Port Louis — Even though it has reviewed its growth rate from 4.9% to 5%, the Mauritius Commercial Bank has no illusions concerning the economic situation. Its first prognostic for the year seems aimed at shaking the authorities into taking rapid initiatives.

Unskilled workers of the textile industry are expected to find work in the newly set up seafood hub.

The country's economy is in jeopardy. The Mauritius Commercial Bank (MCB) is not the first to say so. The International Monetary Fund (IMF) rang the alarm bell a few weeks ago. Some time before, the chairman of the Oxford International Group, Percy Mistry had pointed out that Mauritius has to wake up and boost its economic and financial activity.

This time, however, the MCB does not intend to handle either the government or the population with kid gloves. On the contrary, its first 2006 economic outlook may be aimed at awakening the authorities so that they take rapid action to improve the economic situation in a difficult global context. The document makes it clear that the development of the country will be in great danger if nothing is done at once.

The MCB has made a list of the difficulties ahead this year: with a declining EPZ industry (particularly textile), unemployment will keep rising leading to more socio-economic problems; inflation will go upwards while the drop in the trade deficit is not going to stop soon. This is what the country has to face now if the government does not engage in radical reforms.

The MCB chief economist points out: "Laudable measures to facilitate investment and promotion were announced in August 2005; they now have to be implemented rapidly and efficiently." During a public symposium of the National Productivity and Competitiveness Council (NPCC), Percy Mistry stated, "Mauritius should avoid making the same mistakes as India, which wastes time in long debates and sometimes forgets to take action." For him, the only way to save the situation is to have a more open economy that would attract potential foreign investors.

The government might have a lot of ideas about how to boost the economy and make the situation less dramatic but if they do not adopt a realistic approach and clearly state that we are in grave danger, there will be no improvement. It is high time to "speak the truth". Gilbert Gnany explains: "Calculated risks should be taken to prevent more economic difficulties since a status quo and self-satisfaction scenario will not lead us to our ambitions of achieving development."

More sustainable public finance

To reduce unemployment, the government could first favour investment projects that are expected to create the largest number of jobs. The seafood hub is among the sectors that are expected to do so in the near future (see inset).

The bank also recommends the adoption of a Fiscal Responsibility Act in Parliament to ensure long-term sustainability of public finance. This will also help to fix a maximum limit to public debt and thus prevent it from reaching astronomical amounts which will be difficult to settle!

Seafood hub: next big employer?

With a huge amount of investment expected, the seafood hub might become one of the most important pillars of our economy. Thanks to the extension of existing companies and the establishment of others, the industry should create a large number of jobs - thus compensating for job losses caused by textile factory closures. The unskilled staff formerly employed there could be accommodated. The marketing campaigns led by the government jointly with the private sector should prove fruitful in the near future.