We are told that Prince Mohammad, the son of King Salman of Saudi Arabia has agreed to finance the Heritage city project?  The whole financial transaction sounds more or less like a gamble exercise. ? And with what kind of money, may we ask, such finance will be done? If that project succeeds, tax payers will contribute part of their savings most of their remaining lives regarding such deal the government is embarking on borrowing money from Saudi Arabia on Heritage City.

Is Hon  Showkutally  Soodhun , the VPM,  doing his utmost to obtain financial help from the Arabs for the Heritage City project?  If so, we do not know at that stage what sorts of conditions and deal Soodhun has made to the Saudis to obtain financial assistance for such a project? This could be the biggest blunder the government will be committed if ever they borrow money blindly from Saudi Arabia without proper investigation.


Elimination of registration duties and land transfer tax

How can we be sure that the money our government is getting from Saudi Arabia is clean money?  Will Hon Roshi Bhadain, Minister for Good Governance, smart enough to investigate whether or not such money is clean and not a sort of money laundering from the Arab world for us to do business on capitalist development project such as Heritage City. Is Saudi Arabia in the good book of the World Bank and IMF regarding the transparency of its financial institutions in both its government and private sectors?

I totally agree with the arguments of my colleague Arvin Boolell when he asks: Is our government becoming a speculative real estate development company, mortgaging taxpayers’ monies and government assets in the hands of Foreign financial institutions? We all know that the recent acquisitions and mergers have precipitated the elimination of registration duties and land transfer tax under the regime, which is obviously a substantial loss of income to the government coffers, to enable the sprouting of alleged smart cities around the island.

It is very unlikely that the highly speculative real estate development will create  Real Economic Value and Long Term Sustainable jobs for Mauritians. Had  Hon Soodhun stated that Heritage City would also be an innovation and entrepreneurship venue, the startup Capital of Africa for digital activities? What we should bear in mind that the total construction costs so far mentioned by various parties is to be US $ 200 million.

The funding according to two Senior Ministers will be from Saudi Arabia and the terms will be as follows:- (a) there will be redeemable preference shares of about Rs 8 billion which will carry a fixed interest rate of 6% annually, (b) Saudi Arabia government MUR 10.5 billion rupees at 2% interest rate per year,with a moratorium of 10 years and repayable in 25 to 30 years. (c) our government will have to guarantee as well as paying a rental of MUR 40 million with an increment of 10% every 5 years for a period between 25 to 30 years to the Saudi’s concession contract holder (d) our government has also given guarantee that the project would be completed in 3 years and Heritage City Co Ltd will earn an annual rental budget of about MUR 200 million that is US$ 5.6 million today.


Financial risk

All these transactions are risky for our country and there is no doubt that it will be us, the tax payers, who will have to foot the bill. The questions that come to mind : Are we dealing with genuine financial investment at the expense of our taxpayers money? Are we in a position to live up with such a financial risk and what will happen if the whole transactions fail like some of those big Chinese projects such as Jinfei?

The government has a duty to avoid long term debt and whatever the Minister for Good Governance may say it stands to reason that the Jugnauth’s government miscalculation and obsession will increase budget deficit. The presence of the Financial Secretary at the Minister’s press conference does not mean that redeemable preference share will be off the balance sheet. Non current debt is still debt.

It remains to be seen if our government will enlist the services of an investment bank to structure and rise the funding. Our country deserves better and our population needs to be told of all kinds of financial deal whether genuine or risky. The government should reduce debt instead of augmenting it. The whole transaction between the government of Mauritius and the Saudi government  on financial assistance to the Heritage City project is a risk to put our country to bankruptcy in the long run if our government is not careful. Borrowing is one thing and repaying back the debt with interest especially in US dollars is a different matter.

                                                                                                                                                                                                   Dr Samuel Nicholas Duymun