New Governor aims to revitalize BoM after Troubling Legacy

A week filled with significant developments is on the horizon as the government undertakes an evaluation of the economic legacy left by the outgoing administration. Prime Minister Navin Ramgoolam has warned that the findings may shock the public, given the extensive damage inflicted during the previous regime’s tenure.

Amid these changes, Rama Sithanen, the newly appointed governor of the Bank of Mauritius (BoM), is engaging in consultations aimed at restoring the credibility and independence of the institution.

Sithanen has described the BoM as having become an “annex of the Ministry of Finance” in recent years.

In recent statements, Ramgoolam emphasized the need to examine how the previous government mismanaged the economy, claiming that the former Minister of Finance distorted financial statistics to create a deceptive monetary narrative for the public.

To address these issues, the new government has established a team tasked with conducting a comprehensive assessment of the economic situation.

The tight monitoring of financial mismanagement is a critical justification for Ramgoolam retaining the Finance portfolio himself, with junior minister Daneshwar Damry assisting him.

Damry, who was elected at the top of the list in constituency no. 8 (Quartier-Militaire–Moka), will be responsible for specific assignments within the former office of Renganaden Padayachy.

Since taking office a week ago, Governor Sithanen has been actively meeting with economic operators, financial institution leaders, economists, bank staff, and government officials to gather insights.

He stressed the importance of collaboration among different stakeholders and called for coherence between monetary and fiscal policies.

“We are all in this together,” he told L’Express, highlighting his urgent priorities: stabilizing the Mauritian rupee, ensuring the availability of foreign exchange in the market, and addressing issues related to the Mauritius Investment Corporation (MIC) while guiding monetary policy.

Sithanen acknowledged the complexity of the rupee’s situation, especially in light of the strengthening U.S. dollar following Donald Trump’s victory.

On Friday, November 22, the exchange rate for the U.S. dollar was Rs 47.26, compared to Rs 46.42 the day after the election.

The new governor is conducting an audit of the BoM’s operations and is focused on restoring its independence to fulfill its essential mandates, including controlling inflation, stabilizing the financial system, regulating the foreign exchange market, and promoting balanced economic development.

He noted the challenges faced by the BoM during the COVID-19 pandemic, stating that, while there was a need to save jobs and businesses, questions remain about whether the measures taken were the most effective.

Sithanen asserted that the BoM must return to its core functions as a regulatory body, emphasizing that it should not act as an investor in sectors that could create conflicts of interest related to its monetary policy.

“For the BoM, we need to determine the best path forward,” he stated.

“Numerous institutions have offered recommendations to address these challenges, and it is essential to eliminate any ambiguity regarding the bank’s mandate.”

In parallel, the issue of the MIC is central to Sithanen’s efforts to reorganize the BoM’s governance.

He highlighted the fiduciary responsibility of the BoM to protect its funds, which ultimately belong to taxpayers.

A forensic audit of the MIC’s management is necessary, and immediate action will focus on stabilizing the current situation with discipline and professionalism.

Meanwhile, the new government is expected to announce its first economically impactful, election-related measures this week.

Expectations are pointed towards a potential reduction in fuel prices, which will require funding of Rs 2.1 billion by June 30, 2025, and Rs 4.3 billion annually until 2030, as detailed in an Axys report titled The Winds of Change – Challenges of the New Government, released last week.

Source: l’Express