Professional Documents
Culture Documents
droolkEconomicDevelopmentInstitute
of The WorldBank
Successful
Public Disclosure Authorized
Stabilization
and Recovery
Public Disclosure Authorized
in Mauritius
Ravi Gulhati
and
Raj Nallari
Public Disclosure Authorized
Successful Stabilization
and Recovery in Mauritius
Ravi Gulhati
Raj Nallari
The Economic Development Institute (EDI) was established by the World Bank in 1955 to train
officials concerned with development planning, policymaking, investment analysis, and project
implementation in member developing countries. At present the substance of the EDrs work
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At the time of writing, Ravi Gulhati was senior adviser in the Economic Development
Institute of the World Bank. He is now a consultant and an academic.
Raj Nallari is a consultant in the National Economic Management Division
of the World Bank's Economic Development Institute.
Gulhati, Ravi.
Successful stabilization and recovery in Mauritius / Ravi Gulhati,
Raj Nallari.
p. cm. -- (EDI development policy case series. Analytical
case studies; no. 5)
Includes bibliographical references.
ISBN 0-8213-1617-6
1. Mauritius--Economic conditions. 2. Economic stabilization--
Mauritius. I. Nallari, Raj, 1955- . II. Title. III. Series.
HC597.5.G84 1990
338.9698'2--dc2O 90-41657
CIP
List of Abbreviations vi
Preface vii
1. Introduction 1
2. Diagnosis 3
Shocks 3
Policy Framework 6
Mismanagement of Aggregate Demand 6
Extent of Market Orientation 8
How Efficient Was the Public Sector? 17
Income Distribution Policies 20
Agricultural Policy 21
Sugar Subsector 21
Diversification within Agriculture 23
Strategy for Manufacturing 27
Import Substitution Policy 27
Export Promotionof Manufacturers 27
Policiesfor Tourism 30
id
iv Succesafl StabilizationandRecoveryin Mauritius
5. Lessons of Experience 57
References 61
Appendix Tables 67
Figures
2.1 Terms of Trade Index, 1960-80 4
2.2 Sugar Prices in Different Markets, 1968-87 5
2.3 Indicators of National Accounts, 1960-80 7
2.4 Balance of Payments Indicators, 1970-80 9
2.5 Budget Deficit and Its Financing, 1968-80 10
2.6 Nominal and Real Effective Exchange Rates, 1970-86 12
2.7 Average Monthly Earnings by Sector, 1970-86 14
2.8 Nominal and Real Interest Rates on Commercial
Bank Deposits of Six Months, 1970-86 16
2.9 Government Expenditure and Revenue, 1965-80 18
2.10 Sugar Production and Exports, 1963-86 25
4.1 Terms of Trade Index, 1960-86 41
4.2 Indicators of National Accounts, 1980-86 42
4.3 Balance of Payments Indicators, 1980-86 43
4.4 Budget Deficit and Its Financing, 1980-86 44
4.5 Government Expenditure and Revenue, 1980-86 47
Tables
2.1 Growth Rate of Government Expenditures, 1969-86 19
2.2 Export Duty on Sugar, 1979-90 22
2.3 Selected Indicators of Twenty-one Large Estates in Sugar Sector,
Selected Periods 1968-84 23
Contents v
Appendix Tables
A-1 SelectedEconomicIndicators, SelectedYears 1966-86 69
A-2 SelectedSocial Indicators, SelectedYears 1965-86 70
A-3 Terms ofTrade, 1960-86 71
A-4 Sugar-Prices in Different Markets, 1968-87 72
A-5 EEC Dividendand its Impact on Mauritius's Economy,1968-86 73
A-6 Indicators of National Accounts,1960-86 74
A-7 Balance of Payment Indicators, 1970-86 75
A-8 Budget Deficitand Its Financing, 1968-86 76
A-9 Nominal and Real EffectiveExchange Rates, 1970-86 77
A-10 AverageMonthly Earnings by Sector, 1970-85 78
A-li Nominal and Real Interest Rates on Commercial Bank Deposits of Six
Months,1970-86 79
A-12 GovernmentExpenditure and Revenue, 1965-86 80
A-13 Sugar Productionand Exports, 1963-86 81
A-14 Guaranteed Producer Prices for SelectedFoodCrops, 1977-87 82
List of Abbreviations
vi
Preface
During three visits to Mauritius during the past decade, Ravi Gulhati (former
Chief Economist of the Eastern and Southern Africa Region of the World Bank) had
a number of opportunities to discuss at length its economic problems and possible
solutions. Raj Nallari visited Mauritius in 1989. The following study is dedicated
to our Mauritian friends, who freely gave their time to talk candidly about the
issues. Both authors wish it had been possible for some Mauritian officials, who had
an "insider's" view of the unfolding economic policy process, to write down their
insights. It is our firm belief that no one analysis of the policy process can capture it
in all its key dimensions. A number of contributions from different vantage
points, therefore, would have been enriching.
A word about the origins of this study will be useful. Parallel studies on Zambia
and Malawi have been published in this series. All three are part of a general
treatment of economic policy change in Sub-Saharan Africa. The entire project is
an effort to reflect on events that have dominated recent economic history in Sub-
Saharan Africa. The authors are very grateful to Christopher Willoughby of the
Economic Development Institute for providing generous support for this project.
Associates in the operational part of the World Bank have cooperated fully. A
substantial part of the analysis is borrowed from their work over a long period.
Notwithstanding all these connections with the World Bank, the project should
be regarded as our own initiative. We have chosen to write about the impact of
politics on economic policy-a sensitive area on which the Bank has no official
views. Our effort to address this difficult topic is an experiment and should be
regarded in that light. Scholars disagree frequently in this field, and we have
reported on some of the controversies. Judgments made in this report are personal
ones, and we alone are responsible for them.
We are grateful to Sofia Mendoza and Dulce Afzal, who assisted in ways too
numerous to spell out. Without the valuable contribution of these two colleagues,
producing this study would not have been possible. Finally, a special word of
thanks to many readers in Mauritius and Washington, D.C., who helped greatly
during the long journey from first draft to final manuscript.
Ravi Gulhati
Raj Nallari
vii
1
Introduction
James Meade (1967, p. 250) used Mauritius to illustrate the implications of the
population explosion in less developed countries. He wrote,
Heavypopulation pressure must inevitably reduce real income per head below what it
might otherwisebe. That surelyis bad enoughin a communitywhichis full of potential
politicalconflict.But ifin addition,in the absenceof other remedies,it must lead either to
unemployment(exacerbatingthe scramblefor jobs between Indians and Creoles)or to
even greater inequalities (stockingup still more the envy felt by the Indian and Creole
underdog for the Franco-Mauritian top dog),the outlook for peaceful developmentis
poor.
Population was growing at an unusual rate of 3.0 percent during the 1960s and
imposing severe pressure on available resources. Sugar was grown on almost all
cultivable land, and it was the main source of foreign exchange. The economy was
very open and extremely vulnerable to fluctuations in international prices and to
recurring weather disasters. Mauritius imported most of its food, consumer
manufactures, and producer goods. There was little experience on which to build
the manufacturing sector.
History has belied Meade's pessimistic prognosis. Mauritius walked out of the
'Malthusian Trap." Population growth was restrained effectively, thereby
signaling one of the earliest demographic transitions in the Third World. The
economy scored a high rate of growth of production of more than 6 percent per year
during 1968-79. There was a spectacular expansion in the growth of manufactured
exports. Income distribution, which was very skewed at the outset, became less
unequal. These are impressive accomplishments, but our enquiry is not about
them. We focus, instead, on the debacle suffered by Mauritius in the second half of
the 1970s when the sugar boom ended. For a number of years, economic instability
and financial troubles marred the picture. Our aim is to analyze government
policy leading up to this setback and to explore the process that ended with
stabilization and recovery. The reforms appeared to be successful. Not only was
inflation tamed and financial balance restored during 1984-86, but the economy
resumed rapid growth, and unemployment dropped to very low levels. Not all
problems were solved, however. Mauritius remained very exposed to exogenous
shocks and to adverse policy changes in its trading partners.
1
2 Successful Stabilization and Recovery in Mauritius
Diagnosis
The economic and financial difficulties that Mauritius encountered during the
late 1970s were moderate in magnitude compared with those in other SSA countries
(Gulhati 1990). These difficulties were the combined result of exogenous shocks
(such as the decline in the terms of trade and bad weather) and policy weaknesses
(particularly with respect to the public sector and the labor market).
Shocks
Foreign trade is very big in relation to the overall economy and fluctuations in
the terms of trade largely determine the economic outcome in Mauritius. The terms
of trade index (1980 = 100) averaged 89 during 1968-72 and rose sharply to an
average of 155 during 1973-75 (see Figure 2.1 and Table A-3). The deterioration in
the terms of trade between 1976 and 1979 was mainly due to falling sugar prices in
1976-77 and partly due to rising import prices. The index of the terms of trade
averaged 112 during 1976-79. There was a decline of 28 percent when compared with
1973-75, or a loss in gross domestic income (GDY) of 14.1 percent. 1
The impact of this shock would have been greater (in terms of loss in income),
but for the preferential treatment of Mauritian sugar under the EEC Agreement of
1975 (Figure 2.2 and Tables A-4 and A-5). If the free market price is treated as the
export price for sugar, then terms of trade (1980 = 100) would have averaged 55.9
during 1976-79, compared with 176.6 in 1973-75. This would have resulted in a loss
equivalent to 47.5 percent of GDY. This calculation roughly illustrates the impact of
preferential arrangements. The free market price applies only to a small segment
of world trade in sugar (10 to 15 percent), and it is not a good approximation of the
international sugar price in the absence of preferential arrangements.
1. The terms of trade in the 1973-75period was far better than during the preceding decade.
However,expenditurelevels got adjusted to these favorableinternational conditions,and it is to
assess the impact of the subsequentdeteriorationthat we adopt this base.
3
Figure 2.1
TERMS OF TRADE INDEX, 1960- 80
(Index 1980 = 100)
200 -
0 10-
0~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~0
ExportPrice Index s
50-
, _ .. L-Eor
-W-.-W Import Prce Index
1960 1962 ~~
. f 1964 ~ 1966
~ ~ 1968~ ~1970~ ~1972. 1974 1976 1978 1980
Year
cak\w4SUUM
Figure 2.2
SUGAR PRICES IN DIFFERENT MARKETS, 1968 - 87
35 -
s0-
US Price
25-
20-
15 ~~~~~~~~~~~~~~~~~~~Free
Market Price
10-
5-
1968 1970 1972 1974 1976 1978 1980 1982 1984 1986
Year
akw4SW6
6 Succes8ful Stabilization and Recovery in Mauritius
Policy Framework
The economic policy framework of Mauritius in the 1970s was an amalgam of
historical and political factors. The compulsion to build a consensus across
factions and parties within a parliamentary system helped avoid the adoption of
extreme policy positions. Macroeconomic policies were dominated by the terms of
trade cycle during the early 1970s and by the electoral cycle later on in the decade
(see Chapter 3). The government tried to reduce income inequalities and to
generate enough jobs for the growing labor force. These objectives clashed at some
points with the desire to sustain economic growth and efficiency. Notwithstanding
these conflicts, Mauritius's economic policy during the 1970s was far superior to
that of most SSA countries (Gulhati 1990).
2. Although tourism's contributionto GDP was only 4 percent in the 1970s,it accounted for a
sizableshare ofjobs directlyand indirectly.
Figure 2.3
INDICATORSOF NATIONALACCOUNTS, 1960 - 80
12,000 -
GDE (Gross Domestic Expenditure)
10,000 -
8,000- i'
GDY(Gross DomesticIncome)
a*
# \ I GDP (Gross
* *#[ Domestic Product)
6,000-
4,000-
2,000- /
Investment
0 - I I II I I I I I I I I I I I I I - -I
1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980
Year
oak\w4U8M8C
8 Succe8ssfuStabilis4tion and Recoveir in Mauritius
Net ODA *
0 -...... E.-.-f
\NotI1SF
] Capital
~~~~~~~~~~~Nel;
-100\I
CurrentAccountBalance /
50- I
;200IIIIII
1970 1972 1974. 1976 1978 1980
Year
Excludesofficialdevelopmentassistance(ODA).
=M}w48568D
Figure 2.5
BUDGET DEFICIT AND ITS FINANCING, 16 - 80
400 -,
200-
140 - 4
400-
I l
-200 -
150 -
140 -
120 -
0~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~1
f~~~~~~~~~~el
Exhne\ae
160
180 - -
90-
80- E X i l l l
1970 1972 1974 1976 1978 19 1982 1984 1986
Year
Diagwsois 13
3. A more specific evaluation of the incentive structure would require estimates of effective
exchangerates applicableto various branches of manufacturing. Unfortunately, such estimates
were not available. However, the structure of effective protection is discussed later in the
chapter.
Figure 2.7
AVERAGE MONTHLYEARNINGS BY SECTOR, 1970 86
2,000 -
1,800 -
/ \ ~~~~Government
1,600-
* 1,200 -
*o 1,000 - /tI;
M -/Textiles
1,000 (EPZ)
800 -/
/ Sugar Sector
600 - /'
Other Manufacturing ' A (
Apparels (EPZ)
400 - l l l l l l l l l
1970 1972 1974 1976 1978 1980 1982 1984 1986
Year
wk\wUMH
Diagnsi 15
from these anomalies, ROs have not exercised a major impact on the pattern of
wage differentials (ILO 1985). Most workers were paid above the minima set by
ROs.
Average real earnings for all sectors increased in 1971 but then declined
sharply until 1974. The policy of severe wage restraint under a state of emergency
during these years prevented increases in real earnings during the spectacular
sugar boom of the mid-1970s. Average real earnings increased by a moderate 5
percent only in 1975, but there were quantum jumps in the next three years.
Antagonized by government's repressive measures during the early 1970s, many
workers voted for the opposition party (MMM) in December 1976. As mentioned
already, the share of the popular vote of the MLP and the PMSD declined sharply
between 1967 and 1976. However, the next government was again formed by the
MLP and the PMSD. The new government had a razor-thin majority of only one
seat in the assembly. Under these circumstances, the new government was forced to
accept demands for annual COLAs and bonuses, despite the sharp deterioration in
the macroeconomic situation.
Unemployment averaged 20 percent in 1971.4 The Meade Report published in
1961 had generated a great deal of concern about the growing labor force and
limited capacity of the economy to generate jobs. The govemment was committed to
a policy of high employment, and this objective permeated the first and second
development plans. These will be discussed later, including the government's
public works program. As part of the policy to maintain a high level of employment,
the government compels sugar estates to maintain a regular work force throughout
the year, despite large seasonal variations in the demand for labor. Such a measure
is not only a financial burden for the sugar industry, but it also is inefficient from
the standpoint of the national economy.
The government's policy framework vis-a-vis labor during the 1970s was full
of internal contradictions. Legislation aimed at protecting existing sugar workers
on the estates was an incentive for management to mechanize rather than hire
more labor. Trade union pressures, backed by the opposition party (MMM), during
the late 1970s caused wages to rise and manufactured exports to lose international
competitiveness, thereby slowing down job creation in the EPZ. And yet it is the
dynamism of this part of the Mauritian economy that had the potential of
alleviating unemployment pressures.
Government policies for the capital market relied mainly on nonprice policy
instruments. The job of mobilizing savings was largely entrusted to commercial
banks, which increased in number from five to nine during the 1970s. Two of them
(the privately owned Mauritian Commercial Bank and the government-owned
Mauritian State Commercial Bank) held 75 percent of total deposits, however. The
government controlled nominal interest rates. There was considerable
differentiation of these rates for savings instruments of various maturities, but the
average real rate remained negative throughout the period (Figure 2.8 and Table A-
11). The Post Office Savings Bank was established to mobilize small savings. It
did not offer fixed term accounts, however, and its operations did not keep pace with
those of commercial banks. In addition, there were 400 cooperative societies that
raised deposits from rural areas.
Allocation of credit and its overall amount was governed by a series of nonprice
policy instruments such as reserve requirements, overall credit ceilings, and
4. A person is said to be unemployedif he/she is in the 15 to 64 age bracket and is seeking work
but is withouta job.
Figure 2.8
NOMINAL AND REAL INTEREST RATES
ON COMMERCIAL BANK DEPOSITS OF SIX MONTHS, 1970 - 86
10
Nominal
5~~~~~~~~~~~~~~~~~~~5
O~~~. - 0~~~~~~~~~~~~~~~~* . , ,
-1I
-16 ,,
-20- X , --
1970 1972 1974 1976 1978 1980 1982 1984 1986
Year
mk*485M
Diagnosis 17
sectoral priorities. The highest priority was assigned to EPZ and to the government
itself, while there were severe limits on credit to importers and other traders.
Commercial banks did not have adequate incentives for lending on a long-term
basis, given the structure of controlled interest rates (World Bank 1978, p. 83). The
government established the Development Bank of Mauritius to lend on a long-term
basis and to make equity investments. Its operations grew slowly at first but then
picked up momentum. Its loans to industry, as a proportion of the total portfolio, rose
from 52 percent in 1972 to 72 percent in 1980. The Mauritius Housing Corporation
was established to provide mortgages to low- and middle-income borrowers.
Despite the creation of these and other specialized lending institutions, the
provision of finance on a medium- or long-term basis remained relatively
underdeveloped.
Altogether, Mauritius's capital market was remarkably well developed for a
country of very small size. The volume of savings and investment rose rapidly
during the period of the sugar boom (Table A-1). The rate of savings fell sharply in
the late 1970s, however, as the terms of trade declined. The government did not
reverse its interest rate policy, and interest rates remained negative in real terms
even during the years of stress. Strong preference was given to the EPZ, and
monetary policy became a handmaiden of the government budget.
2,500 -
2,000- /'
00 1,600 __
1,500 Current Expenditure
1,00
0~~~~~~~~~0
1,000 -_s---0,---
R ) X
Current Revenue
500 -
Capital Outlays
0 - lI l I I
1965 1967 1969 1971 1973 1975 1977 1979
Year
ck\w48868
Dsagnoss 19
the Mauritius Meat Authority (-95 percent), the Tea Development Authority (-35
percent), and the Development Works Corporation (DWC), the agency managing
the government's public relief works (-29 percent).
Four factors were responsible for public sector inefficiency. First, the process of
preparing projects and evaluating their costs and benefits was neither systematic
nor comprehensive. Consequently, a number of projects were started during the
1970s whose prospective low returns on investment could have been anticipated.
Second, a number of parastatals were established whose objectives did not place
much emphasis on the efficiency criterion compared with other government
concerns. Examples are the DWC (responsible for creating jobs through public
relief works), the agricultural marketing board (expected to subsidize producer
prices), and the trading corporation (expected to subsidize the consumer price of
imported wheat and rice).
Third, overstaffing characterized most parastatals. Following the end of the
sugar boom, 13,000 people were added to the payroll of the public sector during 1975-
77. A substantial proportion of these appointments were aimed at mobilizing
electoral support during the 1976 elections. 5 The Central Water Authority
estimated that it could shed 50 percent of its employees without reducing its
operations (World Bank 1987, p. 20). Altogether, the public sector provided 25
percent of the total number of jobs in 1975. Fourthly, compensation levels tended to
be high relative to those in the private sector. Pay levels in DWC and the Central
Housing Authority were triple those in the private sector (World Bank 1987a, p. 44).
Some parastatals (for example, Cargo Handling Corporation and Overseas
Telecommunications) maintained compensation scales that were even higher than
in the rest of the public sector, reflecting stronger trade unions.
5. Accordingto Simmons (1982, p. 184),the elections of August 1967 prompted the hiring of
10,600relief workers six months beforethe vote.
20 Successful Stabilization and Recovery in Mauritius
There was considerable potential for improving the efficiency of the public
sector. Compared with the situation in Sub-Saharan Africa, however, the
magnitude of the problem in Mauritius was relatively small. This was largely
because the scope of the public sector did not expand very much in the independence
period. Although the MLP's ideology contained some radical ideas, including
nationalization of key industries (for example, sugar, transport), they were never
put into practice.
6. The Gini ratio has a range from zero (perfectlyequal incomedistribution) to one (very skewed
incomedistribution).
7. Tax rates ranged from 3.3 percent on personal incomes of up to 10,000rupees to 58.6 percent
on incomes exceeding250,000rupees.
Diagnosis 21
Wages in these programs were set 20 percent below that of unskilled government
workers. Over time, anomalies, such as DWC workers getting more than EPZ
workers, emerged. In 1976 DWC had 14,000 relief workers on its payroll.
According to Legum (1978, p. B315), they were perceived by many as workers 'who
spend much of their time sitting by the roadside."
The Gini ratio declined to 0.42 by 1975, signaling that income distribution had
become less unequal. By 1979 only 12 percent of the population was "absolutely poor"
(see Table A-2). The Gini ratio fell further to 0.37 in 1986-87.
Agricultural Policy
The agricultural sector in the colonial period was dominated by sugar, largely
in the hands of Franco-Mauritian planters. Ramgoolam described them as 'the
oligarchy" (Mulloo 1982, p. 118) that enormously influenced the economic policies
of the colonial government. After independence was secured, the government made
a major effort to regulate the sugar sector through labor laws and taxes. However,
since sugar was critical to the generation of foreign exchange, the government also
tried to secure favorable foreign markets and remunerative prices. Sugar was a
very profitable crop as long as Mauritius had access to preferential EEC prices.
However, changes in EEC agricultural policy could endanger sugar's viability.
Consideration of this risk led the government to try to promote nonsugar farm
activities as well as manufacturing and thereby to diversify the structure of
production.
SUGAR SUBSECTOR. Mauritius had 23 percent of the sugar quota under the
Commonwealth Sugar Agreement. When the United Kingdom joined the EEC, it
insisted on a suitable arrangement to safeguard the interests of Commonwealth
sugar producers. Mauritius succeeded in obtaining a very good deal under the
Lome Convention signed in 1975 by the EEC and African, Caribbean, and Pacific
(ACP) countries. Mauritius's share in the EEC quota was 38 percent, and the
quantity of sugar subject to the new arrangement increased by 30 percent compared
with what was eligible under the Commonwealth regime. 8 Furthermore, the price
guaranteed by the EEC to ACP countries was equal to the producer price for
European beet sugar producers. It was much more stable than the world free market
price and for most years its level was much higher (Figure 2.2 and Table A-4). The
EEC quota was roughly 80 percent of production in Mauritius-a much higher
proportion than in most other ACP countries (World Bank 1986a, p. 143). In Chapter
3 we will enquire into political economy considerations underlying this favorable
deal.
Most of Mauritian exports not going to the EEC were absorbed by the United
States at prices well above the free market level in most years. Mauritius had a
quota of 27,000 tonnes under the U.S. Sugar Act until it expired in 1975. Since 1977
Mauritius has secured duty-free access to the American market under the
Generalized Scheme of Preferences (GSP).
8. The free market price rose very sharply, however, during 1974from 15 cents per pound in
January to 57 cents per pound in November. For some months, therefore, the free price
exceededthe EEC price for 1974 of 32 cents per pound. Apparently, this negative differential
led some sugar-producingcountries to be ambivalent about the Lome deal under negotiation
duringthis time. Mauritius,however,was firm about seeking a large EEC quota.
22 Sucesfui Stabilizaion and Recoveryin Mauntius
The tax on sugar was introduced in 1961 at a uniform rate of 5 percent of the
gross value of exports. The initial rationale was mainly fiscal, and in the early
1970s the rate rose to 6 percent (Table 2.2). A subsidiary objective of the sugar tax
was to promote diversification in production by reducing the rate of return of
investment in sugar in relation to other crops. A major change occurred in 1975.
Small planters (exporting less than 20 tonnes) were exempted and the principle of
progression was introduced in the rate structure. The tax acquired a redistributive
rationale. Estates producingmore than 3,000 tonnes had to pay a tax at a 12 percent
rate. In 1979, a surcharge of 75 percent on the basic tax was imposed to mop up the
windfall gains occurring to sugar producers from the devaluation of the rupee.
Furthermore, estates producingmore than 3,000 tonnes now had to pay a tax rate of
23.6 percent. In addition, these estates were subject to the corporate tax (after
payment of dividends) at a rate of 55 percent for publicly owned companies and at 66
percent for private companies.
Note: Allsugar is sold through the Mauritius Sugar Syndicate,whichpays a uniformprice to all
producers based on average export prices, taking account of preferential prices in the EEC and
United States as wellas free world priceselsewhere.
a. Including surcharge of 75 percent on the basic duty.
b. Including surcharge of 50 percent on the basic duty.
c. Up until March 1985a producerexporting6,000tonnes wouldhave had to pay a duty equal
to 23.6 percenton the entire proceeds.After this date, the first 1,000tonnes wouldbe exempt,the
next 2,000tonnes wouldbe taxedat 15.8percent,and the remaining 3,000tonnes at 23.6 percent.
With such a marginal rate structure, the average tax wouldbe about 17 percent.
d. These changes occurred followingthe enactment of the Sugar Industry EfficiencyStudy
Actin July 1989.
Large planters claimed that the sharp hike in the rate of the export duty and the
financial burden of government's labor laws had reduced their profitability very
considerably (Table 2.3). The level of wages in the sugar sector was relatively high
(Figure 2.7). Furthermore, as noted already, planters were obliged to maintain a
Diagnsis 23
regular work force (defined as number of workers in the last slack season before
independence) all year around. In addition, they had to maintain at least 15 percent
of the supplementary labor hired during the harvest season, which had an
attendance record of 55 percent. Wages and salaries constituted over 50 percent of
operating costs.
Employment('000) 45 45 46 43
Netprofit(loss)in
millionsof rupeesa
After depreciation - 508 74 (32)
Before depreciation - 558 148 67
Net capital employed - - 1705 2400
Source:WorldBank data.
The increase in production of selected food crops for the local market was quite
impressive. For example, the output of potatoes almost doubled during 1972-81,
thereby eliminating the need for imports (Table 2.5). Similarly, maize production
almost tripled and there was a large increase in the output of onions and also of
groundnuts.
The economics of these diversification programs was difficult to assess,
however. Sugar estate owners, obliged by labor laws to retain workers through the
slack season, utilized them to grow food crops during this period. The Agricultural
Marketing Board (AMB) guaranteed prices to producers at remunerative levels.
The guaranteed price for potatoes, for example, rose by 55 percent in terms of 1980
rupees (after deflating nominal prices by the consumer price index; see Table A-
14). The corresponding increase for onions was 37 percent. The AMB had a
monopoly on the import of these items and brought in overseas supplies only to the
extent that local production fell short of demand. No study has been made that
Figure 2.10
SUGAR PRODUCTION AND EXPORTS, 1963 - 86
800-
Production
700- X
Production Trend
I' ~ ~ ~ I
4 00 - ___ _
1963 196f5 1967 1969 1971 1973 1975 1977 1979 1981 1983 19886
Year
eak\w4MR1K
26 SuccessfdlStabiliatwonand Recove in Mawitiiu
compares local and border prices to quantify the extent of protection enjoyed by
farmers.
The government subsidized the consumer price of rice and wheat flour
throughout the 1970s. Each adult was entitled to buy 200 grams per day of basic
quality rice and wheat flour at subsidized prices. Those doing "heavy work" were
entitled to twice the basic entitlement and children to 50 percent. The subsidy
increased from 32 percent of the landed cost of imports in 1975 to 60 percent in 1979
(World Bank 1983, p. 11). The State Trading Corporation, which was responsible
for administering these subsidies, had to rely on heavy support from the budget.
These subsidies rose from 100 million rupees in 1976/77 to 230 million rupees in
1981/82.
Tea (leaf)
Acreage (arpents) 14,765 9,000 9,650
Production (tonnes) 23,543 26,577 42,651
potatoes
Acreage (arpents) 1,009 1,500 1,895
Production (tonnes) 7,516 13,500 16,265
Imports (tonnes) 1,569 nil nil
Groundnuts
Acreage (arpents) 1,009 1,310 1,605
Maize
Acreage (arpents) 592 1,285 4,304
Production (tonnss) 470 1,395 7,970
Inports (tonnes) n.a 11,000 16,000
Onions
Acreage (arpents) na. 510 598
Production (tonnes) ns. 2,242 2,995
znports (tonnes) n.. 1,753 2,385
9. The benefits were numerous: protective import duties and quotas for infant industries;
suspension of import duties on materials and equipment for industrial use and not locally
available;rebates of import duties on other raw materials and componentsfor specified
industries;d-rawback ofimportdutiesonmaterialsand componentsusedin exportedproducts;
initial depreciationallowanceof 40 percenton plant, 20 percenton industrialbuildings,tax
holidaysof fiveyears, exemptionfromincometax on dividendsup to eight years;long-term
loansat favorableinterestrates fromthe Development Bank;leaseofstandardfactorybuildings
at subsidizedrates;and freerepatriationfacilities.
10. Greenaway and Milner (1989) arrive at an estimate for 1980 of 128 percent. In twelve out of
twenty-twobranches,EROPexceeded100 percent. In descendingorder of EROP, these
brancheswereleatherproducts;watchesand lenses; limeand stone; woodproducts;electrical
machinery;beverages;footwear;fabricatedmetals;basemetals;paperproducts;furniture;and
rubber.
28 Successful Stabilization and Recovery in Mauritius
recommendation until it had discovered for itself the limited scope of import
substitution in a very small domestic market (Bheenick and Schapiro 1989, p. 99).
In 1970, the government established the second prong of its industrial strategy
(namely, export production a la Jamaica and Hong Kong) without, however, giving
up the first prong (that is, import substitution). The Export Processing Zone
established in 1970 was a great success,but it also suffered from some weaknesses.
11. The Export Processing Zone Act of 1970 provides concessions and incentives to export-
oriented industries. The main features are complete exemption from payment of import duty
on capital goods; complete exemption from payment of import and excise duties on raw
materials, components, and semi-finished goods (except spirits, tobacco, and petroleum
products); and corporate income tax holiday for ten to twenty years. Corporate tax was 50
percent of the normal rate during eleven to fifteen years and 75 percent of the nominal rate
during sixteen to twenty years. Dividends were tax free for any consecutive five years
beginning with the first year of dividend payments. EPZ firms were also protected against
double taxation (in both countries) by agreements with France, the United Kingdom, Germany,
and India. Other features of the act include loans at preferential rates for importing raw
materials; electric power at subsidized rates; export finance at lower interest rates; loans up to
50 percent of total building costs for a ten-year period; priority in allocation of investment
capital by Development Bank of Mauritius; provision of reinforced factory buildings at
subsidized rates; free repatriation of capital and remittance abroad of profits and dividends to
companies with an approved status; and guarantee against nationalization. EPZ firms are
subject to general labor laws including minimum wages, etc., but they have greater flexibility in
Diagnosis 29
the Mauritius EPZ was that it was not geographically restricted. "Bonded
factories," catering exclusively to foreign markets, could locate anywhere on the
island. The Ministry of Commerce and Industry had to be restructured to provide
institutional support for the new export policy by undertaking studies aimed at
attracting foreign investors, scanning overseas markets, evaluating projects, and
monitoring developments. The Development Bank of Mauritius provided long-
and short-term credit to EPZ firms on a priority basis and operated the industrial
estates. These firms enjoyed preferential access to the EEC market on a duty-free
basis under the Yaounde and Lome conventions.
The volume of EPZ activity (employment, exports) expanded rapidly,
particularly in 1971-75 (Table 2.7). High sugar prices during a part of this period
created conditions enabling local investors to invest in the EPZ alongside
foreigners. Ethnic connections between Hong Kong investors and Sino-
Mauritians proved to be invaluable. These investors were concentrated in the
textile and garment industries. Bheenick and Schapiro (1989, p. 117) suggest that
local participation in EPZ equity was roughly half-a much higher ratio than in
free zones in other developing countries. Mauritius was in a better position to take
advantage of EEC preferential arrangements than were other ACP countries,
'because of the relative development of its entrepreneurial class and its educated
and easily trainable labor force" (Bheenick and Shapiro 1989, p. 119). Over 80
percent of EPZ workers in the 1970s were women. Their wages, influenced by
gender differentiated minimum wage levels, were 30 percent lower than for men.
A weakness of the EPZ was its heavy concentration on textiles and garments
and on EEC markets. Knitwear, for example, constituted 44 percent of total exports
in 1976 and 52 percent in 1980. The share of exports going to EEC was about 85
percent throughout the period. Access to EEC markets, on a duty-free basis, is
subject to very elaborate "rules of origin" and the "safeguard clause." During the
late 1970s Mauritius had to exercise "voluntary restraint" in the French and
British markets with respect to a number of product lines. It coped with these
restrictions fairly successfully by hopping from one item to another in various
markets. For example, the share of men's outerwear (not knitted) in total EPZ
exports declined from 14 percent to 6 percent in 1976-80 while the share of women's
outerwear (not knitted) rose from 0 percent to 4 percent. Knitted outerwear's share
also rose from 37 percent to 47 percent during the same period.
The EPZ has had its critics in Mauritius. Dependency theorists such as Alladin
(1987) regarded it as an enclave for international capitalism. This was also the
view of the extreme leftist faction within the MMM. These observers would have
favored an industrialization pattern that gave priority to the development of the
local capital goods industry. This is a dubious argument in our view, given the
very small size of the local market and the lack of a long industrial tradition at this
stage of Mauritius's development. Alladin claimed that EPZ posed a threat to the
sugar industry. It is difficult to understand this argument. Sugar profits helped
finance the EPZ. He also alleged that women workers were exploited in these
activities. They probably were, although gender wage differentials have narrowed
to some extent in recent years.
The momentum of EPZ activity slowed down considerably in 1976-80 (Table
2.7). The volume of investment declined. The rate of growth of exports and
employment decelerated. A rising real exchange rate and large wage hikes tended
to reduce considerably Mauritius's international competitiveness. It was clear that
the policy framework had to be altered to restore the earlier EPZ dynamism.
a. End of period
Sources: WorldBank (1978,1985).
owing to oil price hikes. Air fares to Mauritius became even more expensive than
before.
Government policy during the 1970s was to attract high-incometourists. There
was considerable concern that indiscriminate development of tourism could
accentuate congestion in the already crowded island and generate negative
cultural and environmental repercussions. The government offered development
certificates to hotel builders that entitled them to tax and other incentives. The
government chose to rely almost totally on scheduled airlines, including Air
Mauritius, to transport tourists. There was a virtual prohibition on chartered flights
and a number of restrictions on foreign airlines aimed at providing support to the
national flag carrier (Air Mauritius). Although these policies saw a substantial
expansion of tourism during the 1970s, they did not facilitate the full exploitation of
the potential (UNDP-IBRD 1982, p. 345). Furthermore, these policies had to be
modified because of important changes in the world economy and in the
international tourist trade. Several tour operators had experienced a sharp
reduction in their profit margins and had dropped or were considering dropping
their Mauritian operations.
It was important for the government to decide whether it should cultivate
'cultural tourists" (those who wish to explore life-styles other than their own) and
'independent tourists" (those who wish to organize their own holidays) in addition
to the high-incometourists. The government also needed to consider ways of easing
factors limiting transport capacity on scheduled airline services, particularly in
the peak winter tourist season.
3
Political Factors and Their Impact
on Economic Policy in the 1970s
In analyzing the evolution of macro and sectoral policies in the 1970s in Chapter
2, we briefly referred to a number of political determinants. In this chapter we will
spell out the political dynamic, the main political trends and their implications,
particularly for readers who are unfamiliar with Mauritius's recent history. Our
aim is not to write a definitive analysis but rather to provide background for an
understanding of selected economic issues.
32
PoliticalFactors and TheirImpact on Economic Policy in the 1970. 33
Parti Socia]isteMauricien
(PSM)C - 18
Comite D'ActionMusalman
(CAM)d 5 naL la. na. ta.
First, Prime Minister Ramgoolam presided over four governments from 1967 to
1982. His role was great even though his power was circumscribed by the
Constitution and the need to cooperate with many parties or pressure groups. He
joined the MLP in 1948 and remained in the limelight until his death in 1985.
Ramgoolam had a distinctive ability to forge a consensus among people with
opposing views. He brought moderation and pragmatism to Mauritian politics. 1 2
Ramgoolam's long tenure at the helm of state contributed greatly to adapting
constitutional democracy to the needs of a society that was stratified in many
different ways. The prime minister became the main instrument of
accommodation and reconciliation. About himself he once said, 'I have been a
Fabian all my life, in my approach to politics, in my tactics and political
philosophy" (quoted in Mulloo 1982, p. 42).
Second, Franco-Mauritians played a considerable policy-making role through
the PMSD and various business organizations such as the Sugar Producers'
Association. The PMSD was a member of the governing coalition in 1969-73 and
again in 1976-82. Duval had excellent connections abroad and used them to good
advantage. Franco-Mauritians were a small group with much wealth and a stake
in many different parts of the economy. Their economic and financial prominence
gave them much direct and indirect influence over the making of economic policy.
Third, workers were represented by trade unions, the MLP, and the MMM. All
labor groups were represented by MLP at independence. After Ramgoolam invited
the PMSD to join the coalition government, many workers became disaffected. The
MMM was born in 1969 and attracted the support of trade unions (grouped under the
General Workers Federation) in the transport, electricity, and sugar industries.
Another twenty trade unions (under the Mauritian Labor Congress) remained tied
to the MLP. The role of trade unions in economic policy was circumscribed during
the emergency period from 1971 to 1975. Government passed the Industrial
Relations Act in 1973 to curb the growing strength of MMM. Under this act, as few
as seven workers could form a trade union. The number of trade unions then
rapidly rose from 89 in 1974 to 283 in 1979. Such proliferation weakened the unions
financially and organizationally. After the emergency was lifted and the MMM
scored heavily in the 1976 elections, the role of worker organizations in economic
decisions was much enhanced. In fact, the government was alarmed by widespread
strikes and the emergence of strong wage pressures. 1 3 Widespread strikes broke
out again in 1979 when the government refused to recognize two new unions.
Two other groups should be noted briefly. The Chinese represent 3 percent of the
population. They own restaurants, retail stores, and EPZ firms. Their strong
ethnic link with Hong Kong investors was a considerable asset. Small planters,
mostly Hindus, are a growing interest group. Most small planters are members of
176 cooperatives, which are associated with the Mauritius Cooperative Agricultural
Federation. Some 31,400 small planters have holdings of fewer than five arpents
and produce on average three to fifteen tonnes of sugar per year. They tended to vote
12. Accordingto Simmons (1982,p. 49), "He was a born politician, sensitive to the feelings of
those around him, intuitivein the art ofcompromise,persuasive and honest."
13. The minister of finance in his budget speech of June 1976 declared, "It is pointless for
government to offer incentives if the climate of industrial relations is such that enterprises
cannot plan for the future. The whole industrialization programme can be wrecked by
irresponsible action by those who use trade unions for their political ends" (Legum 1977, p. B
264).
36 Successfid Stabilization andRecouery in Mauritius
for IFB and MLP. They succeeded in getting important concessions related to the
sugar tax and to labor laws.
A distinctive aspect of the policy process in Mauritius is the role played by the
very active media. They report on interparty and intraparty discussions.
Occasionally, the media highlight a policy issue on their own steam. In 1973, for
example, the press reported on "coolie wages" in the EPZ leading to a vigorous
parliamentary debate. As economic conditions deteriorated after the fall in sugar
prices, the media helped educate the public and contributed to the pressure on the
Ramgoolam government to introduce remedial measures.
It is very difficult to define the precise role played by the bureaucracy in
economic policy decisions. The core economic ministries built up some analytical
capacity for policy work over time, but even at the end of the 1970s there were many
weak areas. Sectoral ministries were particularly deficient, and parts of the
Planning Ministry also suffered from a chronic shortage of professional talent.
Typically, the practice was to hire consultants to undertake policy studies and for
the Planning Ministry and concerned sectoral ministry to supervise jointly. There
was considerable tension between sectoral ministries and the Ministry of Finance.
Relations between civil servants and politicians followed British precedents. The
former have no party affiliations, and their role is to administer policies of
whatever government is in power. The Public Service Commission (an
autonomous body) is responsible, in theory, for civil service appointments and
promotions. Its decisions can be challenged in court. The civil servant, therefore,
has a measure of protection. How this works out in practice is difficult to determine.
Some permanent secretaries have stayed a long time in key posts and their long
experience has given them an inside track in policy making. In the open,
pluralistic environment of Mauritius, however, many economic policies are
decided by polling and party alignments, rather than by technocratic professional
work. It is common practice for civil servants to tailor their ostensibly technical
conclusions to the known or presumed views of the minister in power. There are
exceptions, however.
15. Legum (1982, p. B273) quotes another writer named Borushka who claimed that the U.S.
DefenseDepartment was interested in DiegoGarcia as a base as early as 1970. Legum(1976,p.
B263) adds that MLP's agreement to lease Diego Garcia to the United Kingdom was a
preconditionfor independence. In the absence of this agreement, the United Kingdommight
have preferred the option of "association"favoredby PMSD. Minogue(1983,p. 75) said, "Much
officialaid and investment from Britain is probably to induce Mauritian leaders to keep quiet
over DiegoGarcia; and much Western anxiety about MMMvictoriesin Mauritius stems from
the naive convictionthat they are "communist"and would,from the Western point ofview,be a
destabilizinginfluencein the Indian Ocean."
4
Financial pressures and the setback in the real economy led to dissatisfaction
with Prime Minister Ramgoolam's leadership in 1978. Growing pressure on
foreign exchange reserves belied the hope that "something would turn up' (in the
words of Charles Dickens's famous fictional character Micawber) to provide relief.
Delay in taking policy action to deal with the situation became increasingly
untenable. Three MLP dissidents (called "Contestataires") headed by Harish
Boodhoo insisted on the resignation of two cabinet ministers accused of corruption.
Later these two were found to be guilty. In March 1978, in his speech on the tenth
aniversary of independence, the prime minister admitted that the country was in
serious difficulty. At the end of 1978, Finance Minister Ringadoo and other
"influentials" asked the prime minister to hold general elections-a demand also
being made by PMSD and MMM. In early 1979, fifteen MLP parliamentarians
openly asked Ramgoolam to resign (Legum 1980, p. B267).
Faced with this internal revolt within MLP, the prime minister started to pay
more attention to the views of the Treasury. A number of agreements with the IMF
were negotiated to stabilize the economy (Table 4.1). Furthermore, the Mauritian
government decided to revise its development plan on the advice of the World
Bank, and it signaled its new policy orientation at the first meeting of the
Consultative Group of Aid Donors in October 1980. A structural adjustment loan
was negotiated with the World Bank in 1981. Thus began a process of economic
reform that focused on the supply side, which complemented IMF agreements
focusing on managing demand. In fact, the two multilateral organizations joined
the "policy circle" in Mauritius for the next several years. However, conducting
policy business with Mauritius was quite a different enterprise from similar
exercises elsewhere in Sub-Saharan Africa. Finance Minister Ringadoo was
always in charge. He paid close attention to IMF and Bank views, but he made it
quite clear that proposals for reform had to gain acceptance by the cabinet and later
by parliament, where the government held a very slim majority. Mauritian
officials insisted on getting from IMF and Bank staff a full explanation of all the
implications of proposed policy changes. Ringadoo acquired key importance in the
Vishnu Mauritian policy circle during 1979-82. Later finance ministers continued
this tradition of maintaining a measure of autonomy and self-confidence vis-a-vis
38
The Policy Turnaround 39
February 1978 Macro policy agreement with IMF; implementation was incomplete
October 1979 Macro policy agreement with IMF; implementation was incomplete.
September 1980 Macro policy agreement with IMF; completed September 1981.
June 1981 First structural adjustment policy agreement with World Bank.
December 1981 Macro policy agreement with IMF; completed December 1982
May 1983 Macro policy agreement with IMF; completed August 1984.
June 1983 Consultative Group of Aid Donors reviewed economic policy.
December 1983 Second structural adjustment policy agreement with World Bank.
March 1985 Macro policy agreement with IMF; implementation was incomplete.
September 1985 Sugar policy agreement with World Bank.
As percentage of GDP
Consumption 86 85 79
Investment 32 23 20
Gross domestic expenditure 118 108 99
Imports 56 55 53
Exports 46 47 54
Fiscal deficit 6.1 11.7 5.9
Current account deficita 8.1 11.6 4.3b
1980=100
Gross domestic expenditure
(constant prices) 108 1 ooc 107
Import volume index 113 96 88
Export volume index 83 93 120
Nonsugar farm output volume index 94 104 110
These reforms were eminently successful, but the process was stressful. Bad
weather in 1980 and 1983-84 caused setbacks. The terms of trade deteriorated during
the early 1980s (Figure 4.1). These shocks delayed the restoration of financial
balance; in fact, disequilibrium in the budget and the balance of payments
worsened before it started to get better (Figures 4.2, 4.3, 4.4, and Table 4.2). Gross
domestic expenditure in real terms contracted considerably during 1979-82, largely
at the expense of capital accumulation. The following period, 1983-86, witnessed
some recovery in GDE, as well as a significant reduction in financial imbalances.
GDE in the last year covered by this study, 1986, was 29 percent above the 1980 level.
The current account of the balance of payments was in surplus, and the budget
deficit had diminished in magnitude. A major expansion had taken place in EPZ
exports. Rising local production of food items had reduced the need for imports.
Although supply-side responses were important in securing relief from balance of
payment pressures, a considerable part was played by restraint on expenditures.
Per capita consumption (constant prices) in 1986, for example, remained 11 percent
below the peak reached in 1979.
The stresses of stabilization and adjustment also influenced political events,
although it is far from easy to establish their role vis-a-vis noneconomic factors.
Mauritius had a general election in June 1982, one of the most difficult years in the
reform process when unemployment climbed to 20 percent. The result was a
transformation of the political scene (Tables 3.1 and 3.2). The ruling coalition of
MLP and PMSD was totally defeated by a new left-wing alliance of MMM and
PSM. According to Legum (1984, p. B227), "caste and religious loyalties, so
important in previous elections, were abandoned. The tendency was to move away
from ethnic politics and give the country a new sense of direction under a new
Socialist government with new leaders and new ideas."
The new finance minister, Paul Berenger, took over in the middle of the
implementation of an IMF stand-by. All targets agreed with the previous
government, which reflected conventional IMF medicine, were implemented
despite earlier criticisms leveled by MMM spokespersons. When confronted with
responsibilities of office, Berenger appeared to show a large measure of
openmindedness. He was impressed by the force of the logic inherent in the IMF
recipe and adopted it despite its unpopularity in many quarters. He also broke with
past practice of secrecy by publishing the details of policy agreements between the
government and the IMF/World Bank. His flexibility cost him his job. According
to Legum (1985, p. B209), "Berenger's first budget ... was at the root of the political
crisis of March 1983." The surcharge on the sugar duty was reduced from 75 percent
to 50 percent (Table 2.2). The leader of the PSM took issue with the government's
ongoing austerity policies and campaigned for an alternative economic strategy.
Berenger resigned and was replaced as finance minister by Lutchmeenaraidoo.
Another general election took place in August 1983 in which a new party (MSM)
joined forces with MLP and PMSD to defeat MMM (Tables 3.1 and 3.2). According
to Legum (1985, p. B213), the campaign saw a return of communal tendencies in the
political arena of Mauritius. The new government remained in power and
Finance Minister Lutchmeenaraidoo presided over the economic recovery. Many
dramatic events were played out on Mauritius's political stage during the 1979-86
reform period, but successive governments changed very little their economic
policy orientation. Undoubtedly, this stability and persistence helped the process of
economic revival. Next we will examine in some detail the nature of the
government decisions and the extent to which they were implemented at the macro
and sectoral levels.
Figure 4.1
TERMS OF TRADE INDEX, 1980 -86
200 -
160~~~~ - ~~~~~~~~~~~
*94.'
150-O -
100~~~~~~~~~~~~~~~~1
Terms of Trade
50- I I
1980 1981 1982 1983 1984 1985 1986
Year
cak\w48U58L
Figure 4.2
INDICATORS OF NATIONAL ACCOUNTS, 1980 - 86
16,000 l
GDY(Gros.Dometc
GDE (GramsDom\e
11,000 - N
_ X osmGDP(Cinc
t~~~~~~~~~ -
1,000 - I II I I
1980 1981 1982 1988 1984 1985 1986
Year
ckw486S
Figure 4.3
BALANCE OF PAYMENTS INDICATORS, 1980 - 86
150 -
100 -
Net ODA/
50-
0-
i -50
J ~~~~~~Net
Capital * <\ X
-50-
-10 /Net IMF
-200- I l l l
1980 1981 1982 1983 1984 1985 1986
Year
600 -
0 600
-1,200
1980 1981 1982 1983 1984 1985 1986
Year
16. The subsidy on rice and flour was reducedfrom 60 percent to 38 percent followingincreases
in October 1979 and July 1980.
46 Successful Stabilization and Recoueryin Mauritius
ho~~~~C
P_ _ __°____°o
St~~~~~-
lA l l ll
T 1 T~~~~~~
f ;; ff~~~~~~~~~~~~~~~~~~~~~'
*~~~~~~~~~~~~
48 Successful Stabilization and Recovery in Mauritius
investment was 40 percent of total capital outlays. The MMM and PSM govemment
that came to power in August 1982 abandoned the proposal to construct a new airport,
a high priority of the Ramgoolam government. No major new projects were started
during 1981-83. New guidelines were developed to evaluate public projects, and they
were applied in most cases. Social projects tended to escape scrutiny. The
incremental capital-output ratio (ICOR) of public outlays is estimated to be 5.0
during 1982-86 compared with 6.3 for 1977-82 (World Bank 1987b).
The expenditure on education (capital and current) as a percentage of the
overall government budget steadily declined from 17.8 percent in 1979-80 to 13.4
percent in 1985-86. Four substandard schools were closed. During this period, the
pupil-teacher ratio increased form 27:1 to 32:1 in government primary schools and
from 16:1 to 17:1 in government secondary schools. In primary schools no new
teachers were hired after 1979. In secondary schools only ten new teachers were
recruited in 1982. Recruitment of teachers of oriental languages was stopped.
Existing teachers had to cover more than one school wherever distances permitted
such economies to be made.
Restructuring of Parastatals
Reforms took place in three parastatals. The number of relief workers on the
payroll of the Development Works Corporation was reduced from 14,000 in 1976 to
4,000 in 1982. This was achieved by transferring workers to other agencies and by
attrition. The government tried to transform DWC into a public contractor that
competed with private contractors. However, even by 1986, DWC was not
financially self-reliant and was a substantial burden on the budget.
The reform of the Tea Development Authority focused on improved
management in 1981. The 2,500 person work force was reduced 5 percent. Trainees
and pluckers were converted into smallholders cultivating tea. They paid a
nominal rent on land owned by TDA. After initial progress, political pressures
seemed to prevent further restructuring for some time. The fall of tea prices in 1985
caused a deterioration in TDA's financial situation. A new company, Mauritius
Tea Factories Company, was established in 1986 to manage TDA's tea factories.
TDA's responsibility was reduced to providing training and extension services
only.
The Central Housing Authority was created in 1960 to build low-cost houses for
victims of cyclones. Of the 8,000 units to be built by 1980, CHA was able to build only
2,000 houses at exorbitant costs (World Bank 1987b, p. 26). Since 1981, the
government has gradually increased rents on these housing units to cover costs of
maintenance and provision of utilities. It also sold some of these units to tenants.
CHA diversified its activities by bidding for construction contracts. Its financial
position did not improve, however, and its burden on the budget remained large.
Limited progress was made in parastatal reform. Many major parastatals
continued to be a substantial budgetary burden. The government found it very
difficult politically to reduce overstaffing. The Ramgoolam government appeared
to reverse the reform process in 1982, in the middle of the election campaign, when it
promised jobs to 20,000 unemployed people. Fortunately, the new MMM/PSM
government refused to confirm these promises.
The Policy Turnaround 49
Table 4.3 Gross Commitments, Net Resource Transfers, and Volume of Imports,
1978-86
Sugar Sector
A preparatory unit for the Sugar Commission was established in September
1981, but controversy over the appointment of the members of the commission
prevented any further action till after the 1982 elections. The commission was
appointed in December 1982 under the chairmanship of Dragoslav Avramovic, a
well-known World Bank and UNCTAD expert with a wealth of development
experience. Other members included Jagadhish Manrakhan, Vice-Chancellor of
the University of Mauritius, and Ramsamy Chedumbarum Pillay, the Director of
Audit, who was replaced on the commission by Ramakrishna Sithanen, a transport
economist, in July 1983. The small size of the commission was a surprise to some
observers, but the government did not envisage a group that would represent all
interested parties. The commission's focus was on establishing a factual base and
on obtaining expert opinion from outside Mauritius.
Two reports (one by Avramovic and a dissenting report by Manrakhan and
Sithanen) were submitted to the government in early 1984. Avramovic concluded
that Mauritius had a strong comparative advantage in sugar, but that the sugar
industry was overtaxed and its productivity was held back by fragmentation of mill
capacity, as well as by submarginal yields in the smallholder sector.1 7 On the tax
issue, Avramovic pointed out that the high rates of export duty were discouraging
investment, thereby putting into question the capacity of Mauritius to maintain
sugar output. He argued that tax rates should be reduced over three years, and then
the export duty should be replaced by an excess profits tax. To calculate a company's
liability under the new tax, it would be necessary to establish a base line valuation
of its assets, compile an index to update the value of assets annually, estimate the
remaining life of assets to calculate depreciation, and establish a "standard" real
17. Avramovic also recommended that Mauritius should sell its expertise in sugar technology to
other sugar-producing countries in Africa.
The Policy Turnaround 51
The government lifted the ban on mill closures in 1985, and two mills were shut
down. The private industry was asked to provide a list of additional mills that
would be closed. Such a list would permit the government to plan for a gradual
redeployment of redundant labor. The government established four farm service
centers to provide smallholders with inputs and extension services. Over time,
twelve additional centers are to be established.
During the reform period, 1980-86, sugar production continued to fluctuate due to
cyclones and drought. But since 1985, sugar production has been above the long-run
trend (Figure 2.10). The contribution of sugar to GDP, exports and employment
continued to decline, however (Table 4.4). Real wages continued to decline at 1.9
percent p.a. since the late 1970s. The gap between average labor earnings in the
sugar sector and manufacturing was considerably narrowed (Figure 2.7). Milling
costs declined at a rate of 1.5 percent p.a. during the first half of 1980s, and by 1985-
86 the average return on capital (after depreciation) was 5 percent (Government of
Mauritius 1988). Unit cane growing costs on large estates had also declined, but
sugar cultivation on estates remained unprofitable. Financial profitability of the
sugar industry in Mauritius remains low, but this is largely a reflection of onerous
labor costs mandated by current labor laws and the tax regime for sugar. Physical
productivity in Mauritius is high in relation to other sugar-producing countries.
This is true of both cane cultivation and milling (World Bank 1986a, pp. 81, 83).
Employment(thousands) 54 48
Share of sugar in total employment(%) 27 24
Nonsugar Agriculture
A major effort was made to review agricultural pricing issues in the 1980s.
Various committees were established and a national seminar was held. However,
in view of approaching general elections in 1982, the government found it very
difficult to finalize its views. The white paper on agricultural diversification and
The Policy Turnaround 53
food policy did not emerge till February 1983. Despite this seeming ambivalence,
government made significant alterations in guaranteed producer prices. For
example, the potato price was reduced in real terms (after deflation by the cost of
living index) by 36 percent during 1980-83and further by 34 percent during 1983-86
(Table A-14).These declines notwithstanding, potato production continued to rise
(Table 2.5). Having achieved self-sufficiencyby raising potato prices very sharply
during the 1970s, the government reversed its price policy. The guaranteed real
price for onions was also reduced sharply during the 1980s, even though rising local
production had not eliminated imports. Government policy for maize was quite
different, however. The real maize price was raised by 38 percent during 1980-86to
provide strong incentives for import substitution. In the absence of any study
comparing the government controlled prices with border prices, it is difficult to
assess the economicrationale of these policy developments.
The government's attempt to reduce budgetary outlays and to alter the pattern of
food consumption by phasing out consumer price subsidies on rice and wheat proved
to be very sensitive politically. The retail price of wheat flour was raised by 27
percent in real terms during 1980-84 and by 8 percent in the case of rice. The
budgetary subsidy amounted to 111 million rupees in 1978-79,230 million rupees, a
peak, in 1981-82,and 72 million rupees in 1985-86.Both Legum (1984, p. B229)and
Latham-Koenig (1984, p. 168) concluded that reduction of such subsidies was very
difficult politically and was one of the factors leading to the collapse of the MMM
and PSM government in 1983.
The government encouraged meat and milk production by making available
some "crownland" under forest for ranchers. It also set up a National Dairy Board
in 1985 that guaranteed prices to milk producers. Milk production rose from 7,500
tonnes in 1981 to 11,500 tonnes in 1986. Self-sufficiency was achieved in pork,
poultry, and venison. The government approached the World Bank for technical
assistance to develop fishing, but the World Bank regarded the government's
desire to test the feasibility of promoting deep sea fishing as overly ambitious. The
government then requested FAO and the European Development Fund for
assistance. The government succeeded in formulating a development program for
fresh water and marine aquaculture, lagoonal and other artisanal fisheries, bank
fisheries, and commercial tuna fishing. Fish production rose from 3,716 tonnes in
1981to 8,012tonnes in 1986,and Mauritius becamea net exporter.
The government appointed a study group in 1983 to draw up a program to
restructure the Tea Development Authority. It took two years to develop a plan of
action with the help of expatriate experts. Very favorable tea prices in 1984
stimulated considerable interest among TDA employees, and many agreed to
become smallholders. Tea production rose sharply (Table 2.5). However, this
upsurge proved to be temporary, and TDA's problems reemerged as international
tea prices weakened.
18. "AnEPZ companyenjoyedcompletetax exemptionfor the first 10 years and was taxable at
half the normal rate during years 11 to 15 and a quarter of the rate during years 16 to 20, while
dividends were tax free for any consecutive 5 years during the first 10 years; a company
holding and Export Service Certificate paid corporate tax at a rate of 10 percent and enjoyed the
same dividend concessions as an EPZ company; under the Hotel Management (Incentives)
Schemes..., hotel companies got a partial tax holiday for 15 years, with the rate of corporate tax
for the first 8 years being 10 percent, rising to 15 percent for the subsequent 7 years; and, finally,
a company with a Development Certificate or Agricultural Development Certificate enjoyed a
corporate tax holiday for 5 to 8 years with an exemption from payment of income tax on
dividends similar to that of an EPZ company" (Bheenick and Schapiro 1989, p. 105).
The Policy Turnaround 55
external reserves and a fall in public revenues. The government was also
concerned about the adverse impact of lower import duties on the financial position
of DC enterprises producing import substitutes. A number of intensive discussions
between the government and the Bank failed to break the impasse. In January 1986
some high tariffs on imports of transport equipment were lowered on average by 25
percent. The government was not ready, however, to agree to a schedule for phased
rationalization of the overall tariff structure. Such an agreement was not reached
till July 1987, which is beyond the time-frame of our study.
The government reduced the number of manufactured products subject to price
controls from forty in 1983 to eight in 1985. The remaining controls were on
essential products such as kerosene, soap, and toothpaste. The government also
reduced items subject to maximum mark-up at the retail stage from forty in 1983 to
eighteen in 1985. Such a ceiling on mark-up continued largely on agriculture
products such as maize, potatoes, rice, beans, onions, garlic, tumeric, and
groundnuts.
The manufacturing sector, particularly EPZ firms, responded vigorously to the
changed policy environment. EPZ value added in constant prices expanded at 16
percent p.a. during 1981-86 (Table 2.7), while the corresponding figure for DC firms
was 3 percent p.a. The share of EPZ in total manufacturing investment increased
from 27 percent in 1979 to 52 percent in 1985. These firms created 30,000 new jobs
during the 1980-86 period and were the major instrument for reducing economy-
wide unemployment from 17 percent to 12 percent. The proportion of males in total
EPZ jobs increased from 18 percent to 31 percent during this time. Mauritius joined
the ranks of the biggest knitwear exporters in the world.
The government is aware of the remarkable success of its EPZ policy and its
riskiness. The degree of concentration on exports of textiles and garments has
increased from 69 percent to 83 percent during 1980-87. The reliance on the EEC and
US market is very heavy, and a recession could hurt the momentum of exports.
Furthermore, the EPZ remains an enclave. It has little connection with the rest of
the economy. Bheenick and Schapiro (1989, p. 119) note that although some
ancillary industries (buttons, braid, trimmings) and backward linkages (thread,
boxes, bags) have developed, there is potential for much more. These authors
recommend providing incentives to encourage subcontracting between EPZ and DC
firms.
capacity. The number of hotel beds increased substantially (Table 4.5). However,
the government encountered difficulties in implementing a scheme that would
license "bungalow" owners to provide rooms to tourists. The government closed
several beaches to the Mauritian public with a view to reserve facilities for tourists.
This move has encountered some hostility. Tourist arrivals increased appreciably
(Table 4.5). There were corresponding increases in gross earnings and in value
added.
Lessons of Experience
Is the Mauritius case relevant for Sub-Saharan Africa? Some observers claim
that it is not, because basic conditions in Mauritius are very different from those in
a "typical" African country. This debate is analogous to the one about the
replicability of the spectacular industrialization experience of South Korea. We do
not deny the many special features of Mauritius (or Korea for that matter) that
make it difficult to transfer its experience in specific terms to other countries. All
such transfers have to be adapted to the particular circumstances of the receiving
country. This adaptation is a creative and innovative process, not a mechanical
one. It is useful to question the concept of a "typical" African country since so much
intercountry diversity exists within this region. Behind this diversity, however, the
analyst can discover common patterns, shared problems, and similar policy
responses. It is at this general level that useful comparisons can be made and
replicable lessons of experience identified.
The Mauritian problem in 1979 had three major dimensions. First, aggregate
demand had been mismanaged since 1973. Consumption and investment had been
allowed to expand far too rapidly during the sugar boom, the exchange rate had been
allowed to appreciate in 1975-78, and wage levels had become excessive. Second, the
government had a number of goals (economic growth with efficiency, rapid
expansion of employment, and reduction of inequality), but it had not articulated
clearly the conflicts among these goals and the related trade-offs. A number of
questionable policies resulted. There were elaborate labor laws, large wage
differentials unrelated to productivity, and trade union pressures that impeded the
labor market. The sugar export duty had become excessive, and its rate structure
induced a break up of large estates into relatively inefficient small holdings.
There was open-ended protection for an indefinite period against imports given to
DC enterprises in the manufacturing sector, at the expense of consumers. Third, the
"politics of repression" during 1971-75 was followed by the "politics of
accommodation" during 1976-79. In both periods, but particularly in the second one,
the political imperative of governing a deeply stratified society according to the
rules of parliamentary democracy had reduced economic policy to the lowest
common denominator. The government coalition in the late 1970s, headed by
Prime Minister Ramgoolam, tended to react passively to events. It had a
57
58 SuccessfidStabilixationand Recoveryin Mauritius
diminishing capacity to lead society out of its growing economic and financial
troubles.
The distortions in policy in Mauritius, mentioned above, are hardly peculiar to
this country. They exist everywhere in some form or shape. What was distinctive
about Mauritius in the 1970s was the relative mildness of policy distortions (Gulhati
1990). Aggregate demand had been mismanaged but not to the extent of
precipitating a disastrous financial crisis as in the Sudan or Zambia or Zaire.
Factor prices in Mauritius did get out of alignment, but the extent of disequilibrium
was moderate. The sugar tax became excessive, but it did not lead to a large decline
in sugar exports as happened in Ghana with respect to cocoa exports or in Tanzania
with respect to all exports.
It is remarkable that even the relatively mild disequilibrium in Mauritius at
the end of the 1970s brought about a societal response. Prime Minister Ramgoolam
was pressured and persuaded to change course. The open political system in
Mauritius generated sufficiently strong feedback to party and cabinet members
that government collectively became concerned about the deteriorating economic
and financial situation. The turnaround occurred when the Finance Minister and
the Bank of Mauritius, whose warnings had been ignored during the late 1970s,
began to gain influence vis-a-vis the spending ministries. First, the IMF and then
the World Bank were requested to advise the government on policy and to provide
financial help. Although these international organizations joined the Mauritian
policy circle, their role was defined and orchestrated by the finance minister. The
sequence of policy packages adopted by the government during the 1980s always
went through a detailed process of examination by government officials and of
discussion within the Cabinet. Subsequently, they were debated within the
legislature and even more widely in the media.
The reform program was undertaken in two distinct steps. From 1979 to 1982 the
emphasis was on macroeconomic stabilization, mainly through curtailment of
aggregate demand. This involved quite a painful adjustment consisting of rising
unemployment, declining real wages, and disciplined austerity. The government
persevered with reform even though it meant a considerable loss in the momentum
of economic growth and a perceptible setback in the welfare of low-income groups.
Very little was done to "sweeten the pill" for underprivileged social groups.
Attempts by the World Bank to get the government to tackle key sectoral issues (for
example, sugar) did not make much headway during this period.
The second step in the reform program was taken after the 1982 general
election. A number of issues at the sectoral level were put on the policy agenda
where they remained for quite a long time while studies were commissioned,
reports were analyzed, and policy options were debated. The process for preparing
policy action was elaborate and time consuming. In the case of sugar and the
import protection regime for manufacturing DC enterprises, there was a genuine
need for collecting data and analyzing it. Furthermore, it was necessary to consult
with interested parties and to build a measure of agreement on how and when to
tackle the key issues. Full agreement was not reached, of course, in the case of
sugar restructuring. Two sugar commissioners issued a dissenting report.
Although the government was able to implement fairly quickly the
recommendations of expert studies to abolish QRs on imports, it took quite a long
time to revise the schedule of import tariffs.
Three different governments were involved in carrying out reforms over the
1979-86 period, but the basic thrust of new policies was sustained. This was a
remarkable accomplishment. Even the leftist MMM/PSM government adhered to
Lessons of Experience 59
61
62 Successfil Stabilizationand Recoveryin Mauritius
1987.
…----*
Digest of Agricultural Statistics. Central Statistical Office,
Ministry of Economic Planning and Development, Port Louis, Mauritius.
Greenaway, D., and C. Milner. 1989. "Nominal and Effective Tariffs in a Small
Industrializing Economy: The Case of Mauritius." Applied Economics,
vol. 21, no. 8
Haggard, Stephen, and Robert Kaufman. 1989. "The Politics of Stabilization and
Structural Adjustment." In Jeffrey Sachs, ed., Developing Country Debt and
Economic Performance, vol. 1. Chicago: University of Chicago Press.
1967.…____.
"Population Explosion, The Standard of Living and Social
Conflict." Economic Journal, vol. 77, no. 306.
1983.…____.
"Mauritius: Political, Economic and Social Development in a
Small Island." Manchester Papers on Development 8 (November): 31-76.
Mulloo, A. 1982. Our Struggle: 20th Century Mauritius. New Delhi: Vision Books.
Selwyn, Percy. 1983. "Mauritius: The Meade Report Twenty Years After." In
Robin Cohen, ed., African Islands and Enclaves. London: Sage
Publications.
World Bank. 1978. The Economy of Mauritius: A Basic Economic Report. Report
1509-MAS. Eastern Africa Region. Washington, D.C. February.
1981.
…____.
Mauritius: Tea Development Authority Project. Project
Performance Audit Report. Operations Evaluation Department.
Washington, D.C.
-__ 1984. Social Data, 3d ed. Baltimore, MD: Johns Hopkins University
Press for the World Bank.
1986b.
…____.
Mauritius: Sugar Industry Project. Report P-4349 MAS.
Washington, D.C. June.
1988.…____.
Mauritius: Industrial Finance Project. Report 6708-MAS.
Industry and Energy Division, Eastern Africa Department. Washington,
D.C. March.
1989b.
…. Mauritius:
… Managing Success. Africa Regional Office.
Washington, D.C.
References 65
67
I I I
Appendix Table 69
Comparators1986
Middke
income Developing
Indicator 1966-68 1972-74 1978-801984-86 countries countries
National accounts
Value added in agriculture 22.3 19.9 18.7 15.3 15 19
Value added in industry 19.3 20.1 22.0 23.3 36 36
(of which manufacturing) 11.9 13.5 12.8 14.8 22 21
Resourcebalancea 2.1 -2.8 -14.7 -0.3 1 -1
Exports 572 62.0 47.9 52.7 22 19
Imports 55.1 64.8 62.6 53.0 21 20
Total consumption 80.2 78.1 87.2 77.8 76 76
Gross domesticinvestment 21.0 33.9 27.9 24.0 23 24
Gross domesticsavings 19.8 21.9 12.8 22.2 24 24
Government finance
Current revenue
(excludinggrants) 18.3 15.2 19.7 20.8 24 23
Expenditures
Education 2.9 4.2 4.9 3.5 3 3
General public services 2A 3A 5.4 4.2 2 2
Heslth services 1.7 3.1 4.2 2.2 6 6
Economicservices 4.5 5.0 4.2 3.4 1 1
Wagesand salaries 9.9 14.1 9.9 8.9 - -.
Total expenditure 24.8 19.7 27.9 25.2 28 26
Current 19.6 15.2 22.7 22.2 - -.
Capital 5.2 4.5 5.2 3.0 - --
Actual debt service
(%of exports)a -- 1.0 4.1 11.3 21 20
a. goodsand nonfactorservices.
Sources:World Tables (1987);IMF (variousyears), GovernmentFinance Statistics Yearbook.
70 Successfil Stablization and Reovery in Mauiiue
a. World Bank Atlas method of convertingdata in national currency to US dollars. The conversion
factor for any year is the average exchangerate for that year and the two precedingyears, adjusted for
differences in rates of inflation between the country and United States. The official exchangerate is
usualy used, but when it divergesby an exceptionallylarge margin from the rate effectivelyapplied to
international transactions, then an alternative rate is used. Midyearpopulationis used to arrive at per
capita figures.
b. 1976.
c. US$190per capita for urban and rural areas.
d. 1979.
Sources: World Tables, vol. 2; Social Data, 3d ed., published for the World Bank by Johns Hopkins
University Press, Baltimore, January 1984;and WorldDevelopmentReport (various years).
Appendix Table 71
a. National Accounts(NA)is definedas the ratio of export (gnfs)price index to import (gnfs)
price index.
b. UNCTADseries is defined as ratio of price index of commodityexports fob. to that of
commodityimports ci.f.
Sources: World Development Report (1987); UNCTAD(1985). This table is based on the
national accountseries.see Figures 2.1and 4.1in this paper.
?2 Suriafed S bWiaftoa and Rmvery iA Maunwiga
Table AZ EEC Dividend and its Impact on Mauritius's Economy, 1968-86 (US$
millions, current prices)
1968 5.9
1969 6.2
1970 8.0
1971 7.3
1972 12.9
1973 22.8
1974 34.0
1975 16.4
1976 27.1
1977 86.3
1978 119.9
1979 140.7
1980 -70.9
1981 26.1
1982 147.1
1983 121.3
1984 142.8
1985 168.4
1986 193.8
a. The difference between value of sugar exported at EEC prices and free market (international)
prices. EEC dividend amounted to US$487.5 million during 1968-80 (of which US$346.7 million
is during 1977-79) and US$799.5 million during 1980-86. The impact of the EEC dividend on the
economy is calculated using the Harrod-Domar framework with the following assumptions:
marginal (and average) propensity to save is 0.25; incremental capital-output ratio is 3.00; and
all savings are invested. Absolute savings (and investment) due to EEC dividend during 1968-80
is US$122 million (of which savings during 1977-79 is US$87 million) and during 1980-86 is
US$200 million. The increase in national income during 1968-80 (i.e., 13 years) is 12213x 13 =
US$529 million.
This is equivalent to 7.0% of total GDP in 1968-80.Similarly, increase in national income during
1977-79 is US$87 million, which is equivalent to 3% of total GDP in 1977-79. Lastly, increase in
national income during 1980-86 is US$467 million, equivalent to 5.7% of total GDP in 1980-86.
Table A-6 Indicators of National Accounts, 1960-86 (million rupees, 1980 prices)
Source: World Tables, 1987. See also Figures 2.3 and 4.2 in this paper.
Appendix Tables 75
Sources: For current account balance and net capital, IMF (various years), Balance of
Payments Yearbook; for net IMF, International Finance Statistics Yearbook (various years); and
for next official development assistance, OECD (various years). See also Figures 2.4 and 4.3 in
this paper.
76 Succeful Stabijeation andRecovery inMauritius
Table A-8 Budget Deficit and Its Financing, 1968-86 (million rupees, current
prices)
Net foreign Borrowing Budget
Year Capital a from local banks b deficit c
1968 13 18 -65
1969 24 1 42
1970 22 11 -56
1971 10 59 -75
1972 32 27 -75
1973 11 -15 -72
1974 30 190 -210
1975 41 -9 -145
1976 20 236 -160
1977 70 289 400
1978 284 464 -553
1979 310 490 -718
1980 219 500 -559
1981 721 454 -895
1982 866 594 -1115
1983 -152 946 -780
1984 -88 643 -673
1985 883 -325 -881
1986 119 272 -607
Source: IMF (various years), Government Finance Statistics Yearbook See also Figures 2.5 and
4.4 of this paper.
Appendix Tables 77
Note: Effectiveexchange rates have been derivedusing base year (1980)import weights of 123
trading partners. The real exchangerate is arrived at on the basis of the nominal effectiverate
and movementsin consumerpriceindicesin Mauritius and its trading partners. An increase in
the index means an appreciationin the exchangerate and viceversa. SeeFigure 2.6.
Table A-11 Nominal and Real Interest Rates on Commercial Bank Deposits of Six
Months, 1970-86 (annual percentage)
Notes:
a. At year end.
h Real interest rates (R) have been arrived at using the formula:
1+i
R= - -1
1
+p
Where i = nominal interest rate
p = percentage change in consumer price index.
Note: GDP deflator is used to convert data in current prices into series at 1980 prices. Current
revenue excludes grants. See Figures 2.9 and 4.5.
Source:WorldBank (1986a).
82 Succesfid Stabilization and Recoueryin Mauritius
Table A-14 Guaranteed Producer Prices for Selected Food Crops, 1977-87 (constant
1980 rupees per ton)
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