The Banker designates Manou Bheenick as Central Banker of the Year, Africa
The role of central bank governor has come under increasing scrutiny over the past 12 months as markets in the developed world continued to wobble. The Banker (a professional magazine of the Financial Times Group, UK) recognises those who have led their countries’ economies through what has been another tumultuous year. Mauritius is particularly vulnerable to the vagaries of external inflationary pressures, thanks to the openness of its economy and the fact that food and fuel – which mostly have to be imported – make up 40% of its consumer price index.
The past three years have hardly been easy for Rundheersing Bheenick, governor of the Bank of Mauritius. First, he had to deal with a sharp fall in inflation in 2009 as the island’s tourism industry and sugar and textile exports slowed, hurting the economy. Then, thanks to a quick recovery from late 2010, inflationary pressure increased again.
But the country has been fortunate to have him as its central banker during this volatile period. From the moment he was appointed in February 2007, he has proved himself to be a reformer and far-sighted operator.
Within two months of starting the job, he created a monetary policy committee (MPC). Mr Bheenick cites interest rate decisions being made by consensus, rather than opaquely by the governor, as a big reason for Mauritius’s stable inflation since then.
The MPC moved quickly to deal with the forces buffeting Mauritius during its downturn, cutting its key repo rate sharply, which helped launch the country’s recovery.
In 2011, the Bank of Mauritius had to react carefully to the economy’s renewed buoyancy and ensure inflation did not rise too far. It succeeded, thanks largely to the MPC’s decision to put up the repo rate from 4.75% to 5.5% in the course of the first nine months.
Mr Bheenick says that November’s inflation rate of 6.6% – significantly below the levels of 9% to 10% witnessed between 2006 and 2008 – marks the peak of the cycle. He expects it to fall to between 5% and 5.5% by June, within what he calls the central bank’s “comfort zone” of 4% to 6%.
Mr Bheenick has helped Mauritius’s economy, expected to grow 4% in real terms in 2012, in other ways too. In April 2011, to boost credit growth, he capped banks’ holdings of Treasury bills – the rates of which he said had fallen to “unacceptably” low levels – to 20% of their liquid assets. “When the crisis hit, our bankers seemed to become a bit risk averse,” he says. “They preferred to sit on extra liquidity instead of lending it.” Credit growth rose to a healthy 12% by the end of 2011.
The central bank’s policies have also led to a stable Mauritian rupee, which, unlike most other African currencies, appreciated against the dollar last year. Mr Bheenick had faced plenty of pressure from the island’s exporters to weaken it, but he refused to budge, something he firmly believes is in Mauritius’s long-term interests. “We do not believe we can gain competitiveness by depreciating the currency,” he says. “That was the quick fix our exporters were always asking for. They had got used to it and were very surprised I didn’t want to deliver on it.”