Port Louis — When Finance minister, Pravind Jugnauth, called a press conference Friday last to announce an Economic Restructuring and Competitiveness Programme (ERCP), he took everybody by surprise. The press, the opposition, the export processing sector, the tourist industry, the SMEs and the opposition were taken by surprise by this Rs 12 billion stimulus package, the third of its type since the recession broke loose, followed by the euro crisis.

"I have been taken off guard by this unexpected Economic Restructuring and Competitiveness Programme which is bound to fail, in the same way the two previous stimulus packages presented by Rama Sithanen, exminister of Finance failed," says Kee Chong Li Kwong Wing, economist and mouthpiece of the MMM on economic matters.

But the surprise was double for the laymen watching the televised news on Friday last and asking themselves if there was any necessity for a Rs 12 billion economic stimulus package in a country which has gone through the big recession without big lay-offs, where unemployment remains at a reasonable 8 % and inflation is well under control.

If local economists are still wrangling over the end results of the ERCP, they all answer "yes" on the necessity of an economic stimulus package. "It is necessary to correct the weakness and address the vulnerabilities of local enterprises and the economy in general," says Kee Chong Li Kwong Wing, "because the present crisis is more serious. It is an immediate crisis that has impacted on our economy. We are feeling it. White Sand tours is in receivership, most of our beach hotels are showing losses,a deterioration in revenues, a decline in profits. The unemployment rate has risen over 8 %. The Mauritian economy is heading southwards," he says.

No massive lay-offs

Pierre Dinan, an old hand on the Mauritian economy and Vishal Ragoobur, economist for the Mauritius Employees Federation share almost the same views as Kee Chong Li Kwong Wing on the necessity of a new stimulus package. However, unlike Kee Chong Li Kwong Wing , Ragoobur and Dinan do not believe that the two different stimulus packages presented by the ex-government failed in their objectives.

"We have not had any massive lay-offs in the country. Unemployment is under control, just because the ex-minister of Finance decided to invest heavily in infrastructure, roads and airport inter alia. The country will need this infrastructure. The construction sector is booming. But the crisis has intensified because of the fall of the euro and the ERCP is just an intensification of the measures taken under the Additional Stimulus Package of Rama Sithanen," says Pierre Dinan. But an economic stimulus package most of the time means funding and bailing out private companies with good public money. Economists have well defined views on the questions and all local economists say that it cannot be otherwise if we, and the world, are to get out of the crisis.

"It was John Maynard Keynes who first came up with the concept that public money should be used to make up for private deficits," says Pierre Dinan who adds that the world has learned a lot from mistakes made during the Great Depression of the Thirties. "But now we should learn where and when to stop funding private companies with public money. Private companies should learn to take matters into their own hands at a given time." he adds. According to him, "the success of the measures announced by the Minister depends, to a large extent, on the efficiency of the committees(some 10 in all) set up to monitor the execution of the ERCP, as well as on the integrity of their respective memberships."

According to Vishal Ragoobur, most of the benefi ciaries will be small and medium companies which employ 43 % of the local labour force. So, "the Mauritian public should not get the impression that government is dishing out money to big private companies," says.

Raj JUGURNAUTH

Kee Chong Li Kwong Wing asks for the economy to be revolutionized

When Kee Chong Li Kwong Wing, talks about the Economic Rrestructuring and Competitiveness Programme (ERCP) one gets the impression that Pravind Jugnauth has arrived late at the beside of an ailing economy with a survival kitin which the most important medicines and medical equipment are missing.

"The ERCP presented on Friday last is too short and has come too late to succeed. We shall pay the cost of inaction. We are still banking on an old economic model which has outlived its usefulness. We need to think ahead and bring in the restructuring measures that will radically overhaul the economy and revolutionise the SME sector," says the MMM mouthpiece.

According to him, the ERCP is just a repackaging of the two stimulus packages presented by the ex-government. "The ERCP focuses on fiscal stimulus and it does not address the fundamental structural weaknesses of the economy which makes it so vulnerable to the euro zone crisis which is much more serious than the financial crisis of 2008,", explains Kee Chong Li Kwong Wing.

He compares the outcome of the 2008 crisis to strong gales blowing and the euro crisis to an intense tropical cyclone and says that measures that failed to protect from the gales will do very little against this intense cyclone.