The week ahead is likely to be full of twists and turns. In question, the costing of the economic legacy left by the outgoing government, which could shock the population, according to the Prime Minister, Navin Ramgoolam. This, given the extent of the damage caused. In the meantime, the new governor of the Bank of Mauritius (BoM), Rama Sithanen, who is continuing his consultations, wants to restore the credibility and independence of this institution which, he says, has become in recent years “an annex of the Ministry of Finance”.
“We will soon know how the old regime squandered the economy, how the Minister of Finance distorted and manipulated statistics to give a monetary illusion to the population”highlighted in recent days the new head of government, who has set up a team to carry out an economic inventory. The tight monitoring to collect all the facts surrounding the financial mismanagement is put forward by Navin Ramgoolam to justify the choice to keep the Finance portfolio. He will be assisted by the Labor MP elected at the head of the list in the constituency of no 8 (Quartier-Militaire – Moka), Daneshwar Damry, appointed junior minister on Friday, who will be entrusted with specific files which he will be called upon to look into with his team in Renganaden Padayachy’s former office.
In the meantime, the new governor of the BoM has already marked out the terrain after a week in office, multiplying meetings with economic operators, heads of financial institutions, economists, bank staff and even government officials to listen to them. “There needs to be collaboration between the different stakeholders. There must be consistency between monetary and fiscal policy. We are all in this together”confides Rama Sithanen to l’express. However, he recalls that his urgent priorities at the bank remain the stabilization of the rupee, the availability of foreign currencies on the market, the problems at the Mauritius Investment Corporation (MIC) and the conduct of monetary policy. He recognizes that on the rupee front, the situation has become complicated with the strengthening of the dollar following Donald Trump’s victory in the United States. “The dollar is almost at par with the euro. This is a situation that will inevitably impact the value of the rupee.» Friday, the greenback traded at Rs 47.26 against Rs 46.42 on November 6, the day after the victory of the Republican candidate.
Rama Sithanen, who continues his audit of the BoM’s operations, insists on the need to restore its credentials to operate with complete independence, and in accordance with its mandate to control inflation, stabilize the financial system, to regulate the currency market and above all, to promote orderly and balanced economic development. “I insist on this last objective because we all know the ambiguity that the BoM faced during Covid. We know there was a need at the time to save jobs and businesses. Was this the best way to do it? That’s another question.”asks the new governor.
Today, we must work so that the BoM is «back to its basics». However, basically, he says, a central bank is a regulatory institution; it also provides supervision, but it is not an operator or an investor who invests in economic sectors where there may potentially be conflicts of interest, particularly in its conduct of monetary policy. “For the BoM, it will be necessary to know the best solution to take. There are several institutions that have made recommendations to manage this situation. It is essential that there is no ambiguity in the bank’s mandate.” Rama Sithanen will work to ensure that the BoM is credible and independent and not an arm of the Ministry of Finance, as has unfortunately been the case in recent years.
At the same time, the burning issue of the MIC occupies a central place in the new governor’s putting the house in order. “It is a fiduciary responsibility of the BoM to protect its money and, in turn, that of taxpayers. A forensic audit will be required on the management of the MIC. For the moment, it is important to stabilize the situation. Everything will be done with discipline and professionalism.”
In the meantime, the first economic measures of an electoral nature must be announced this week, following the formation of the new government. Everything suggests that this will be the fall in the prices of gasoline and diesel. This will require funding of Rs 2.1 billion by June 30, 2025 and Rs 4.3 billion annually until 2030, according to a study by Axys appearing in its document The Winds of Change – Challenges of the New Government made public last week.
