Differences between IFRS and AAIOFI standards Term Paper

Differences between IFRS and AAIOFI standards - Term Paper Example The development of the international accounting standards and its acceptance would help in reducing the compliance costs and in the process would develop consistency in the quality of the audit. (IFRS in your pocket 2005, p. 2) What are IFRS standards? The International Financial Reporting Standards (IFRS) have been enforced by International Accounting Standards Committee for the better understanding by the equity investors, the lenders and anyone else who uses the information. The world securities regulators have been recommended by the International Organization of Securities Commission to allow the foreign users to use IFRS in making financial statements for the cross border offerings and listings. The uses of IFRSs have been made obligatory in the consolidated statements of the listed Europe companies from the year 2005. It has also been reported that many countries have started replacing their national GAAP by IFRSs in their domestic companies in comparison with the other nation s which are adopting policies to approve IFRSs either verbatim or in the exact manner as their national standards. The IASB and the US counterpart of it, the Financial Accounting Standard Boards, have taken up a comprehensive agenda to converge the IFRSs and the US GAAP as much as possible over the next several years. A convergence project has also been initiated with Japan. The pre-requisites of the global business is a global capital market which is ensured by superior governance, better-quality laws and a set of internationally accepted accounting standards. The IFRSs standards have been largely accepted around the world. The Standards of IFRS 1. The initial acceptance of the International Financial Reporting standards. The objective of the standard was to lay down the process when the IFRSs are being newly adopted by any organization while drafting its financial statements for common purpose. The statement includes an overview of the financial statements for the first time entit ies and they should draft their accounting policies according to the IFRSs which have been enforced from 31st December, 2005. The organization is needed to frame its financial statements at least for the years 2005 and 2004 and also should reaffirm the opening balance sheet. As IAS 1 requires the comparative financial data of the previous one year minimum the opening balance sheet that will be produced should be of January 1, 2004 if not earlier than that. If the entity adopts the standards on 31st December 2005 and produce selected portion of the financial data on an IFRS basis for the period before 2004 along with its financial statements for the year 2004 and 2005, that would not change the fact that the opening balance sheet according to the IFRSs standards will be of 1st January 2004. (p. 57) 2. Share Based Statement The objective of the standard is to lay down for the transaction which involves the receiving or acquiring of goods or services by the entity either as a â€Å"co nsideration for its equity instruments or by incurring liabilities for amount based on the price of the entity’s shares or other equity instruments of the entity†. (p. 58) The Standard specifies the mandatory recognition of the entire share based payments in the financial statements on the basis of a fair value measurement. It also specifies the recognition of any goods and

E-Business strategy Essay Example | Topics and Well Written Essays - 2500 words

E-Business strategy - Essay Example Starbucks Company also has an information technology department that incepted its first website in 1998. This use of website has enabled the company slowly embrace and transact with e-commerce. In the year 2000, Starbucks Company managed to upgrade its server system to the Microsoft Commerce server 2000, which led to a remarkable improvement witnessed in its online service delivery. The Company has continually embraced e-commerce by purchasing different commerce servers in relation to the change in technology Stanford-Smith and Kidd 2000.The presence of e-business and e-commerce has enabled Starbucks Company to consistently purchasing numerous advanced registers and coffee machines to replace the old systems. The use of these new systems has contributed to the improvement of staff‘s efficiency and the speed, with the inclusion of assisting the shops to produce better quality coffee products. The use of these new materials and processes has resulted in the company. Starbucks Com pany and coffee houses no longer experience annoying queues to be served. This ensures the Starbucks considerably expand its customer base, and assist in the improvement of better customer relations.E-business has become one of the few technologies strategies that have been sort of by many companies and organizations. Through this technology, companies are able to improve their facilities by the use of the internet, intranet and extranet in ensuring that they have both intra and extra communication within the company, and the outside world.... Some of the issues that need to be addressed include poor communication between the staffs, customers and the external world. Rationale for The process mapping of Starbucks technological advancement Starbucks has made some efforts to improve customer communication. This has been central to design evaluation. These efforts include development of the brand in order to improve customer experience. One of these processes involved improvement of internal communications in the effort to ease customer base connection. Sophisticated feedback machinery sees to it that customer’s feedback is collected and acted upon in an effective and timely manner. One of such an effort includes the intention by the company to partner with Square’s GPS mobile for improved payments. In addition, through GPRS, the customer can be able to receive alerts on any updates including special offers. Starbucks can also get alerts whenever a returning customer has returned for more. Furthermore, Starbucks was named the most popular social media brand. It uses several social media sites to reach out new customers and continued communication with the old customers. Some of the popular sites used by Starbucks include Facebook, Twitter, and Foursquare. In addition, the company has adopted the use of digital network in its stores. With Wi-Fi availability, the company is able to entertain customers with digital networks. The process mapping of Starbucks technological advancement The Intertwining E-business and Starbucks can be intertwined. This is because e-business uses tools like mobile phones, file transfer, video conferencing, internet, intranets, and extranet to improve the administrative and operational activities. It ensures that Starbucks is in a position to access the internet to source

Bibliography of Famous Authors Essay Example for Free

Bibliography of Famous Authors Essay In this article by Robert Scholes, it talks about the hope and memory in My Antonia. He says the characters find themselves by looking back at the past. He said â€Å"we are reminded of this past constantly: by the Bohemian customs and culinary practices of the Shimerdas; by the observations of Otto Fuch on the relationship of Austrians and Bohemians I the old country; and especially by the Catholic religion of the Bohemians, which is their strongest link with the past, and which serves to bind them together and to separate them from the protestant society of their adopted and†¦Antonia cherishes her connection with the past† it talks about the characters and their past and how it has impacted their lives. I will use this to tie back into my thesis because this is basically what my whole paper is about. My paper based on the character’s past and how it impacts them later in life. The article talks a lot of the past memories that I can use in my research paper. Lucenti, Lisa Marie. â€Å"Willa Cathers My Antonia: Haunting the Houses of Memory.† Twentieth Century   Literature 46 (2000): Literary Reference Center, Galileo. MPHS Library, 18 April 2011 (#33 a work from an online service to which your library subscribes) This article analyzes My Antonia and it’s theme of memory and how it haunts some of the characters. It talks about the story of the wolves and how its haunted Peter and Pavel and how that brings gothic to the story. It also tells why Cather included some of the memories that she did in the novel. It tells the importance of those memories to the characters. I will talk about the memories it mentions and how they are important to the story and to the characters lives. Their past is what makes them who they are and it is important to mention why they are so important to them. This article analyzes the theme and I can use some of that information to help with my argument. Meeker, Joseph W. â€Å"Willa Cather: The Plow and The Pen† Willa Cather’s Ecological Imagination. Ed. Susan Rosowski. Volume 5. Lincoln: U of Nebraska, 1986. (#18 a selection from an anthropology) In this article, Meeker talks about the symbols mentioned in Cather’s novels. It talks about the plow and the landscape in My Antonia. It also talks about how some of the symbols represent the past. The article mentioned imagery throughout the novel and how the Nebraska plains had an impact on Jim. It also mentioned some of the imagery in O Pioneers! and other novels by Cather. I will use the information to help support my thesis on the symbols and theme and how it impacts the characters in the novel. In the article when it talks about the land and how it ties back to the past, I will use that to help my thesis. It has very good detail on everything represented in the novel and it will help me develop my paragraphs on symbolism. Gross, Jonathan D. â€Å"Recollecting Emotion in Tranquility: Wordsworth and Byron in Cathers My à ntonia   and Lucy Gayheart† Cather Studies 7 (2007): Literary Reference Center, Galileo. MPHS Library 18 April 2011 (#33 a work from an online service to which your library subscribes) This article compares My Antonia with novels from Wordsworth and Byron. They all share similar qualities in their writings. In this article it talks about theme and symbols in My Antonia. In both My Antonia and in â€Å"Lines Written a Few Miles above Tintern Abbey†, they talk about the theme of nature and how it impacts the characters. This whole article compares My Antonia to other works by Cather, Wordsworth, and Byron. I will use the information about the theme of nature and symbols mentioned in the article. There’s not a whole lot I can use on My Antonia but it has good information about theme and symbols throughout out the novel. It talks about how Cather focused on landscape and sensitivity of the reader to relate the past. Hallgarth, Susan A. â€Å"Archetypal Patterns in Shadows on the Rock†. Colby Quarterly 24 (1988): 2-4. (#22 An article in a journal with continuous pagination throughout the annual volume) In this article, it talks about symbols and how they represent something in the novel. It talks about how shadows are a repeated pattern in My Antonia and how Antonia breaking away from her mother is a symbol of her going through a new beginning. It compared symbols in My Antonia to some in Death Comes for the Archbishop and how they relate to one another. In the article it says â€Å" Burdens discovery of pastness in the present allows him to see Antonia as all the ‘image’ which do not fade and herself, a ‘battered woman’ (MA, 352, 353). So I will use that in the paragraph I will have talking about how the past still reminds him of Antonia because his childhood is basically Antonia. All of his memories remind Jim of her because she is a big part in his past.

Tennessee Williams :: essays research papers fc

â€Å"Everything in his life is in his plays, and everything in his plays is in his life,† Elia Kazan said of Tennessee Williams. Williams, who is considered to be the greatest Southern playwright, inserted many of his own personal experiences into his writing, because he â€Å"found no other means of expressing things that seemed to demand expression† (Magill 1087). He stated that his primary sources of inspiration for his works were his family, the South, and the multiple writers he encountered in his life. Therefore, he presented American theatergoers with unforgettable characters, an incredible vision of life in the South, and a deeper meaning of the concept he called â€Å"poetic realism† (Classic Notes 1). Poetic Realism exists as the repeated use of everyday objects, so that they would produce a symbolic meaning. Often, Tennessee Williams’ writing was considered to be melodramatic and hysterical; however, it is the haunting and powerful life experiences included in Williams’ writing that makes him one of the greatest playwrights in the history of the American drama.   Ã‚  Ã‚  Ã‚  Ã‚  Thomas Lanier Williams began his life March 26, 1911 as the second child of Cornelius and Edwina Williams. His father, Cornelius, managed a shoe warehouse and was a stern businessman. Cornelius’ bouts with drinking and gambling (habits that Tennessee later inherited) made him increasingly abusive as Tennessee grew older. Tennessee, his mother, his older sister, Rose, and his younger brother, Walter, lived with Tennessee’s maternal grandparents until 1918, when his father was transferred to his firm’s main office in St. Louis. Although, he began living with his father at age seven, his father remained emotionally absent throughout his life. His mother, however, smothered Tennessee with her aggressive showings of affection. The move to St. Louis was shattering to Tennessee, Rose, and Edwina. The change from a small, provincial town to a big city was very difficult for the lower class family. Because of the ridicule from other children, her father’s abuse, and her mother’s unhappiness, Rose was destined to spend most of her life in mental institutions and she quickly became emotionally and mentally unstable. Edwina allowed Rose’s doctor to perform a frontal lobotomy on Rose; this event greatly disturbed Williams who cared for Rose throughout most of her adult life. Tennessee remained aloof from his younger brother, because his father repeatedly favored Walter over both of the older children. His parents often engaged in violent arguments and Tennessee, Rose, and Walter repeatedly encouraged their mother to leave their abusive father. Williams family life was full of tension and despair; however, he said he found therapy in writing.   Ã‚  Ã‚  Ã‚  Ã‚  Unable to bear his life at home, Tennessee began his lifelong

Reproductive Health Bill Essay

* House Bill # 4244 ─ An Act Providing for a Comprehensive Policy on Responsible Parenthood, Reproductive Health, and Population and Development, and For Other Purposes * Senate Bill # 2378 ─ An Act Providing For a National Policy on Reproductive Health and Population and Development While there is general agreement about its provisions on maternal and child health, there is great debate on its key proposal that the Philippine government and the private sector will fund and undertake widespread distribution of family planning devices such ascondoms, birth control pills (BCPs) and IUDs, as the government continues to disseminate information on their use through all health care centers. On October 2012, a revised version of the same bill was presently re-named to Responsible Parenthood Act and was filed in theHouse of Representatives as a result of re-introducing the bill under a different impression after overwhelming opposition in the country, especially from the Catholic Bishops’ Conference of the Philippines[2][3]. The bill is highly divisive, with experts, academics, religious institutions, and major political figures supporting and opposing it, often criticizing the government and each other in the process. Debates and rallies proposing and opposing the bills, with tens of thousands of opposition particularly those endorsed by the bishops of the Roman Catholic Church and various other conservative groups, have been happening nationwide. Bill content [edit]Sections Philippine Population Density Map. Darker areas mean more population. The basic content of the Consolidated Reproductive Health Bill is divided into the following sections. 1. Title 2. Declaration of Policy 3. Guiding Principles 4. Definition of Terms 5. Midwives for Skilled Attendance 6. Emergency Obstetric Care 7. Access to Family Planning 8. Maternal and Newborn Health Care in Crisis Situations 9. Maternal Death Review 10. Family Planning Supplies as Essential Medicines 11. Procurement and Distribution of Family Planning Supplies 12. Integration of Family Planning and Responsible Parenthood Component in Anti-Poverty Programs 13. Roles of Local Government in Family Planning Programs 14. Benefits for Serious and Life-Threatening Reproductive Health Conditions 15. Mobile Health Care Service 16. Mandatory Age-Appropriate Reproductive Health and Sexuality Education 17. Additional Duty of the Local Population Officer 18. Certificate of Compliance 19. Capability Building of Barangay Health Workers 20. Ideal Family Size 21. Employers’ Responsibilities 22. Pro Bono Services for Indigent Women 23. Sexual And Reproductive Health Programs For Persons With Disabilities (PWDs) 24. Right to Reproductive Health Care Information 25. Implementing Mechanisms 26. Reporting Requirements 27. Congressional Oversight Committee 28. Prohibited Acts 29. Penalties 30. Appropriations 31. Implementing Rules and Regulations 32. Separability Clause 33. Repealing Clause 34. Effectivity Summary of major provisions The bill mandates the government to â€Å"promote, without bias, all effective natural and modern methods of family planning that are medically safe and legal.†[12] Although abortion is recognized as illegal and punishable by law, the bill states that â€Å"the government shall ensure that all women needing care for post-abortion complications shall be treated and counseled in a humane, non-judgmental and compassionate manner.†[12] The bill calls for a â€Å"multi-dimensional approach† integrates a component of family planning and responsible parenthood into all government anti-poverty programs.[12] Under the bill, age-appropriate reproductive health and sexuality education is required from grade five to fourth year high school using â€Å"life-skills and other approaches.†[12] The bill also mandates the Department of Labor and Employment to guarantee the reproductive health rights of its female employees. Companies with less than 200 workers are required to enter into partnership with health care providers in their area for the delivery of reproductive health services.[12] Employers with more than 200 employees shall provide reproductive health services to all employees in their own respective health facilities. Those with less than 200 workers shall enter into partnerships with health professionals for the delivery of reproductive health services. Employers shall inform employees of the availability of family planning services. They are also obliged to monitor pregnant working employees among their workforce and ensure they are provided paid half-day prenatal medical leaves for each month of the pregnancy period that they are employed.[12] The national government and local governments will ensure the availability of reproductive health care services, including family planning and prenatal care.[12] Any person or public official who prohibits or restricts the delivery of legal and medically safe reproductive health care services will be meted penalty by imprisonment or a fine.—————- Maternal health and deaths Birthing services are key to solving maternal deaths Maternal deaths in the Philippines, according to the WHO, is at 5.7 per day,[50] not 10-11 deaths a day, as per the proponents who repeated these numbers â€Å"to drive home the point.†[51][52] The proponents state that RH will mean: (1) Information and access to natural and modern family planning (2) Maternal, infant and child health and nutrition (3) Promotion of breast feeding (4) Prevention of abortion and management of post-abortion complications (5) Adolescent and youth health (6) Prevention and management of reproductive tract infections, HIV/AIDS and STDs (7) Elimination of violence against women (8) Counseling on sexuality and sexual and reproductive health (9) Treatment of breast and reproductive tract cancers (10) Male involvement and participation in RH; (11) Prevention and treatment of infertility and (12) RH education for the youth.[citation needed] The Department of Health states that family planning can reduce maternal mortality by about 32 percent.[17] The bill is â€Å"meant to prevent maternal deaths related to pregnancy and childbirth,† said Clara Padilla of Engender Rights. She reported that â€Å"Daily, there are 11 women dying while giving birth in the Philippines. These preventable deaths could have been avoided if more Filipino women have access to reproductive health information and healthcare.†[citation needed] Regarding these figures, Francisco Tatad of the International Right to Life Federation and former Senator wrote that â€Å"If correct, experience has shown (as in Gattaran, Cagayan and Sorsogon, Sorsogon) that the incidence of maternal death arising from such complications could be fully mitigated and brought down to zero simply by providing adequate basic and emergency obstetrics care and skilled medical personnel and services,† without any need for a law on the distribution of contraceptives.[11] The key to solving maternal deaths, according to the Senate Policy Brief on reproductive health, is the establishment of birthing centers.[7] The Philippine Medical Association or PMA stated in their Position Paper that the goal of reducing the rise of maternal and child deaths â€Å"could be attained by improving maternal and child health care without the necessity of distributing contraceptives. The millions of funds intended for the contraceptive devices may just well be applied in improving the skills of our health workers in reducing maternal and child mortality in the Philippines.†[53] Magna Carta for Women of 2009 There have been comparisons made with the 2009 Law called the Magna Carta for Women and the RH Bill. The Magna Carta for Women contains the following provisions in Section 17 and 19:[54][55] * Prenatal and postnatal care * Information regarding all types of family planning methods * Access to family planning methods as long as they are ethically and medically safe * Sex education * Obstetric and gynecological care regarding pregnancy complications and the prevention of AIDS, HIV, STD, and the like * Spouses have the right to decide to space their children The Implementing Rules and Regulations of the Magna Carta directs the Commission on Women under the Office of the President to oversee that the provisions are implemented by the Department of Health, the Department of Local Governments, the Commission of Human Rights, the Department of Education, Department of Social Welfare, Department of Labor, the Commission on High Education. In the IRR, it also states that in order for the law to be successful, the government should tie up with all LGUs so that midwives, doctors, birthing facilities should be put in place to take care of the health needs of all to ensure that we minimize maternal and child deaths. Because of these provisions, Senator Majority Floor Leader Tito Sotto said that the RH Bill is redundant. Family planning Catholic Church: A large family is a sign of God’s blessings (CCC2373) The Catholic Church teaches the necessity of responsible parenthood and correct family planning (one child at a time depending on one’s circumstances), while at the same time teaching that Every birth is a gift from God; every new life, a blessing.[57] The RH bill intends to help couples to have government funded access to artificial contraception methods as well.[citation needed] Access One of the main concerns of the proponents is the perceived lack of access to family planning devices such as contraceptives and sterilization. The bill intends to provide universal access through government funding, complementing thus private sector initiatives for family planning services, such as those offered by the International Planned Parenthood Federation (IPPF) which supports the Family Planning Organizations of the Philippines and the 97 organizations of the Philippine NGO Council.[citation needed] The opposition argues that â€Å"Access to contraceptives is free and unrestricted† and that the proposed law is pushing an open door.[11] They say that these family planning items are available to the citizens and many local government units and NGOs provide these for free. Congressman Teddyboy Locsin argued, echoed by a Business Mirror editorial, that the poor can afford condoms since they can pay for other items such as cellphone load. Opponents also argue that Philippine government is not a welfare state, and taxpayers are not bound to provide for all the wants and desires of its citizenry, including their vanity needs, promiscuous actions and needs artificially created by elitist, imperialist and eugenicist forces; nor should taxpayers pay for drugs that are objectively dangerous (carcinogenic) and immoral. They argue that the Philippines should give priority to providing access to medicines that treat real diseases.[11][23] Birth control pill The UP School of Economics argues, in contrast, that there is lack of access especially for poor people, because contraceptive use is extremely low among them and â€Å"Among the poorest families, 22% of married women of reproductive age express a desire to avoid pregnancies but are still not using any family planning method.†[13] They say that lack of access leads to a number of serious problems which demand attention: (1) â€Å"too many and too closely-spaced children raises the risk of illness and premature deaths (for mother and child alike),† (2) â€Å"the health risks associated with mistimed and unwanted pregnancies are higher for adolescent mothers, as they are more likely to have complications during labor,† (3) women who have mistimed pregnancies are â€Å"constrained to rely more on public education and health services and other publicly provided goods and services,† further complicating limited public resources, (4) families are not able to ach ieve their desired family size. Thus the UP economists â€Å"strongly and unequivocally support† the thrust of the bill to enable â€Å"couples and individuals to decide freely and responsibly the number and spacing of their children and to have the information and means to carry out their decisions.†[13] Proponents argue that government-funded access is the key to breaking the inter-generational poverty that many people are trapped in. Abortion Abortifacient issue According to the RH bill, one of its components is â€Å"prevention of abortion and management of post-abortion complications.† It provides that â€Å"the government shall ensure that all women needing care for post-abortion complications shall be treated and counseled in a humane, non-judgmental and compassionate manner.† It also states that â€Å"abortion remains a crime and is punishable,† as the Constitution declares that â€Å"the State shall equally protect the life of the mother and the life of the unborn from conception.†[66] Opposing the bill, the Faculty of Medicine of the catholic University of Santo Tomas, the Philippine Nurses Association (with at least 368,589 members), the Bioethics Society of the Philippines, Catholic Physicians’ Guild of the Philippines stated that â€Å"the antiabortion stance of the bill is contradicted by the promotion of contraceptive agents (IUD and hormonal contraceptives) which actually act after fertilizati on and are potentially abortifacient agents.†[67] Opposition refers to a 2000 study of a scientific journal of the American Medical Association, in which a meta-analysis of 94 studies provides evidence that when a common birth control pill fails to prevent ovulation, â€Å"postfertilization effects are operative to prevent clinically recognized pregnancy.†[24] They also point to the American Journal of Obstetrics and Gynecology (2005), which concluded that the IUD brings about the â€Å"destruction of the early embryo,†[25] thus is deemed to kill five-day old babies.[68] The position of the Philippine Medical Association (PMA) â€Å"is founded strongly on the principle that ‘life or conception begins at fertilization’ at that moment where there is fusion or union of the sperm and the egg and thus a human person or human being already does exist at the moment of fertilization.† The PMA condemns abortifacients that â€Å"destroys the fertilized egg or the embryo† and â€Å"abhors any procedure †¦ or medication that will interrupt any stage of fertilization and prevents its normal, physiological, uninterrupted growth to adulthood†.[53] Jo Imbong, founder of the Abay Pamilya Foundation, reported that â€Å"Lagman said in a House hearing that the bill would protect human life ‘from implantation,'†[69] and not from fertilization, noting at the same time that the Records of the Constitutional Commission state that â€Å"Human life begins at fertilization.†[69][70] After referring to many standard textbooks of medicine and human embryology to affirm this as true,[71] the anti-RH bill citizens argue that the human embryo already has the complete genetic code and is thus a distinct human life beginning its own new life cycle. They say that the embryo is an individual, self-coordinated and self-organizing subject belonging to th e species homo sapiens: a human being by nature and thus a person equally worthy of respect.[26] 5-day old human embryo called a blastocyst, which comprises 70–100 cells. [edit]Contraception and abortion relationship Proponents argue that research by the Guttmacher Institute, involved in advancing international reproductive health, reveals that the use of contraceptives can reduce abortion rates by 85%. Proponents such as 14 Ateneo de Manila University professors, argued thus: â€Å"Studies show that the majority of women who go for an abortion are married or in a consensual union (91%), the mother of three or more children (57%), and poor (68%) (Juarez, Cabigon, and Singh 2005). For these women, terminating a pregnancy is an anguished choice they make in the face of severe constraints. When women who had attempted an abortion were asked their reasons for doing so, their top three responses were: they could not afford the economic cost of raising another child (72%); their pregnancy occurred too soon after the last one (57%); and they already have enough children (54%). One in ten women (13%) who had attempted an abortion revealed that this was because her pregnancy resulted from forced sex (ibi d.).

Heterogeneous Definition (Science)

The word heterogeneous is an adjective that means composed of different constituents or dissimilar components. In chemistry, the word is most often applied to a heterogeneous mixture. This is one which has a non-uniform composition. A mixture of sand and water is heterogeneous. Concrete is heterogeneous. In contrast, a homogeneous mixture has a uniform composition. An example is a mixture of sugar dissolved in water. Whether a mixture is heterogeneous or homogeneous is largely dependent on the scale or sample size. For example, if you look at a container of sand, it may appear to have evenly distributed particles (be homogeneous). If you viewed the sand under a microscope, you might find unevenly distributed clumps of different materials (heterogeneous). In materials science, specimens may consist entirely of the same metal, element, or alloy, yet display heterogeneous phases or crystal structure. For example, a piece of iron, while homogeneous in composition, might have regions of martensite and others of ferrite. A sample of the element phosphorus might contain both white and red phosphorus. In the broader sense, any group of dissimilar objects may be described as being heterogeneous. A group of people might be heterogeneous with respect to age, weight, height, etc.

World economic growth - Free Essay Example

Sample details Pages: 24 Words: 7107 Downloads: 7 Date added: 2017/06/26 Category Statistics Essay Did you like this example? World economic growth 1.0 INTRODUCTION 1.1 World Economic Outlook: According to the World Bank, world economic growth accelerated sharply in 2004. In aggregate, the year 2004 has been the healthiest year for developing countries since the last three decades. East Asian countries have come out of the 1997 crisis and are now performing well. The ongoing economic boom in China as well as the surge in activities registered in Japan were major factors in promoting growth in the region. Latin American countries and Sub-Saharan Africa also had a better year. This performance reflects a fortuitous combination of long-term secular trends built on a foundation of better macroeconomic management and an improved domestic investment climate converging with a cyclical recovery of the global economy. Don’t waste time! Our writers will create an original "World economic growth" essay for you Create order There were however some lingering imbalances in the global economy associated with the rising twin deficits in the United States, a delayed recovery in Europe, coupled with high and volatile oil prices, and questions about the path of Chinas economy that might constitute risks to the pace of growth in developing countries over the medium term. Worlds economic growth is likely to slow down in 2005 with a projected rate of 3.2%. Several factors are likely to contribute to the slower growth. It is believed that the investment cycle in the US has peaked, therefore resulting in a slowdown in growth. Furthermore, world demand has far exceeded world supply, resulting in a substantial increase in oil and other commodity prices, therefore reducing demand in other countries. Also, increases in interest rates are likely to slow the investment growth. The US is likely to finance its large budget deficits through tighter fiscal policies and in Europe countries will tighten their budgetary control to remain within the realm of Maastricht limits. Table 1: World economic outlook Real Growth Rate (%) 2002 2003 2004 2005* World 1.7 2.7 4.0 3.2 High Income Countries 1.3 2.1 3.5 2.7 Euro Zone 0.9 0.5 1.8 2.1 USA 1.9 3.0 4.3 3.2 Japan -0.3 2.4 4.3 1.8 Developing Countries 3.4 5.2 6.1 5.4 East Asia and Pacific 6.7 7.9 7.8 7.1 Latin America and Caribbean -0.6 1.6 4.7 3.7 Sub Saharan Africa 3.1 3.0 3.2 3.6 *projected figures Source: Global Economic Prospects 2005, World Bank. 1.2 Mauritian Economic Outlook: Mauritian economic growth in 2004 was positive and stabilised at 4.2%, slightly lower than the 4.4% recorded in 2003. On the one hand, internal demand constituted an important dragging factor, with a 6.3% growth in consumption expenditure compared to 4.5% in 2003. On the other hand, lingering uncertainties linked to the wave of change in the international economic order, uninterrupted trade liberalisation and the gradual loss of our long-standing preferences had a dampening effect on growth. The recent run-up in oil prices was also a constraining factor on economic buoyancy. Business confidence appeared to be quite timid in 2004. However, in spite of an overall deceleration in the rate of investment, which grew by 5.5%, compared to 10.0% in 2003, private sector investment grew by a high 13.2% as opposed to a negative 2.2% in 2003. Moreover, international perception about Mauritius remained positive, and foreign investments in hotels and ICT projects were at a relatively high level. Despite the stable growth rate, several macroeconomic and sectoral performances were relatively unfavourable. Savings rate was lower, registering 23.3% of GDP in 2004 against 25.4% in 2003. Inflation rate was higher in 2004, reaching 5.5%, as opposed to 3.9% in 2003. Overall external trade worsened, from a surplus of Rs. 2 billion in 2003 to a deficit on Rs. 3.9 billion in 2004, as a result of a very large increase in the merchandise trade deficit, from Rs. 8.4 billion to Rs. 15.7 billion. On a sectoral basis, industries were faced with a restricted margin of manoeuvre as a result of increasing international competition from lower-cost producers. Repercussions were felt in the EPZ sector, which registered a negative growth rate of 5% in 2004, following the deceleration of 6% in 2003. The tourism sector, in spite of its apparent dynamism, recorded a growth rate of only 2.6%, compared to 3.0% in 2003. Financial services experienced some inertia, with a low expansion of 1.0%, compared to a high 7.2% in 2004. However, the agricultural sector expanded by 5.1% in 2004, in contrast to the low 1.9% recorded in 2003 and the non-EPZ sector grew by 5.0% in spite of the gradual reduction of tariff protection. 2.0 ECONOMIC PERFORMANCE FOR 2004 2.1 National Accounts: Real Gross Domestic Product (GDP) grew by a moderate 4.2% in 2004, compared to 4.4% in 2003. At current basic prices, GDP increased from Rs. 137.9 billion in 2003 to Rs. 151.7 billion. GDP per capita at current basic prices increased by 10.1%, to attain Rs. 122,984 in 2004. In US dollar terms, GDP per capita reached US$ 4,477, 11.7% higher than the previous year, when it reached US$4,010. It is worth noting also that at Purchasing Power Parity, GDP per capita in dollars was estimated at US$ 11,400 in 2003. For the second consecutive year, net income from the rest of the world was negative, with Rs. 415 million in 2004, compared to Rs. 833 million in 2003. Table 2: Output at current basic prices: Unit 2001 2002 2003 2004 Real GDP growth rate % +5.6 +1.8 +4.4 +4.2 GDP Rs. Million 117,720 125,260 137,868 151,725 Net income from abroad Rs. Million 393 396 833 415 GNI Rs. Million 118,113 125,656 137,035 151,310 GDP/capita Rs. 98,086 103,479 112,720 122,984 US$ US$ (PPP)* 3,380.9 9,609 3,462.2 10,810 4,010.0 11,400 4,477.4 n/a Exchange Rate, annual av. mid-rate Rs/$ 29.012 29.888 28.11 27.468 * GDP at Purchasing Power Parity provides a more reasonable international GDP comparison among nations.Source: CIA Fact Book 2004 While the EPZ sector continued to register negative growth rates for the third consecutive year, almost all other sectors recorded positive growth rates in 2004. Non-EPZ grew by +5.0% in 2004, slightly lower than in 2003, when the growth rate was +5.8%. After high growth rates registered in 2002 (+7.6%) and 2003 (+11.1%) mainly due to high investment in building and construction works by the public sector, Construction grew by 3.1% in 2004. The distributive trade sector grew by 3.2%, slightly higher than the 3.1% recorded in the previous year. Transport and Communications activities expanded by 6.5% in 2004 as opposed to 6.1% in 2003. During the same period real estate, renting and business activities grew by 6.9% compared to 6.5% in 2003. Education, including services provided by public and private operators grew by 7.2% in 2004, compared to 5.3% in 2003, while health and social work expanded by 8.8% compared to 7.0% in 2003. Electricity, gas and water supply registered a growth of 4.2% as opposed to 4.6% in 2003. 2.2 Consumption Last years economic performance was once again influenced by internal demand. Total final contribution of consumption to GDP at market price was estimated at 77.3%, compared to 75.1% in 2003. Real final consumption expenditure, increased by 6.3% in 2004, compared to a 4.5% rise in 2003. This expansion in the consumption rate, which is much higher than the GDP growth rate, is clearly inflationary and has a negative direct impact on trade balance and budget deficit. It must be noted that private consumption represented 83.1% of total consumption in 2004, as opposed to 82.8% in 2003. A growth of 6.7% was observed in the consumption of households in 2004, against 4.9% in 2003. This is the highest growth rate recorded since 1989. On the other hand, the share of public sector consumption amounted to 16.9% of total consumption in 2004, showing a slight drop from the 17.2% observed in 2003. Public consumption grew by 4.4% compared to an increase of 2.6% in 2003. In 2004, the continued growth observed in total consumption has been largely sustained by the significant increase in average monthly income earnings of households. The average monthly earnings in large establishments grew by 12.8% between March 2003 and March 2004, to reach Rs. 11, 084. A general upward trend was observed in all industrial groups. The largest increase (+24%) was noted in public administration, following the implementation of the PRB in July 2004. Table 3: Consumption 2001 2002 2003 2004 Aggregate Final Consumption Household Central Government Rs b Rs. b Rs. b 97.0 80.2 16.8 106.6 88.3 18.3 118.3 98.1 20.2 135.1 112.2 22.9 Consumption as a % of GDP at MP % 73.4 75.0 75.1 77.3 Real Agg. Final Consumption growth o Household o Central Government % % % 3.3 3.0 4.7 3.2 3.3 4.1 4.5 4.9 2.6 6.3 6.7 4.4 Average monthly earnings (March) Rs. 8,701 9,159 9,826 11,084 Change in monthly earnings, Nominal % 6.4 5.3 7.3 12.8 2.3 Savings Investment Gross national savings, measured by the difference between Gross National Disposable Income and Total Consumption, increased in nominal terms by 1.8% to reach Rs 40.7 billion in 2004 from Rs 40.0 billion in 2003. Consequently, the saving rate, calculated as the ratio of GNS to GDP at market prices, showed a decline from 25.4% in 2003 to 23.3% in 2004. This decline results from an increase in both public and private expenditure. Table 4: Savings and investment 2001 2002 2003 2004 Gross National Savings (Rs. Billion) 37.6 38.7 40.0 40.7 Nominal Change (%) +2.8 +3.4 +1.8 GNS as a % of GDP at MP (%) 28.4 27.3 25.4 23.3 GDFCF (Rs. billion) Private Sector Public Sector 29.8 20.5 9.3 31.4 21.6 9.8 35.7 21.8 13.8 38.9 25.6 13.4 Real Change in GDFCF (incl aircrafts and vessels) , % +2.7 +1.9 +10.0 +5.5 Real Change in GDFCF (Excl. aircraft and vessels), % -2.6 +6.1 +7.9 +8.2 GDFCF as a % of GDP at MP 22.5 22.0 22.6 22.3 Investment, measured by the Gross Domestic Fixed Capital Formation (GDFCF), increased to Rs 38.9 billion in 2004 from Rs 35.7 billion in 2003. In real terms, including the purchase of aircrafts and marine vessels, total investment has followed an upward trend of 5.5% in 2004, but lower than the 10.0% growth recorded in 2003. It is interesting to note that net of the purchase of aircrafts and vessels, real investment grew by 8.2% in 2004, representing a better performance than in 2003, when it grew by 7.9%. Investment rate, measured as the ratio of GDFCF to GDP at market prices, has however gone down by 0.3%, to reach 22.3% in 2004 from 22.6% in 2003. Private sector investment continued to make up the bulk of GDFCF in 2004. It accounted for 65.6% of total investment in 2004, compared to 61.2% in 2003. This represented a real growth of 13.2% in 2004, after a negative growth rate of -2.2% in 2003. Higher private sector investment was accounted for by new hotels projects, where investment increased by 55.8% in 2004, as opposed to a negative growth of 21.8% in the preceding year. Moreover, there were additional investments in spinning mills and other projects in the EPZ sector, with an increase of 45.0% in 2004 as opposed to a negative 7.7% in 2003.Inversely, the share of public sector investment fell from 38.8% in 2003 to 34.4% in real terms in 2004. In fact, real public sector investment dropped by 6.6% in 2004, after a high 37.0% real growth in 2003, resulting from a record increase of 133.3% in investment in the construction sector in 2003. The resource gap, given by the difference between savings and investment, was again positive in 2004. However, there has been a significant contraction of 59.7%, from Rs. 4.3 billion in 2003 to reach Rs 1.7 billion in 2004, since investment increased more than savings. The direct consequence of this contraction is a further deterioration of the external account of goods and services. 2.4 Foreign Direct Investment In 2004, FDI inflow fell by 8.6% to reach Rs 1.79 billion against Rs 1.96 billion in 2003. A sharp contraction was observed in the banking sector, where only Rs. 121 million were invested in 2004, as opposed to a high Rs. 1.3 billion in 2003. In contrast, higher investments were recorded in the telecommunications sector in the wake of further liberalisation. Similarly, a total of Rs. 1.08 billion were invested in 2004 in other sectors of the economy, including IT, compared to only Rs. 485 million in 2003. The EPZ sector also attracted more FDI in 2004, with Rs. 248 million, compared to Rs. 77 million in 2003. The same upward trend was observed in the tourism sector, from Rs. 103 million in 2003 to Rs. 121 million in 2004. Table 5: Foreign Investment, Rs million 2000 2001 2002 2003 2004 Foreign Direct Investment 7,265* 936 979 1966 1,796 EPZ 8 3 41 77 248 Tourism 10 0 100 103 121 Banking 0 600 316 1301 310 Telecoms 7204 0 0 0 38 Others 43 333 522 485 1079 Direct Investment Abroad 333 83 278 1166 909 Net Foreign Direct Investment 6,932 853 701 800 887 * Includes receipts from the sales of Mauritius Telecom shares to France Telecom of Rs 7.2 billion 1 Revised Estimates Concerning outward investment, a high figure of Rs. 1.2 billion was recorded in 2003. However, in 2004, it fell to Rs. 887 million. 2.5 Balance of Payments The overall balance of payments in 2004, measured as a change in foreign reserve assets excluding valuation changes of the Bank of Mauritius, showed a surplus of Rs. 4.2 billion, compared to a surplus of Rs. 6.2 billion in the preceding year. In the first three quarters of 2004, the current account recorded a deficit of Rs. 2.3 billion, compared to a surplus of Rs. 1.8 billion in the corresponding period in 2003, reflecting a deterioration in the visible trade account. The balance of trade worsened from a surplus of Rs. 988 million in the first three quarters of 2003 to a deficit of Rs. 3.0 billion in the corresponding period of 2004. The capital and financial account, inclusive of reserves, recorded a net outflow of Rs. 163 million in the first three quarters of 2004 as opposed to a net outflow of Rs. 1.6 billion in the same period in 2003. At the end of December 2004, Net International Reserves amounted to Rs. 52.8 billion, 8% higher than in December 2003, when it reached Rs. 48.9 billion. Based on the value of the import bill, exclusive of the purchase of aircrafts and vessels, the level of net international reserves represented 39.6 weeks on imports at the end of December 2004. For the corresponding figure in 2003, it represented 36.6 weeks of imports. 2.6 External Trade Table 6: External Trade, Rs Billion 2001 2002 2003 2004 Trade in goods: Exports of goods excl freeport activities (f.o.b) 47.5 47.3 46.2 48.9 Export of goods freeport activities 7.3 6.6 6.8 6.8 Imports of goods excl freeport activities (f.o.b) 53.8 56.0 57.5 67.6 Imports of goods Freeport activities 5.2 4.2 3.9 3.8 Merchandise trade balance* 4.2 6.3 8.4 15.7 Trade in services Exports of services 35.6 34.4 35.7 39.8 Imports of services 23.6 23.7 25.3 30.0 Balance of trade in services 12.0 10.7 10.4 11.8 Overall trade balance 7.8 4.3 2.0 3.9 * Both Exports and imports are calculated on an f.o.b basis The overall balance of trade in goods and services marked a significant deterioration in 2004. In fact, there was a shift from a trade surplus of Rs. 2 billion in 2003 to a trade deficit of Rs. 3.9 billion in 2004. There was a sharp increase in the deficit in visible trade, which worsened by 87.1% in 2004. Trade in goods was largely biased against imports, therefore resulting in a faster growth in imports, which soared by 14.6% compared to a low 3.3% in 2003. Exports however grew at 7.6% in 2004 as opposed a meagre 0.5% in the preceding year. On the other hand, trade in services fared well, registering a surplus of Rs. 11.8 billion in 2004, representing 13.5% more than in the previous year. Much of the increase in merchandise imports in 2004 was associated with investment projects, both in the public and private sector. For instance, appreciable increases were noted in the c.i.f value of cement (+57.6%), machinery and transport equipment (+25.9%), crude materials including textile fibres (+46.2%), and telecommunications equipment (+80.3%). Others are linked to an increasing food bill, with surge in the c.i.f value of food items (+14.9%) and of road vehicles (+53.1%). In fact, it is worth noting that in the fourth quarter of 2004, additional projects and events continued to contribute to boost the import bill. There were also new investment projects in EPZ and in energy production and the significant rise in the international price of petroleum products. Finally, the appreciation of the Rand (+13.2%), the Pound Sterling (+9.1%), the Australian Dollar (+9.2%) and the Euro (+7.1%) also contributed to the escalating visible trade deficit. Box: 1 Exports lack dynamics: Although the Mauritian rupee continued to depreciate against major currencies, including the Euro, exports growth remained relatively static over the past few years. A combination of factors resulted in such a situation. Our markets remained relatively undiversified, with a high concentration in Europe. In the past few years, especially since the advent of the Euro in 2000, the Euro Zone has been relatively less dynamic than other countries like China and the US. Our exports to the most dynamic zones have remained however low. Some of the factors responsible for this lack of dynamism include erosion of our long-standing preferences, rising costs of production and the mismatch of skills on the labour market. Trade in services on the other hand, recorded a surplus of Rs. 11.8 billion, 13.5% higher than in the previous year. This is in part, due to higher earnings from the travel industry benefiting from the windfall gains of a strong euro and a strong pound sterling. Exports of services surged by 11.4% in 2004, from Rs. 35.7 billion in 2003 to Rs. 39.8 billion in 2004, whereas there was a 10.6% increase in the imports of services during the same period of time, from Rs. 25.3 billion to Rs. 30.0 billion. 2.7 Inflation Table 7: Inflation Rate, % Calendar Yr Inflation rate (%) Fiscal Yr Inflation rate (%) 2001 5.4 01/02 6.3 2002 6.4 02/03 5.1 2003 3.9 03/04 3.9 2004 4.7 04/05 5.5 The inflation rate, as measured by the percentage change in the yearly average consumer price index reached 4.7% for calendar year 2004 compared to 3.9% in 2003. This was mainly the result of a combination of domestic and external factors. There were significant increases in the price of subsidised flour (+17%) and rice (+40%). The rise in the price of flour led to an increase in the price of bread by 12%. The price of other food items, such as chicken (+8.8%), fish (+8.5%) , beef (+9.7%), and frozen mutton (+15.2%) also went up in 2004. In addition, the rise in international oil prices had spill over effects on the domestic economy. There were three successive increases in the price of gasoline and diesel oil. The price of gasoline increased by a total of 27.9% and the price of diesel oil rose by 45.0%, therefore causing subsequent surges in electricity tariffs (+5.1%), bus fares (+13.3%), taxi fares (+15.4%) and air fares (+16.0%). Finally, the prevailing high budget deficit and the sustained level of public investment also contributed to inflationary pressures. 2.8 Employment/ Unemployment Until 2003, labour force statistics were estimated on the basis of the Population census or Labour Force Sample Survey. A new methodology, named the Continuous Multi Purpose Household Survey (CMPHS) was introduced in March 2004 to estimate the labour force, employment and unemployment rate. It is based on a sample of households that presently covers a total 8,640 households for the whole of 2004. Estimates are conducted on a quarterly basis, on 2,160 households per quarter. In the new CMPHS, the lower age cut-off point to estimate the labour force was brought to 15 years instead of 12 years used previously. A few inconsistencies with regard to the results of the survey have been noted, which probably indicate some weaknesses in the new methodology. The table below gives the estimated figures for the 3 quarters of 2004: Table 8: March 2004 Estimates June 2004 Estimates September 2004 Estimates Labour force Male Female 541,100 348,700 192,400 540,700 347,500 193,200 527,800 349,400 178,400 Employment Male Female 494,100 328,400 165,700 491,200 324,600 166,600 483,500 329,800 153,700 Unemployment Male Female 47,000 20,300 26,700 49,500 22,900 26,600 44,300 19,600 24,700 Unemployment Rate (%) 8.7 9.2 8.4 Contrary to what one would logically expect, the CMPHS estimates indicate a downward trend in the labour force over the three quarters. From March to June, there was a fall of 400 people in the labour force. However, a larger fall was observed, with a contraction of 12,900 jobs from June to September 2004. Surprisingly, a contraction of 14,800 was observed among the female labour force, while it was estimated that 1,900 males joined the labour force. The number of people employed in all three quarters also followed a downward trend. There was a fall of 2,900 in total employment between March and June, whereas the total employment loss stood at 7,700 for the period June to September 2004. A total of 5,200 males are estimated to have gained employment between June and September, whereas 12,900 female workers are estimated to have been laid off during the same period. Despite the significant fall in the level of employment during June to September 2004, the overall level of unemployment has also gone down, from 9.2% in June to 8.4% in September. This paradoxical situation is explained by the proportionally larger contraction in the labour force in that period. Over the first three quarters of 2004, employment in the primary sector, showed a slight improvement, slowly rising from 9.6% of total employment in March 2004 to 9.9% in June and to settle at 11.3% in September 2004. The trend in the secondary sector, which includes manufacturing, electricity and water and construction industries, showed a slight decrease in percentage distribution, from 33.0% in March 2004 to 32.4% in June 2004, but picked up again in the third quarter to settle at 34.4% in September 2004. The share of the tertiary sector, which covers hotels and restaurants, transports and all service industries, improved from 57.4% in March 2004 to 57.7% in June and dropped to 54.3% in September 2004. According to the CMPHS, the number of unemployed increased from 47,000 in March 2004 to 49,500 in June 2004 to finally settle at 44,300 in September 2004. The unemployment rate, defined as the percentage of people unemployed to the labour force, increased from 8.7% in March to 9.2% in June to drop down to 8.4% in September 04. Box 3: Unemployment: A structural phenomenon: Despite a relatively stable economic performance, Mauritius is experiencing U-curve employment phenomenon since the last decade. It can be observed that the rate of unemployment has been slowly crawling, from a record low level of 4% in the early 1990s. A closer look at the nature of unemployment shows that the majority of those without a gainful job have the following characteristics: (i) they are young, often less than 30 of age, (ii) many have never held a first job, (iii) most of them have failed primary or secondary education, (iv) they had no vocational or technical training and (v) they are single and family supported. It is however interesting to note that despite the rising trend in joblessness, two paradoxical facts can be observed. On the one hand, the EPZ is crippled by labour supply shortages, and is compelled to import foreign labour mainly from China. On the other hand, the number of unfilled skilled-job vacancies, especially in the financial services sector and in the ICT sector has been increasing since the last 10 years. It is therefore appropriate to say that the unemployment phenomenon is of a structural nature. It basically means that due to changes in demand and technology, there is a mismatch between available skills and available jobs. Structural unemployment cannot be cured solely by reflation, which is the macroeconomic policy to increase aggregate demand in view of creating more jobs. Instead, a policy that would emphasise on retraining and relocation of the affected workforce is necessary. Here, it is worth noting that the education system plays a central role in supplying skilled labour. Although Mauritius is ranked as having a comparatively high literacy rate, it has some weaknesses in its secondary and technical education, especially in the teaching of natural science, engineering and vocational subjects. Our education system is rather academic and based on traditional fields of study. There is presently a lack of training/ retraining programmes that would prepare the labour force for the newly emerging sectors, such as ICT and high value added services. Let us note that Government has come up with a comprehensive reform programme in the education system, which present certain remedial measures to this problem, such as training/ retraining programmes, technical courses and additional university courses, in particular in ICT. 2.9 Public Finance Table 9: Consolidated Government Finance (Rs. Billion) 2001/02 2002/03 2003/04 2004/05 (Estimates) Total Derived Revenues and Grants 25.3 30.3 33.7 35.9 Ratio Rev/GDP (%) 18.4 20.2 20.4 19.9 Total Derived Expenditure and lending minus repayments 33.6 39.5 42.6 45.0 Ratio Exp/GDP (%) 24.5 26.4 25.7 24.9 Overall Budget Deficit as a % of GDP -8.3 6.1 -9.2 6.2 -8.9 5.4 -9.1 5.0 GDP at MP 137.0 149.6 165.3 180.6 Financing: External Domestic o Banking o Non-Banking o Others 1.0 7.3 1.4 4.8 1.1 0.087 9.1 2.5 6.8 -0.15 -0.49 9.4 13.6 -3.5 -0.72 0.17 8.9 4.5 4.4 0 Source: Ministry of Finance and Economic Development Total derived revenue and grants are expected to increase by 6.5% in financial year 2004/05, from Rs. 33.7 billion in 2003/04 to Rs. 35.9 billion. However, the ratio of revenue to GDP is expected to follow a downward trend, from 20.4% to 19.9% in fiscal year 2004/05. Tax revenue is expected to continue to make the bulk of total revenue, with a ratio of 91.1% in 2004/05, compared to 86.3% in the previous year. Domestic tax on goods and services is expected to contribute to 53.8% of tax revenue in 2004/05, slightly higher than the 53.4% registered in 2003/04. The second contributor to tax revenue will continue to be taxes on international trade, although its share will decline from 25.4% in 2003/04 to 24.5% in fiscal year 2004/05. Total derived expenditure and lending minus repayments is forecast to grow by 5.6% in FY 2004/05, increasing in value terms from Rs. 42.6 billion in 2003/04 to Rs. 45.0 billion. The ratio of expenditure to GDP is expected to drop for the second consecutive year to reach to 24.9% in 2004/05 compared to 25.7% in the previous year. Current expenditure makes up the bulk of total expenditure, with a share of 82.1% in 2004/05, higher than the 81.9% recorded in 2003/04. The main component of current expenditure is expenditure on goods and services, accounting for 41.2% of total expenditure in 2004/05, slightly lower that the 41.3% registered one year ago. The second biggest component is current transfers and subsidies, with a share rising slowly from 39.8% in 2003/04 to 40.3% in 2004/05. Capital expenditure accounted for 17.2% of total expenditure in 2004/05, against 18.1% in the preceding fiscal year. 72.6% of capital expenditure was dedicated to the acquisition of fixed assets in 2004/05, as opposed to 67.8% in the previous year. Regarding expenditure by function, welfare and social security (18.3%), education (15.7%), debt interest payment (15.4%) and housing (7.4%) make up the bulk of total expenditure. It is worth noting that in 2004/05, education and housing, taken together, accounted for the bulk of capital expenditure, amounting to a total of 49.9%. This represents a 5% increase from the previous year, where capital expenditure on housing and education was equivalent to 44% of total capital expenditure. The overall value of the budget deficit is projected to increase from Rs. 8.9 billion in 2003/04 to Rs 9.1 billion 2004/05. However, as a percentage of GDP the overall budget deficit is expected to fall from 5.4% in 2003/04 to 5.0% in 2004/05. The deficit is planned to be financed at 98% from domestic sources, with an equal contribution from the banking and the non-banking sector. Table 10: Public Debt Rs. Billion June 2001 June 2002 Jun 2003 June 2004 Sep 2004 Actual Actual Actual Actual Provisional Internal Public Debt 53.7 67.4 86.4 85.0 86.1 Medium Long Term (at nominal prices) 12.7 11.8 12.3 16.7 17.7 Short Term (at nominal prices)(1) 41.0 55.6 74.1 68.3 68.4 External Public Debt 6.8 8.5 9.1 8.4 8.5 Long Term 6.8 0.32 8.6 8.3 8.3 Short Term (2) 8.1 0.5 0.13 0.19 Total Public Debt 60.6 75.9 95.5 93.4 94.7 As % of GDP 48.9 55.1 63.8% 56.5% N/a External Debt of Public Corporations 18.0 18.6 17.6 15.2 15.2 Total Public Sector Debt 78.6 94.5 113.1 108.7 109.9 As % of GDP 63.5 68.4 68.5 65.3 N/a Government short-term obligations, made up essentially of treasury bills represented 63% of total public sector debt in 2004. Medium and long-term obligations, consisting of government bonds, Mauritius Development Loan Stocks, accounted for 15% of total public sector debt. External debt, consisting of foreign loans, disbursement and amortisation was estimated at 8% of total debt. Finally, external debt of parastatals represented the remaining 14% of total public sector debt in 2004. As at June 2004, total public debt, excluding debt of public corporations was estimated at Rs. 93.4 billion, which represented 56.5% of GDP, 6.8 percentage points lower than in June 2003, where total public debt amounting to Rs. 92.5 billion, stood at 63.8% of GDP. The external debt of public corporation was significantly reduced by 13.7%, from Rs. 17.6 billion in June 2003 to Rs. 15.2 billion in June 2004. On the whole, total debt of the public sector, including external debt of public corporations fell from 68.5% of GDP in 2003 to 65.3% of GDP in 2004. Table 11: Public Debt Servicing (Rs billion) June 01 June 02 June 03 June 04 External Debt Servicing 4.4 0.94 1.0 1.1 Capital Repayment 3.9* 0.71 0.84 0.88 Interest payments 419 229 199 218 Internal Debt Servicing 5.9 5.4 7.4 7.7 Contrib. to Consolidated Sinking Fund 0.96 1.0 1.2 1.2 Interest payments 4.9 4.4 6.3 6.5 Total Public Debt Servicing 10.2 6.3 8.5 8.8 As % of Recurrent Revenue 42.4 25.7 28.7 27.2 * includes repayment of Rs 3,125 million in respect of the Floating Rate Note (FRN) External debt servicing slightly increased in June 2004, from Rs. 1.0 billion to Rs. 1.1 billion. Internal debt servicing also went up in money terms in June 2004, from Rs. 7.4 billion in 2003 to Rs. 7.7 billion. Total public debt servicing grew by 4.1% in June 2004. However, the ratio of debt servicing to Recurrent Revenue went down by 1.5 percentage points, from 28.7% in 2003 to 27.2% in 2004, due to higher recurrent revenue in 2004. Box 4: Medium Term Expenditure Framework (MTEF) The Government is currently undertaking a comprehensive budgetary reform programme to strengthen all aspects of the fiscal management system, particularly budget preparation, monitoring and evaluation. The objective is to ensure aggregate fiscal discipline and promote allocative and technical efficiency. In the last Country Assistance Strategy (2002-2004), Government has committed itself to introduce the MTEF as one of the elements of its budgetary reforms programme. At the initial stage, around five ministries are included in the MTEF exercise on a pilot basis. Other Ministries will be integrated into the exercise at a later stage when sufficient experience has been gained in formulating and implementing the MTEF and designing logical frameworks for the Ministries. It is expected that MTEF would bring a fundamental change to the budget preparation process involving: a more strategic approach to the allocation of resources linked to ministries objectives over the medium term (3-5 years); greater emphasis on the performance and achievement of objectives in sectors; improvements to the budget classification so that the types of activities being funded could be more clearly seen in the budget documents; using the activities to be implemented as the basis for estimating both the Recurrent and Development Budgets, thus moving to an activity based budget approach; and building strong links between all stages in the public financial management cycle: budget preparation , implementation; monitoring and evaluation. 3.0 SECTORAL PERFORMANCE: 3.1 Agriculture The agricultural sector, including sugar milling, grew by 5.1% in 2004, compared to a low 1.9% in 2003 as a result of better climatic conditions. The contribution of agriculture to GDP reached Rs. 10.9 billion, compared to Rs. 10 billion in 2003. It must be noted that although the growth rate of the agricultural sector was higher than the GDP growth rate, its share in GDP fell in 2004. In fact, it represented 7.2% of GDP at basic prices against 7.3% share of GDP in 2003. The reason is that overall prices increased more than that of the agricultural sector. Table 12: Agriculture, including sugar milling Main Indicators 2001 2002 2003 2004* Sugar cane Sugar milling Non-Sugar Total Agriculture 4,646 1,436 3,950 10,032 3,914 1,270 3,995 9,179 4,370 1,418 4,219 10,007 4,830 1,565 4,480 10,875 Agriculture Real growth rate, % Real growth rate, sugar cane, % Real growth rate, sugar milling, % Real growth rate non-sugar, % 7.5 9.9 9.9 4.3 -17.5 -25.0 -25.0 -6.1 1.9 3.1 3.1 0.3 5.1 6.5 6.5 3.3 Agriculture -as % of GDP at basic prices 8.5 7.3 7.3 7.2 -as % of Total Employment** 11.7 10.2 9.9 na Sugar -as % of GDP at basic prices 5.1 4.1 4.2 4.2 -as a % of total employment ** 6.4 5.0 4.5 na Non-Sugar as % of GDP at basic prices 3.4 3.2 3.1 3.0 as % of total employment** 5.3 5.2 5.4 na * First forecast ** March estimates na: not available a: Sugar Sector: Sugar production reached 572,200 tonnes in 2004, compared to 537,155 tonnes in 2003. It showed a 7.1% growth in production. In 2004, sugar constituted 3.2% of GDP similar to 2003. Employment in the sugar sector continued its downward trend as a result of the implementation of the Voluntary Retirement Scheme (VRS), linked to the centralisation of sugar industries. b: Non-Sugar Sector: Non-sugar agricultural sector grew by 3.3% in 2004, compared to 0.3% in 2003 and 6.1% in 2002. Favourable climatic conditions contributed to higher growth rates in 2004. Non-sugar sector output increased from Rs. 4.2 billion in 2003 to Rs. 4.5 billion in 2004. The share of non-sugar agricultural sector is estimated at 3.0% of GDP at basic prices, slightly lower than the preceding year. Table 13: Non- Sugar Sector Indicators Units 2003 2004 % change Tea (Green leaves) Tonnes 6,973 7,229 +3.7 Manufactured tea Tonnes 1,436 1,482 +3.2 Tobacco Tonnes 424 411 -3.1 Food crops Tonnes 103,455 113,164 +9.4 Agro-industrial livestock and fishing Tonnes 43,105 43,719 +1.4 The production of green tea leaves went up by 3.7% from 6,973 tonnes in 2003 to 7,229 tonnes in 2004. A slight increase was also observed in the production of manufactured tea by 3.2% in 2004. Tobacco registered a negative trend, where there was a decrease of 3.1% in 2004. A 9.4% expansion was registered in food crops, from a total of 103,455 tonnes in 2003 to 113,164 tonnes in 2004. The most significant increases were observed in mixed vegetables (+148%), ginger (+114.1%), maize (+108.5%), and cauliflower (+71.5%). However, negative growths were recorded in creepers (-49.3%), groundnuts (-32.6%) and pineapples (-1.5%). Box: 6 Non Sugar Sector Reforms In the light of the difficulties being encountered within the sugar sector, the non-sugar sector is called upon to assume a more important role in the agricultural economy. In this context, a non-sugar sector strategic plan has been elaborated in 2003, for a 4-year period to modernise the sector through the transition from traditional practices to a more sophisticated, technology-based approach. The main objectives of the reform are geared towards assuring a certain degree of self-sufficiency in food production, meeting quality exigencies up to international standards, optimising productivity by promoting the transfer of technology and developing a diversified local agro-processing industry in high value added products for exports. 3.2 Manufacturing The manufacturing sector, which represented around 19.7 % of GDP in 2004, registered a real growth rate of 0.3 %, compared to a negative growth rate of 0.02% in 2003. Despite the positive growth rate registered in 2004, the share of the manufacturing sector continued to decline. This reflects the difficulties being felt in the EPZ sector following the rapid liberalisation process and the emergence of new competitors. Table 14: Main Indicators Manufacturing (Excl. sugar milling) Rs. Million 2001 2002 2003 2004 Output EPZ Other 25,987 13,681 12,306 27,009 13,600 13,409 28,281 13,167 15,144 29,955 13,135 16,820 Real growth rates (%) EPZ Other 4.3 4.4 4.1 -1.1 -6.0 4.2 -0.02 -6.0 5.8 0.3 -5.0 5.0 Share in GDP at basic prices (%) EPZ Other 22.1 11.6 10.5 21.6 10.9 10.7 20.5 9.6 11.0 19.7 8.7 11.1 Share in manufacturing (%) EPZ 52.6 50.3 46.6 43.8 Other 47.4 40.7 53.4 56.2 a: EPZ Sector The EPZ contributes significantly to the manufacturing sector. However, its share has been slowly declining since 1999. In 2004, it accounted for 43.8 % of the manufacturing sector, compared to 46.6% in 2003. The same trend was observed in employment, when it represented about 13.7 % of total employment in 2004, against 15.8% in 2003. But one very positive element can be highlighted. It is the substantial increase in investment, which after a drop to Rs. 1.4 billion in 2003, rose by nearly 50% in 2004 to Rs. 2.1 billion. Table 15: Main Indicators in EPZ sector 2001 2002 2003 2004 Real growth % 4.4 -6.0 -6.0 -5.0 Exports (f.o.b) Rs m 33,695 32,683 31,444 32,370 Exports Growth (nominal terms) % 8.8 -0.6 6.0 2.9 Imports (c.i.f) Rs. m 17,140 16,909 15,579 17,210 Net exports Rs. M 16,155 15,774 15,865 15,160 Investment Rs. m 1,758 1,475 1,400 2,090 No. of enterprises New Closures No. 522 23 19 506 9 25 506 23 23 501 20 25 Employment (Growth Rate) No. % 87,607 -3.4 87,204 -0.5 77,623 -11.0 68,022 -12.4 The EPZ sector was severely affected by the economic slowdown, particularly by the phasing out of the MFA. In 2004, EPZ output contracted by -5.0 %, against a contraction of 6.0% in the previous year. In 2004, total EPZ exports amounted to Rs 32.4 billion, while total imports reached Rs. 17.2 billion. Raw materials made up the bulk of total imports, accounting for 85.7% of total imports in 2004, against 90.4% in the previous year. The share of machinery imports increased significantly, by 66.7%, from Rs 1.5 billion in 2003 to Rs. 2.5 billion in 2004. This is due to new investments made in spinning mills and other factories. For the same period, net exports added up to Rs. 15.2 billion, slightly less than the Rs. 15.9 billion registered in 2003. The number of small EPZ firms increased from 134 in 2003 to 141 in 2004. However, employment fell from 565 2003 to 538 in 2004, representing a net job loss of 27. On the other hand, there was a large contraction in large EPZ establishments, with the number dropping from 372 firms in 2003 to 360 firms in 2004. The number of jobs in large establishments fell from 76,707 to 67,145 in the same period. However, most closures occurred in the textile and clothing sector, in particular among foreign-owned firms. The number of factories in the textile yarn and fabric sector diminished from 43 to 41, laying off some 869 people. In the wearing apparel sector, the number of factories fell from 229 to 224 in the same period and 8,953 people loss their jobs. The downward trend in employment in the EPZ sector reflected to a large extent the closure of factories as well as the downsizing of others as a result of restructuring and loss of market access. Also, it is observed that there is a general reluctance for unskilled/low skilled workers to join the EPZ sector. Total employment in the EPZ sector fell by 9,601 from 77,623 in 2003 to 68,022 in 2004. The textile sector continued to represent the bulk of large EPZ establishments. In 2004, there were 265 textile companies, 7 less than in the preceding year. UK, USA and France remained our principal EPZ export markets, accounting for Rs. 23.3 billion, which made up 72% of total exports in 2004. This represented a slight fall from the previous year, where EPZ exports to UK, USA and France amounted to 77.6% of total EPZ exports. The share of UK market increased by 14% from Rs. 7.8 billion to reach Rs. 8.9 billion, whereas the share of US market contracted by 12.9% from Rs. 8.5 billion to reach Rs 7.4 billion and that of France went down by 4.0% from Rs. 7.3 billion to reach Rs. 7.0 billion in 2004. In the region, there was an overall expansion of 11.9% in EPZ exports, from Rs. 1.7 billion in 2003 to Rs. 1.9 billion in 2004. There was an expansion of 25% in the exports towards Madagascar, from Rs. 560 million to Rs. 700 million, but a reduction of 20.1% of exports to South Africa for the same period from Rs. 557 million to Rs. 445 million. b. Non-EPZ Sector: In 2004, the non-EPZ sector registered a real growth rate of 5.0%, compared to the 5.8% registered in the previous year. Contrary to the EPZ sector, it recorded steady positive real growth rates over the past few years. In 2004, the non-EPZ sector accounted for 56.1% of the manufacturing sector, higher than the 53.4% registered in 2003. Table 16: Non-EPZ Sector 2001 2002 2003 2004 Output, Rs. Million 12,306 13,409 15,114 16,820 Share in Manufacturing (%) 47.4 49.6 53.4 56.1 Share in GDP, % 10.4 10.7 11.0 11.1 Real Growth rate, % +4.1 +4.2 +5.8 +5.0 Employment* 49,300 50,700 52,700 53,900 Investment, Rs. Million 2,614 3,397 3,006 3,590 Share in total manufacturing investment, % 59.8 69.7 68.2 63.2 * March Estimates **Estimated The share of the non-EPZ sector in the economy, which was 10.4% in 2001, increased to 11.1% in 2004. The evolution of employment in the non-EPZ sector was also positive, with an estimated figure of 53,900 in 2004, compared to 52,700 in 2003. This represented a positive growth rate of 2.3%. Investment in the non-EPZ sector represented 63.2% of total manufacturing compared to 68.2% in 2003. This is the result of a high 48% growth in EPZ investment in 2004. Manufacture of food products, beverages and tobacco accounted for the bulk of the non-EPZ sector. Other important activities include the manufacture of chemical products, metallic and non-metallic products, furniture and publishing. 3.3 Tourism: During the past decade, the tourism industry has emerged as the fastest growing sector and established itself as the third pillar of the Mauritian economy, accounting for about 6.4% of GDP in 2004, compared to 5.8% in 2003. In 2004, the tourism sector expanded by 2.6%, slightly lower than the 3.0% growth registered in 2003. This is the result of the slower growth in the number of tourist arrivals in 2004, when it increased by 2.4%, compared to 3.0% in 2003. Table 17: Main Indicators in Tourism Sector 2001 2002 2003 2004 Real growth % 1.0 3.2 3.0 2.6 Tourism as a % of GDP at BP % 6.3 6.0 5.8 6.4 Gross earnings Rs m 18,166 18,328 19,415 23,448 Tourist arrivals No. 660,318 681,648 702,018 718,861 Employment (March) No. 19,522 20,729 21,860 22,613 Investment as a % of GDFCF % 10.0 12.8 9.3 13.7 Investment (real growth rate) % -2.9 32.8 -21.0 54.5 Number of Hotels 95 95 97* 103 Number of rooms 9,024 9,623 9,647 10,640 * 3 hotels were not operating in 2003 due to renovation works Gross tourist earnings increased by 20.8% from Rs. 19.4 billion to Rs. 23.4 billion in 2004. Direct employment went up by 3.4% to reach 22,613 in March 2004, from 21,860 in the corresponding period a year ago. Investment grew by a record 54.5% during 2004 following the construction of three new hotels and the modernisation of existing ones. Number of rooms has increased from 9,647 in 2003 to 10,640 in 2004. In 2004, the number of tourist arrivals stood at 718,861, compared to 702,018 in 2003. Some 91% of tourists came for holiday purposes, while 4.2% were on business and 3.5% were on transit. Europe remained our main source, accounting for 66.4% of total arrivals. France, the leading European market, represented 29.3% of total tourists and 44.1% of the European market. Arrivals from France increased by 5.1%. Positive growth rates were recorded in arrivals from countries such as Italy (+3.5%) and UK (+1.6%). The biggest growth came from the Austrian market (+15.9%), the Netherlands (+10.5%) and from Eastern Europe (+10.8). Declines were also observed, namely from Germany (-3.1%), Switzerland (-10.1%) and Belgium (-16.2%). The African market, with most arrivals originating from Reunion Island and South Africa, was second after Europe, with 24.4% of total arrivals in 2004, with the number of arrivals attaining 175,649. This represented a growth of 0.7% from 2003. Reunion island remained the main market, with 96,510 tourists, 0.9% higher than 2003. The South African market expanded by 15% in 2004 with total arrivals increasing from 45,756 in 2003 to 52,609. The Asian market totalled 6.3% of arrivals, with 54.5% coming from India. Although in absolute terms the share of arrivals from China remained relatively low, it showed the highest progression in 2004, with a growth rate of 41.5% In order to boost the tourism industry, Government has recently adopted a Master Plan on Air Access Policy in view of looking at the long-term viability of both Air Mauritius and the tourism sector. The report recommended the prudent and gradual liberalization of air access. Prior to this, an efficient restructuring of the National Airline company is necessary. 3.4 Financial Intermediation: The financial intermediation sector, which comprises banking services and the insurance sector, stagnated, with a low growth rate of 1.0%, compared to 7.2% in 2003. This is the result of a negative performance of 15.5% in the offshore sector, counterbalanced by a growth rate of 5.0% in insurance, 7.4% in commercial banking services and 0.7% in other financial intermediation activities (stock exchange, trusts etc). Table 18: Main Indicators in Financial Intermediation 2001 2002 2003 2004 Financial Intermediation Real growth % 11.0 2.0 7.2 1.0 as a % of GDP at BP % 9.7 9.5 9.9 9.6 Investment as % of GDFCF % 2.3 3.0 2.3 2.0 Investment real growth rate % 21.4 33.8 -16.0 -7.6 Insurance Real growth rate % 10.0 8.0 7.3 5.0 as a % of financial intermediation % 24.8 27.3 27.5 28.5 as a % of GDP at BP % 2.4 2.6 2.7 2.7 Others (mainly banking and offshore) Real growth rate % 11.4 0.0 7.2 -0.5 -as % of financial intermediation % 75.2 72.7 72.5 71.5 -as % of GDP at BP % 7.3 6.9 7.2 6.9 While the growth rate stagnated, its share in GDP went down to reach 9.6% as opposed to 9.9% in 2003. 3.5 Information and Communications Technology (ICT) The ICT sector has been considered as a major component in development strategy over the past few years and the sector has witnessed important changes and a rapid growth. Activities are concentrated around IT enabled services (ITES) and business process outsourcing (BPO). Since the setting up of the first company in 1996, which then employed some 14 people, the BPO-ITES sector counted in June 2004 some 60 companies with a total investment worth Rs. 1,171 million and employing about 2,935 people. Table 19: Indicators on ICT 1996 1998 1999 2000 2001 2002 2003 June 04 No. of companies 1 4 5 7 14 18 42 60 Total employment 14 113 125 278 842 889 1,696 2,935 Investment, Rs. M 5 39 2 28 275 45 408 369 Since the beginning of 2002, the industry has experienced a high growth in terms of new companies created. 24 new companies were created in 2003 and 18 in 2004. Back office operations constituted 36% of the sector, while call centres accounted for 30% and software development made up some 17% of the ITES-BPO sector. Source BPO Secretariat, BOI, 2004 Call Centers employed mostly HSC holders who were recruited to work as tele-operators mainly, while people holding higher-level qualifications were called upon to perform more responsible tasks such as supervisors or team leaders. On the other hand, companies engaged in providing BPO services, Software Development and Multimedia, recruited mostly diploma/degree holders. Total foreign investment in the sector amounted to Rs. 611 million, equivalent to 57% of total investment in IT. 60% of FDI originated from France and India and were concentrated in BPO and call centres. 4.0 CONCLUSION: The review shows that economic performance in 2004 was rather good, especially when viewed against the mounting challenges with which we have to cope. The twin phenomena of regionalisation and globalisation, if they contain the promise of future benefits, impose upon us severe constraints in the short and medium terms, implying critical strategic changes, profound restructuring of business, and heavy investment in equipment and human resources. It is not surprising in this demanding economic environment to see that the price which we have to pay to maintain the growth momentum at a moderate level is translated in high public indebtedness, persisting unemployment, continued depreciation of the rupee and relatively high inflation rate. In spite of all the odds, we have been able to cushion up to now the brutal blows of trade liberalisation. Our textile industry is managing to keep afloat, though it is impossible to avoid the closures of the less performing units. The non-EPZ sector is adapting successfully to more acute competition from overseas. The situation in the tourism industry seems to be improving. The sugar industry has made real advancement in its restructuring and diversification programme. We can also observe material progress in the ICT and financial sectors. It can be inferred further that our economy has developed greater resilience to adversities as the significant improvement in living standards brought about by strong economic growth of the nineties has contributed to develop a robust and varied internal demand. However, the relative lack of dynamism in our export industries can impose serous constraints on growth prospects, with negative impacts on employment, budget deficit and external trade deficit.