EDB Special Budget E-Newsletter 2020/21
We welcome you to this special edition of the EDB newsletter following the budget 2020/21 presented by the Minister of Finance, Economic Planning and Development, Dr the Hon. Renganaden Padayachy.
While the greater part of the global economy is still in a partial recovery mode, our country, with a case sheet of Covid-19 under control, is resuming its economic and business activities, and this gives us an edge over several economies.
Though we may have limited the health impact of the Covid-19 for now, the economic fallout, however, will be hard hitting. The pandemic has pushed job creation targets, exports, consumption, and investments down as the lock-downs all over the world impacted manufacturing and demand at home and abroad.
Budget 2020/21, presented under exceptional circumstances, is already a landmark in our history. It is the first turn of the rudder to steer our economy out of this unexpected storm and will underpin the basis of our economic recovery.
With its outlay of MUR 162.9 billion and more than 150 measures, the budget triggers a number of bold strategies to set the wheels for a sustained steady recovery of the economy in motion. The emphasis will be to protect employment, help sustain small businesses and entrepreneurs, revitalise industries, reduce social inequalities and poverty, restore consumer and investor confidence and build up resiliency and autonomy.
The Bank of Mauritius has set up the Mauritius Investment Corporation to be at the forefront of adjudicating the companies affected by Covid -19 and in need of financial support to keep them afloat and to prevent major layoffs or closures.
Fiscal responsibility pervades throughout the budget in other forms too, and this without falling in the pitfalls of strict austerity. This is a stance which is welcomed by the EDB as it puts long term sustainability of public finances at the forefront, which is essential for economic stability and hence provides confidence for investors.
In fact, the Hon. Minister of Finance, Economic Planning and Development has announced a balanced recurrent budget, which is greatly supported by drastic cuts in unproductive expenditures by Government. This sends an important signal to the international community, as balanced budgets usually improve our country’s credit rating, tapers inflationary pressures and provides additional leeway for Government to intervene during downturns.
Major consideration has been given to achieve self-sufficiency through imports substitution for strategic industries such as crop production, farming, food processing and pharmaceuticals. In particular, the updated and enlarged mandate of the Agricultural Marketing Board will be highly beneficial for farmers and the general population, as a guaranteed income will encourage local production and provide a needed step towards self-sufficiency. Currently, Mauritius imports around MUR 200 billion worth of goods, of which food and live animals represent 18% (MUR 35.9 billion) and fuels represent 18.5% (MUR 36.8 billion). There is thus a market for these products, and the guaranteed income and the land bank allocation of more than 20,000 acres will push for a return of the agricultural sector as another important contributor of national income.
A bolstering plan for the manufacturing sector has been detailed, with facilities and means provided for the industry and its companies to adapt their production capacity, to re-engineer their facilities and equipment for varied products and to invest in modern technology.
Also, a data technology park will be set up at Cote d’Or, laying the foundations of an innovative and data driven economy and create jobs for the future generation.
The setting up of a pharmaceutical manufacturing plant on a Public-Private Partnership basis and a medical cluster is also timely. The strategic importance of these sectors cannot be underestimated as the pandemic has shown us that we cannot remain at the whims of global supply chains and geopolitics for such important supplies. Furthermore, this will provide new export opportunities and become an important pillar of growth.
The development of major public infrastructure projects will be continued in view of directly stimulating demand and job creation in the construction sector. Key measures have been enunciated to assist the private sector in pursuing the development of construction projects. Government has also amplified the housing plan with the construction of more than 12,000 units over 3 years. In the same vein, numerous measures have been announced to further boost the construction sector and ensure that positive growth is maintained.
Notably, the budget implicitly recognises that while we usher in these strategic economic sectors, we need to have the right skills, expertise and talents in our country in the short term while we engage in the development of our own human capital. The extension of the occupation permit from 3 to 10 years, removal of constraints and streamlining of procedures for acquiring occupation permit send the right signal to the business community. Non-citizen investors, professionals and retirees need certainty for themselves and their families before opting for a place where they may be spending a significant part of their lives. Similarly, employers need visibility before engaging foreign professionals. Thus, the amendments to the occupation permit will further improve the image of Mauritius as an international hub for talents.
This budget also strategizes the inception of a circular economy model which will both improve our waste management system and create economic value. In addition, Government reaffirms its sustainable development goals by announcing a 40% share of local renewable energy by 2030, which will trigger consequent investments in the core national infrastructure. In addition, households and MSMEs will be empowered to engage in production of renewable sources of energy namely through a 10 MW renewed Medium Scale Distributed Generated Scheme and roof-top solar units for households.
In line with driving the recovery plan, the EDB is further vested with the continuous task of improving the doing business settings and additional powers for the facilitation of projects and investments.
Already, before the confinement reached its end, cross facilitation with authorities were underway to ensure that projects in the pipeline, with a gross investment value of MUR 62 billion, would have every opportunity to be implemented swiftly in the coming weeks.
We will leave no stone unturned in our endeavour to mobilise and bring in investors and capitals in Mauritius to achieve our primary objective, which is the creation of quality jobs.
Government has outlaid the tools and resources towards a steady recovery, but its success will not rest only on what has been read out or what will be promulgated in a few days in the Finance Bill.
Instead, it will depend on the disciplined, consistent, coordinated, collaborative, unified and patriotic efforts of all stakeholders, authorities, industries, companies, employers, employees and all remnants of the population at large towards making the recovery plan transcend into real terms.
The coming months will be testing, but tough times mould a country, and our country has had no dearth of challenges that it has always overcome.
We will vanquish the Covid-19 first, and along the way, rebuild the country’s economy, and this time not just to be prosperous but above all to become resilient.
In keeping with our ongoing tradition, the EDB is providing highlights of all the key measures announced for the different sectors of the economy in this edition of our newsletter.
I wish you a pleasant reading and we remain resolutely committed more than ever to support all our stakeholders.
Ag. Chief Executive Officer