Eventful End to an Eventful Year

The change of guards at the Bank of Mauritius comes at a time when the role of central banks has again become a matter of debate — By Rajiv Servansingh

Bom: Change of Guard

The change of guards at the Bank of Mauritius (BOM) comes at a time when the  role of central banks in a democratic setting has again become a matter of debate following the “new normal” post 2008 Great Financial Crisis(GFC).

The appointment of Yandraduth Googoolye as the next Governor of the Bank is in itself remarkable in so much as it is a long time since “une personne du sérail” has been appointed to what is albeit one of the most critical positions in the governance of the country. In fact it is ironical and perhaps a form of poetic justice that the one he is being called to replace was the last Governor who was appointed from among the Bank’s staff for his first stint as Governor.

Yandraduth Googoolye, who joined the Bank in 1985, has risen to his actual appointment after having served under Indur Ramphul and a succession of “politically appointed” Governors including Manou Bheenick, Dan Maraye and of course his immediate predecessor. He will therefore be credited with considerable experience for having been the First Deputy Governor under some distinctively opposing characters.

There is no conclusive evidence that these appointees have done any worse or better than those who have been appointed from within the organization except that the personalities of the incumbents and their styles of leadership have often been a determining factor in the public perception of their achievements.

The sense that one gets from conversations with some of the leaders of the private sector is that the appointment of Yandraduth Googoolye at this juncture can be perceived as a signal of “appeasement.” Talking of personalities, the contrast could not be more marked between the incumbent and the now Governor-designate whom one would expect to be much more discreet, as befits a long serving officer of the Bank, in his leadership style than Mr Basant Roi.

The appointment of Mr Googoolye also comes at a time when the role of the Bank of Mauritius has been rather sharply criticized by the IMF in its latest comments. According to Reuters, the IMF has written that “the primary objective of the central bank was to maintain price stability and promote ‘orderly and balanced’ economic development. There appears to be no consensus on the definition of price stability and on the role of the nominal exchange rate in the conduct of monetary policy.”

This column seldom shares the views and policy prescriptions of the IMF-World Bank combine. However in this particular juncture one would remember that we had been very critical of the decision of the BOM concerning its recent decision on “subsidizing” the exchange rate for some distinct sectors of the export oriented industries while simultaneously lowering the repo rate with a view to “weaken” the Rupee. In its report the IMF states “the perceived multiplicity of objectives can risk overburdening monetary policy, spur policy inconsistencies and potentially undermine the Central Bank’s ability to anchor inflation expectations.”

In very broad terms, the next Governor of the Bank of Mauritius seems to have his tasks all cut out for him. He needs to re-establish the focus of the Bank on its primary role of maintaining price stability in a rapidly evolving global context in which the need to rebalance the roles of fiscal and monetary policies in the national economies is being seriously reconsidered.

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By-election in 18: A Predicted Triumph of the “Providential Man”

In an article written in July 2017, following the resignation of Roshi Bhadain, we had pointed out that in the eventual by-election Arvin Boolell would be the “providential man” and went on to predict that he would win the election handsomely. As for Roshi Bhadain we had described his action as a “rash gamble” and that “a likely poor showing would surely create a damning situation for the future of Roshi Bhadain and his Reform Party”.

We had predicted that the MSM would not file a candidate because “the MSM has no interest in raising the odds as regards the ‘enjeux’ of an eventual by-election. It would indeed be much better for them to shrug it off as a most untimely and unnecessary event which is only diverting energies from the serious business of governing the country.”

Finally in an article on 20^th September we concluded with the following: “The figures to watch are therefore the level of abstention and the protest votes which will give an indication of the extent to which the electorate are willing to reject the status quo, repudiate politics as usual and display profound distrust of the erstwhile political parties.”

“The main reasons put forward for dissatisfaction were that politicians do not listen and simply do what they want, that citizens have too little say and that politicians talk too much and act too little.”

Jack and Jeremy

Indeed if the winner was predictable, the surprise has come from the very good performance of Jack Bizlall who obtained no less than 11.47% of the votes and ahead of the PMSD. If the votes of the other two candidates (Tania Diolle and Kugan Parapen) who had a more or less radical discourse based on an alternative political/economic model are added to Bizlall’s, we reach a figure of 22.23 % of voters who have expressed a preference for a new political/ideological platform. This is a voice that every politician would be wise not to ignore including the winner.

When Jeremy Corbyn became the leader of the Labour Party in the UK, the Financial Times opined that this was a “catastrophe for the Centre left.” Months later in the 2017 snap elections called by Conservative leader Theresa May, the Labour Party realized one of its best performances in the last more than a decade by increasing its number of seats and creating a hung Parliament to the great dismay of the Conservatives.

The platform on which the Labour Party had campaigned was a clearly anti neo-liberal leftist manifesto which called for fairer economic redistribution and an anti-austerity measures. Can the parallel really be ignored?

*  Published in print edition on 22 December 2017