This week, Weekly speaks to Dan Maraye, economist and former governor of the Bank of Mauritius, for his opinion on the current political and financial situation, including the latest polemic about Betamax.  

The Betamax verdict has just come out. In spite of the decision of the Singapore arbitration proceedings, the Supreme Court has set aside that award. What do you make of that?

It seems that the Supreme Court has set aside the award basing themselves on public interest. So, I am not a lawyer but I follow these cases, we have to go back to the root of things. It seems to me that when this contract was awarded, it didn’t go through the Public Procurement Board (PPB) which may not have been a good practice in my view. Ethically and for good governance’s sake, the contract should have gone through the PPB and tenders invited.

Once the contract has been allocated, don’t you think there is the continuity of the state?

Yes, that is another issue. It would appear to me that maybe at the time that the contract was rescinded, there was not enough thought and we need to know who advised the government to rescind that contract and those who advised should be accountable. Did the government seek the advice of the State Law Office (SLO) or was it a political decision?

Now that the court has set the award aside, what is likely to happen?

It’s clear that they are heading for the Privy Council.  If the State Trading Corporation (STC) had lost, it too would have gone to the Privy Council because we are talking about loads of money here. That is why I personally believe in good governance, which means transparency and a level playing field.

Don’t you think this verdict opens the door for challenges of other contracts signed by different governments without going through the PPB, like the Independent Power Producers, the Metro Express, Safe City and Alteo, to mention but a few?

That is correct. This will serve as a warning to governments
and prospective tenderers and other parties to ensure that contracts entered into with any government MUST fully comply with all laws and regulations as they may be subject to legal scrutiny by other parties and even future governments. It is all a matter of transparency and good governance that can only benefit our country.  It could be argued that there could have been a better deal in the interest of the public, particularly that our finances are not doing that well.

How bad are we doing?

It is clear that for many years we have been importing almost twice as much as we export, so our current account balance has been in deficit for many years and has worsened over the past six years or so. We have to cut our coat according to our cloth. Our public debt has gone from bad to worse. If you include all the loans guaranteed by the government through the Special Purpose Vehicles, our debt could very well be over 70 per cent. The only thing that is in our favour is that it is divided between our local and foreign debts. The country cannot afford all the wastage that has been going on for the last 10 or 15 years.

Isn’t the rumoured increase in pension to align it with the minimal salary likely to make things worse?

We need to know where that money is going to come from. If they can prove that this money is going to come from the elimination of wastage, then I have no problem with that. But if it is going to come as debt, then I am against it.

Do you see this government reducing its luxurious lifestyle?

Money is indeed wasted left, right and centre and all governments seemed happy. We cannot carry on like that. There is an audit report once a year and then nothing happens. I would suggest that, instead of once a year, we should have an interim report. That will cost the National Audit Office more, certainly, but if a report comes pointing out issues in the first six months and no progress has been seen in the following six months, then certainly the government has to be blamed. Right now, so much money is spent without anybody being accountable for it.

Would you then agree with former Prime Minister Navin Ramgoolam’s proposal of having a Fiscal Responsibility Act?

Yes! I have been talking about that for a long time. They have one in New Zealand and other countries. Why can’t we have one? That would make everyone accountable.

Some people see the increase in the old-age pension as an electoral bribe. Do you agree with that?

If you go back to 1976, the biggest give-away that the then-government gave to the people was free education. Expensive, still costing a lot and, despite that, the government lost.

I am not asking whether it will work or not. Do you see it that way?

I personally don’t believe that you can bribe electors.

Weren’t they bribed in 2014 with pensions?

In December 2014, this government did not win because of pensions. They won because of three things: first, the excesses of previous governments, the rejection of the Sithanen reform and the rejection of the sharing of power between the prime minister and the president. The pension increase was not a major factor. I have spoken to people I know who are pensioners. They did not vote for this government. I am sure there was a percentage of pensioners who voted, but not enough. One of the biggest things a government could have given was free education and still the Labour Party did not win. I will go further; in 1982, the then government employed 24,000 people one month before the election and gave land to the Hindu House. It also made certain appointments from socio-cultural organisations. It still lost 60-0. Of course, most politicians with their crooked mind think they can influence elections, but from what I have seen since the 1970s, the electorate is not easy to bribe. A minority of the electorate might be swayed, but most will not react to what you call electoral bribes.

What would you call it?

Giveaways. Still not enough to win an election.

Forget about whether they would work or not. Some of these ‘giveaways’ come outside a budget, without any apparent thought behind them, like free tertiary education for example, which looks more like a knee-jerk reaction. Can the country afford them?

This is a clear indication that there is not enough thought before taking any action. I think the lesson we need to learn is that we need to have much more responsible politicians and any decisions impacting the finances of the country must be dealt with at a professional level. Somebody with no knowledge of public finance cannot take those decisions.

Are you saying the minister of finance has no such knowledge?

Do we have a minister of finance?

I thought he was also prime minister.

Oh is he?

That’s what I was told last time I asked.

Is it correct, in line with good governance, for a chief executive of a company to also be a finance director? You cannot combine these two functions. I think it’s extremely bad for a prime minister to also get the portfolio of finance. There should be some legislation to prevent such a situation in the future. We cannot leave any portfolio to be accumulated by any other minister for more than three months. A new minister has to be appointed. What is happening is, in my view, extremely bad practice and is condemnable.

There have been many budgets and another one coming up now. Do you see any coherence, continuity or vision behind them?

The problem is that for the last three years, we have not had a full-time finance minister. That is a serious issue. As it appears to me, it is the people at the Finance Ministry who are doing what they can. And, unfortunately, many of the people at the top will just do what the government wants.

What are your expectations for the coming budget, which is going to be the last one?

I don’t expect much. The senior civil servants will just work to please the government of the day. They don’t have a long-term vision for the country. They don’t care.

Does the finance minister have a long term vision?

It is unfortunate to have a finance minister who has never been involved in finance at all. Just as the attorney general has to be a lawyer, I think the finance minister also has to have a background in finance, though he does not necessarily have to be an economist.

Why is a finance background necessary?

Because you cannot just rely on top people at the ministry to do what they can. Many of them are on a contract and so if they don’t do what the minister wants them to do, their contract might not be renewed. Also, there are lots of cases of conflict of interest. To put some order in that, we need good governance. I strongly believe that if this country is going to get out of the rot, it has to be through transparency and good governance. I would say that we have not had transparency and good governance for the past 10 years.