Are we shaping our future?

u003cpu003eFinance Minister Hon Pravind Jugnauth gave a mixed bag of reforms today. He started off by saying that we had to be bold. Indeed, he came with a number of promising measures but we feel that he could have done more on the potential reforms.u003c/pu003eu003cpu003eOn the positive side, he announced measures to reform business facilitation including an acceleration in issuing Building and Land Use Permits, the removal of constraints around Property Development Schemes, e-licensing facilities, new powers to the BOI to clear projects already in the pipeline, authorisation for non-citizens to acquire apartments and business buildings. This is highly encouraging.u003c/pu003eu003cpu003eHe also announced the merger or combination of a large number of public bodies – we all hope for greater efficiency. Interestingly, he mentioned that the SIC would be disposing of its mature investments. Is this a way of saying that Government would finally get out of casinos? Time will tell.u003c/pu003eu003cpu003eWe appreciate the reforms for more digital applications within Government, including the recruitment of a Dedicated Chief Information Officer for each ministry.u003c/pu003eu003cpu003eThe Minister also announced the implementation of the new metro, the Metro Express. We are concerned that this project will be financed and run by Government even though he said that the construction will start with the Victoria terminal on a BOT basis. When we know of the management of the NTC, one can only dread how much this project will cost to operate u0026ndash; all funded by the taxpayer. A PPP would be far more cost effective, and the attractiveness of such a project properly evaluated.u003c/pu003eu003cpu003eThe Minister announced a monthly allocation of up to Rs9,520 for a family of five. This is the first foray in such welfare payments by a government and the cost has been estimated at Rs500M over a 2 year period. If limited to that, the country can probably afford the measure, but the difficulty now will be in managing this scheme. Let us hope that processes are in place and that the money only goes to the truly needy.u003c/pu003eu003cpu003eIn spite of a number of positives, this government appears to be digging its heels in old-fashioned structures. The Metro Express mentioned above to start with, investments in water continue to be solely funded by government and job creation continues to be governmentu0026rsquo;s responsibility – statistics show that civil servants will increase to 62,365 next year, an increase of 19% over June 2016. This is simply amazing!u003c/pu003eu003cpu003eA reform that was expected, but unfortunately not discussed today, was around targeted social benefits u0026ndash; health, education, pensions, transport, food subsidies. These benefits initially targeted for the needy are now for everyoneu0026rsquo;s benefit and probably costing a fortune to the national treasury.u003c/pu003eu003cpu003eAnother lost opportunity seems to be in recurring expenditure figures with an increase of 13.8% over 2015/16 whilst revenues from taxes are expected to grow by 9.3%. So whilst tax buoyancy appears healthy, Government is spending much more than before and this is a year where inflation is estimated at a mere 2%. The funding gap will be huge when the grant from India will have been used up. The increase in Government expenditure and the resulting 3.3% budget deficit also remains a concern.u003c/pu003eu003cpu003eOur conclusion is that this is a no-tax budget and that the Minister has made a genuine attempt at reforming the economy, but not to the extent we expected.u003c/pu003e