The political masters have messed up almost everything, beginning with the disruptive replacement of those previously in position of control in public institutions by one’s own cronies. Continuity was lost in the process. There was no guarantee that more skilful people had come on stage to deal with an already difficult situation. There crept up a feeling in the service that summary dismissals would be prioritized and that positions would be given to new ones who would be politically correct.

The public service was intimidated by the rough riding attitude adopted by certain politicians. This showed up in the poor quality of decisions taken by some at the top under political sway. Let alone dealing effectively with the tough international economic condition, the very authority of public decision-makers was severely undermined in the process.

Changes were made or sought to be made in the legislative framework, a little akin to what is going on in Turkey today: “Either you are with us however much we exaggerate in the conduct of public affairs or you belong to the other side and risk being arrested for one reason or another.” Our rule-of-law system ran a serious risk of being overwhelmed. There were Ministers with little or no experience at all in certain specialised domains who stood up to take credit for decisions taken – which were essentially bad decisions.

In the face of such happenings, public officials were cowed down. The authority they usually exercise to get things done was usurped by certain ministers. Quite a few politicians showed that they did not have the right mettle to shoulder the responsibilities placed upon them.

Some of them worked at cross purposes against each other. Others prioritized short term private gains, showing how little integrity they possessed. Still others mishandled dossiers of the highest national importance, casting a dark shadow on the future of the economy itself. Public good governance went into disarray.

Musical Chair

All this was evidently not the right response to a very challenging economic situation the country was facing and still faces today. Some of the errors made are irreversible. The harm has already been done.

Given this unpredictable situation which threatens to raise a new scandal everyday due to incompetent handling of business by one or the other of the politicians, the question has arisen about whether the politicians in place don’t risk wreaking further irreversible damage to the economic system. It is precisely the same type of question that was put to voters in 2014 before the general elections – the reason this time being the apprehension felt generally of the absence of proper orientation of the economy.

The international economic condition continues to remain prone to numerous vulnerabilities. The British, having at first opted to move out of Europe, for example, don’t have clues how their economy will ride above its isolation even after they voted of late in favour of a minority Conservative government. We, on our part, don’t appear to have all the parameters in our hands to tackle consistently the economic headwinds facing us.

Given the unsystematic actions being taken by Donald Trump in the US, keen observers are asking themselves the question whether he will not actually worsen the economic situation with his “America First” policy, whatever it means. Both for America and for other nations. Just as in other places, misdirected politics has contributed to aggravate the economic problem in the case of Mauritius. But repairing the economy calls for charting a workable course for our economy, in the midst of so much international instability.

Our priority should be to re-focus the economy on the right track once again. Much precious time has been lost already. The question is whether politics– with its record of past disruptions – will chart a new, less turbulent course for the country.

Anil Gujadhur