“No, the end is not for any time soon… so we’d better prepare for the long haul”

Interview: Manou Bheenick

It will not be business-as-usual. The demand side will be severely affected as consumer purchasing power will take a hit’

‘Of course, the government will have to change tack. Yesterday it was spending as if there was no tomorrow’

Manou Bheenick, former Minister and former Governor of the Bank of Mauritius as well as an astute political observer and analyst, takes a deep look at the unprecedented sanitary crisis caused by Covid-19 and its very serious economic fallouts. He is of the view that the government, like governments in many other countries, has the responsibility to both save lives and livelihoods by using all the monetary and fiscal instruments at its disposal, and that it must hesitate to resort to the legislation that allows the central bank, with approval from the Minister of Finance, to finance development projects – and there can be no greater one than saving our nation.


Mauritius Times: We are still in the midst of the storm, and with the recent virus surge in Singapore – one of the best managed countries of the world, whether in relation to the Covid-19 pandemic or otherwise — it does not seem we’ll get out of the woods any time soon. What do you think?

Manou Bheenick: How right you are about Singapore! A gutsy little nation transformed itself within one generation from a Royal Navy fleshpot into a thriving modern nation that offers a master class in how to develop and manage a country for the benefit of all its citizens. In the present, unprecedented health crisis, Singapore has done it again: the WHO strongly commends its strategy to combat the sanitary crisis and the rest of the world can well learn from it. At last count, it had a total of 6 deaths to deplore for a population more than four times our size. Lessons there for our current leaders, don’t you think?

We are really in uncharted territory here, with a virulent health crisis of global proportions bringing in its train as the secondary effects of its possible immediate remedial measures (e.g. lockdown, etc) an economic crisis that in turn weakens the capacity to combat the sanitary crisis which triggered it in the first place. If we now (1) factor in second-order, third-order, and higher order effects, (2) take on board the asynchronous spread of the virus across countries, and (3) the possible resurgence/recontamination of the kind witnessed in Singapore despite its state-of-the-art management, then I’m very much afraid that Covid-19 will be with us for quite some time.

No, the end is not for any time soon. Maybe we can glimpse the beginning of the end when the promised vaccine, on which work is proceeding at a frantic pace, is finally here. The end will come from a combination of herd-immunity and a global vaccination program. It’ll be a brave man who can put a time-frame to all this… so we’d better prepare for the long haul.

* Have we reached a point where we can already anticipate what’s going to be its impacts on the Mauritian economy generally and on different sectors of economic activity, or is it too early to tell the shape of things to come post-Covid, both here and abroad?

I would venture to suggest that the need of the hour is not guesstimates of how many trillions it will cost, or how much it is costing per day in lost output or whatever, etc. What IS of utmost importance is to ensure that there is enough international goodwill and cooperation left — after the gruelling fight against the virus and possible mutual recrimination among some nations about its origin — to repair, restructure, and rebuild from the ashes and the wreckage a new working and fair international order.

There are some mind-boggling figures about the economic fallout being bandied about which is the bread-and-butter of an army of technocrats and professionals in leading global players, such as international institutions, banks, think tanks, investment firms, risk managers and so forth. Don’t get me wrong! Numbers are useful here; it is good that impact assessments and scenario-planning are used to inform policy globally for everyone, including for the small bit-players like us.

Not to quote Bill Clinton, “It’s the people, Stupid!” It’s a case of The People versus The Virus. The people should rightly be the priority of the moment. Quite possibly, for the first time in human history, all countries — big or small, rich or poor – can look in the same direction and subscribe to the same overarching objective of saving our people. What countless global conferences and innumerable UN resolutions, spanning over several decades since World War II, have signally failed to achieve, Covid-19 did in one fell swoop since it struck in Wuhan only a couple of months ago.

We, like every other country, must do all it takes to minimize the death toll and help our people to keep body and soul together. We cannot fail our people at this hour. This is a war we absolutely must win. The duration of the lockdown is not the point at issue here: it must last as long as it takes to flatten the curve and prevent any flare-up.

The time will certainly come, when Covid-19 is behind us, to take stock, assess the damage, reckon up the positive impact – yes, it’s not all negative — of the lockdown on the global commons, and pick up the pieces to get on with the day-to-day business of existence such as, for the individual, putting food on the table and, for the country, earning our keep in the post-Covid world.

* There is no doubt that the focus and priority of the authorities should be on preventing the spread of the pandemic in the country and saving lives, but we’ll sooner than later will have to address the question of how long can we shut down the economy. What’s your take on that?

As a very small economy, exporting a restricted range of specific goods and services to survive and actually, even at the best of times, running twin-deficits in our fiscal and external balances, it should be obvious that the decision of when to end the lockdown and to try to kick the export economy back into gear is most certainly not in our hands.

The changing dynamics of the spread of the virus, within and across countries, will determine when different countries progressively wind down their internal lockdown and then restore external access to the status quo ante, at least selectively for those countries that no longer pose health risks.

Only when this happens can international trade flows of goods expect to pick up, and that too only in a no-change-in-trade-patterns scenario. It is more likely that the severely-disrupted global supply chain, where China was effectively the factory of the world for a wide range of products, will not be among the first to recover and may never recover.

I would heavily discount any chances of a prompt recovery in the air transportation and tourism sector. Hotel operators could share data of forward bookings to help any assessment and better gauge recovery prospects. The offshore sector will feel the knock-on effects of global economic slowdown and quite possibly run into headwinds of its own as cash-starved governments across the world ramp up taxes and weigh down on tax-planning arrangements.

Tele-commuting and working from home has kept our virtual economy going through the lockdown and it may get back to speed quite fast provided its business model is not undermined in the aftermath of Covid.

* Ending the lockdown is not really in our hands, right?

I just do not believe that we are the kind of country and economy where executive fiat can legislate the end of the lockdown and signal the restart of the economic machine. Any premature end of the lockdown and reopening of our frontiers to even a trickle of tourists still brave enough to travel— do not expect the hordes required to fill our hotels — exposes us to serious risk of rekindling the spread of the virus.

 There is, of course, little hindrance to kick-starting the domestic agricultural production sector as soon as health risks abate. Indeed, domestic agricultural production should become the object of tailor-made policy measures not only to fill some of the vacuum created by a shortfall of fresh food imports but also to branch out in new directions — medical cannabis, anybody?

* When the Government does decide to re-open and reboot the economy, do you expect that things will be business as usual?

Make no mistake about it: lockdown fatigue will set in and it will become progressively more difficult to keep it in place. We dragged our feet in introducing it. We proved particularly clumsy in applying it. The civic sense of our people proved wanting. Our law-enforcement people, with their insensitive policing and flowery language fit for the gutter, must be sent to re-education training camps once we roll up the shutters. Our stop-go approach to open and close selected supermarkets and food stores smells of rank amateurism, with an added whiff of corruption.

But, when all is said and done, it is true that the lockdown-cum-social distancing is our best rampart against the spread of the disease, critical to prevent our health services from being overwhelmed and to saving lives. So let’s not focus unduly on when we are ending the lockdown — it’s only the best means available to achieve the basic objective of all living things on the planet: our survival.

* What happens after the lockdown is terminated?

Most of us will pick up the threads and try to get on with the humdrum of daily life that we were used to. Some, having lost loved ones, may be disoriented and take some time to grieve their loss. There may be a Covid trauma in localized heavily-affected communities with large losses of human lives, e.g. Wuhan, parts of Italy and Spain and others we haven’t yet heard of, and possibly among medical personnel who are in the front line in this war.

Profiteers will spring into action in the shortage economy; indeed I have been warned against scammers who are already active here in the online food supply sector where you pay your money and wait interminably before realizing you have been scammed. There will always be smart-alecks around to exploit human misery. It is the business of a proactive government to protect its people against them. Is ours up to the task?

It will not be business-as-usual. The demand side will be severely affected as consumer purchasing power will take a hit. There may be successive rounds of job losses and business closures— including the self-employed, taxi drivers, jobbers, hawkers and others— which may rip through our economy and ravage our society. Some in the travel and recreation sector, where prospects of quick recovery now look dim, will place staff on furlough or lay some off altogether.

On the supply side, the picture is not comforting either. The spread of globalization — that, despite some glaring inequities — has done so much to improve human health and welfare across the world since the cataclysm of World War II, may rapidly grind to a halt. Changes in global supply chains will follow, as indeed will international trade and payments arrangements and the institutions supporting and underpinning them.

One of the key institutions, with a special war chest to help member-states, has just run into a US veto to extend its financial support to Iran, reeling from the double-whammy of Covid-19 and the oil-price collapse which has decimated its revenues. Yes, I believe our international institutional infrastructure, built by the victors of World War II and still heavily influenced by them, as shown in the Iran example during this crisis, is up for some rejigging. A root and branch reform may be even better! I am speculating and my crystal ball is no better than the next person’s.

But, speculation apart, the external trade environment — to which we had adapted so well after our structural adjustment at the turn of the 70s and early 80s to carve out our competitive advantage— may be quite different for both our exporters and importers. We do not know the nature of the changes awaiting us. Whatever they turn out to be, we must restructure our economy and adapt to them to prevent our resource-poor country from turning into a new basket case. That is why, when I was in the governing and policy team running our economic affairs for so long we exercised our brains so much on fiscal and debt sustainability, building national reserves, and building resilience in what was, and still is, a potentially poor country.

All of these, you will note, are singularly difficult concepts to sell to the common man or to the run-of-the mill politician of the type that swarms over our political landscape. What we took several decades to build, our successors blew away within the short space of five years. We were the ants to the grasshoppers pretending to have won the people’s vote at the last elections while we still await the Supreme Court to pronounce on a slew of cases contesting the results. In the meantime, we find ourselves with the grasshoppers fully in charge.

* Will the economic circumstances force the Government to change tack?

Of course, the government will have to change tack. Yesterday it was spending as if there was no tomorrow. Sooner or later, it had to awake from its reverie inside its bubble when it finally woke up to the reality of runaway public deficits, growing external imbalances, disappearing reserves buffers, declining productivity and slowing growth, all of which we can tot up to its credit.

With or without Covid, this government would have had to wake up to the unsustainability of its fiscal and spending trajectory and acknowledge the sheer bankruptcy of its policies across entire swathes of economic and social activity as it proceeded with alacrity to hollow out all public institutions, including watchdogs and regulatory bodies, while stifling dissent and spin-doctoring to make the people believe they were on the way to nirvana. The day of reckoning was looming with the coming budget.

The cynic in me sees the Covid crisis as a providential opportunity for this government to escape any paternity charges for the economic crisis which they have brought without any help from the virus. It provides a fig-leaf to hide incompetence and serial bungling. Having frittered away reserves, having never bothered to build up fiscal buffers, having exploded social transfers, the grasshoppers in Government House, were among the first countries, in our part of the world, to run to the IMF, cap in hand, for lending support from the Rapid Credit Facility. The extent of our mismanagement can be judged from the fact that only Madagascar, which is a gold medallist in the economic mismanagement stakes, beat us to it! And Madagascar also qualified for a parallel direct budget-support loan from the World Bank. A country is also judged by the company it keeps.

A small reminder may be in order here for those who may have forgotten it. In pre-Covid times, when the biggest post-war economic/financial crisis spread across the world, the so-called sub-prime crisis of 2008-2010, we had confidence in our own management and weathered the storm, with hardly a blip in the economy and without having to go to the IMF for liquidity support. Before, we were often an exception in many things.

This government has quietly buried this Mauritian exceptionalism. Now we are very much part of the pack — one of 90 countries lining up for IMF support.

* But there must be a silver lining to the cloud, though, isn’t it?

Yes, indeed. The IMF are the people who make recalcitrant countries swallow the bitter pill of reform. Although the Rapid Credit Facility is light in conditionality, we can be sure that we’ll see less of profligate spending, massaging of figures, more transparency, greater accountability and, hopefully, a reduction in conflicts of interest across our institutions which have become a matter of course and go unrecognized.

All of these are matters that Fund staff conducting the periodic Article IV Consultations were unwilling to delve into when we were held as a poster boy for good policies and a star performer in Africa. Now that the former star has tumbled and joined the cancres, it is reasonable to hope a less-accommodating stance from this quarter. And where the Fund goes to fix the financial sector, the World Bank often follows to look at the real sector. That is the silver lining holding our best hope for the kind of deep economic/social/financial reform that we need any time soon.

* The view has been expressed that, as elsewhere, the Government will have to step in, as it’s already doing to help pay part of the people’s wages, but also to mitigate the hit on the Mauritian economy by injecting billions of taxpayers’ money. Do you see a fiscal and debt crisis looming on the horizon?

The fiscal/debt crisis was already here well before the last election and the outgoing government was well aware of it. Why else would it have done Greek-style massaging of debt and deficit figures? Why else would it have resorted to the subterfuge of setting up off-budget Special Purpose Vehicles to channel large inflows, escaping all accountability and transparency, to undertake very large projects that it had waved through to be implemented in total opacity?

When any economy is in an acute economic crisis, it is the duty of its government, drawing on its central bank resources and external resources as required, to backstop the economy and come to the rescue and save its citizens while minimizing damage to its financial and economic infrastructure. The debt metrics and other prudential guidelines that have been put in place will apply under normal circumstances.

To take an example, when Greece was in crisis, it fell foul of these guidelines and had to be nursed back to health with an austerity cure to purge it of the bad habits it had acquired. Without Covid, we would, in all likelihood, have run similarly afoul of applicable norms and probably be considering some form of austerity at this time. If Covid were not a pandemic, and we were among a few countries affected, we would still have been in the same situation as Greece was.

Because Covid is a pandemic, affecting all countries, some of the applicable norms are no longer of primary concern and prudential guidelines are relaxed across the world. Let’s take Greece again to illustrate what I am saying.

The European Community and European Central Bank norms to which it had to conform have all been made more flexible, relaxed, or reduced to provide more firepower to individual member-countries to suit their particular circumstances. It becomes quite technical but I’ll mention some just to give a flavour: the fiscal deficit target is reduced; there’s a range of capital relief measures for banks via reductions in capital adequacy and liquidity coverage ratios; there is relaxation of collateral standards; there is flexibility in recognition of non-performing assets and loss recognition; there is a significant expansion in the range of securities (including corporate bonds) eligible for ECB financing; there is short-term fixed-rate liquidity support to banks and not the usual penalty rates, etc. The US Fed has injected dollar liquidity by opening swap lines with major central banks, including some smaller ones like Singapore, to enable them in turn to provide USD liquidity to their licensees.

What this flurry of activity means is that we should, like every other country, suspend our normal concerns about public deficits and public debt, at least so long as we have access to the external resources required to pay our import bills— but we do so only temporarily, until humanity has won the battle against the virus, and normal fiscal discipline and macro-prudential guidelines gradually come back.

What it does not mean is that we can defy economic gravity with impunity. It may help with the window-dressing of past incompetence but it doesn’t hand a Get-out-of-Jail-Free card to our bungling government. There will be a bill to pay. The adjustment that we would have been doing, had Covid-19 not happened, is not cancelled, only postponed— with the added uncertainty that we’ll have to adjust to a new global trading environment whose contours we can only begin to guess.

We would, of course, have been much better-placed to take on the challenge if we had not squandered our reserves buffer earlier.

* It’s ultimately the public that will have to pay for the Government’s intervention to save the economy, but shouldn’t there be some form of democratic and popular control over that intervention so that we do not repeat the mistakes of the past – like we did with the Stimulus Package of 2008?

I have never been a great believer in special stimulus packages targeting specific sectors, especially for ongoing activities, as it is the business of policy to be as neutral across various sectors of activity as possible. They may be alright, for limited periods, if you are trying to build up some new sector from scratch. Otherwise, if you resort to it as a normal practice to direct State largesse to your favourites, it only breeds inefficiency lobbying, and corruption.

In both its origin and nature, the 2008 crisis may have been different but it was still a garden-variety old-fashioned financial and banking crisis — admittedly, a severe and systemic one, but still one — that monetary authorities could fix as the rest of the economic and social structure continued functioning.

The situation now is fundamentally different. We are confronted with a complex, unprecedented, multi-dimensional crisis, with some of its dimensions still unknown, and there’s no monetary solution to it. With people locked down at home, work-places closed, and the very act of handling money itself, at least in its physical form, being a possible source of contamination, the transmission mechanism to make monetary policies, via bank intermediation, work may be broken. We cannot take time off to fix it. Which is why bank supervisory bodies have rolled out an array of measures aiming at regulatory forbearance, and relaxation of man-made rules, to ensure that banks don’t go to the wall as their financial assets tank in the financial crisis so that attention can be focused on the struggle to overcome the disease with all the resources that it takes.

An unprecedented situation calls for out-of-the box thinking. Governments, and ours is no exception, will take on the task of helping their citizens survive. Ours has, predictably, bungled in its first responses. The size of the bungle is particularly striking for a country which only the other day was mistaking itself for a tiger. It is even more evident when compared to how many other countries, including Madagascar!, are responding to the same situation by handing out cash handouts , resorting to job creation, offering Care and Support Packages and extra payment to lower-income households and the unemployed, introduced in-kind transfers of basic foodstuffs.

In comparison, we are just bungling along and very far from emerging best practice in extending help and support to our population to limit the impact of the crisis. When countries everywhere have pulled out all stops to save their citizens, can there be any possible excuse for this mean and stingy approach in our hour of need, especially from a government which has made its mark by its spendthrift ways?

It is now that we need to spend, and keep on spending, until some semblance of normality returns, not just here in Mauritius but also, in the export markets that may fuel our restructured economy.

* What about the taxpayer ultimately having to foot the bill?

It is the taxpayer and the consumer, through his direct and indirect taxes, and by suffering a dose of depreciation/devaluation, and rising inflation, who will foot the bill in the final analysis. We therefore need total transparency in how we conduct our economic and financial affairs in this matter. We need to have an oversight of how our money is going to be used for bailing out various operators. We must limit our efforts to sectors that have a reasonable chance of recovering. We should limit our involvement to a specified multiple of the recent tax payments of the beneficiaries. We should suspend dividend payouts of beneficiaries and of the financial intermediaries at least while our own debt repayments to the IMF, and to others who may be funding us in this exercise, are still outstanding.

Since we are going to lean on taxpayer rupees to pull ourselves out of this crisis, the time may well be right to address some old thorny issues that successive governments have studiously shied away from. I am referring to the inherited inequities and the ownership concentration which overshadow our entire economic and production structure. Or should we again close our eyes, hold our nose, and just roll the old structure over? Which, in our local lingo, would be tantamount to a case of Prend mo baton pou batte mo-même! If we are serious about rebooting and resetting the system, this must also be addressed.

There is a big task ahead. There is absolutely nothing in the past experience of the current government to even remotely suggest that they can deliver on this. They bribed their way into office by promising increased monthly paychecks by way of non-contributory old-age-pensions to a full 20% of the population. To bail out Greece, the troïka funding it had insisted on early elections before untying their purse-strings. Will the IMF, then part of the troïka and leading the Greek restructuring but alone this time, have enough spine to insist on this in our case? Or will it prove just as accommodating as it has sadly been in the last two Article IV consultations?

We may very well need a new team to take on this monumental task if we are to have any running chance of being among the winners of the new post-Covid world emerging before our very eyes. The Supreme Court and the IMF hold some cards. But it is the people who has the final say. We should give them their say before we wreak irretrievable damage to ourselves and to future generations to carry on bungling.

* It has been argued the time has come for ‘helicopter money’ to help weather the Covid-19 storm. What’s your take on that?

I must confess my utter bafflement that so much energy is being spent on what is for me very much of a non-issue, as indeed also is the subsidiary question, which is also exercising some minds, of how to avoid classifying such money as central government debt.

Milton Friedman, the guru of monetarism, coined the term in the 1950s, in a half tongue-in-cheek manner, when he wrote about what to do in the extreme scenario when normal monetary policy instruments, operating through their usual transmission mechanism i.e. commercial bank intermediation, have stopped working. In like vein, I recall Sir John Hicks, also an Economics Nobel Laureate like Friedman, bringing up in one of his graduate seminars at All Souls College, Oxford, a similar tongue-in-cheek idea — actually aired earlier by someone else whose name I no longer recall — on what to do if all attempts to increase growth and employment via Keynesian spending have failed: employ the idle to start digging holes and, when they have finished, keep them employed in filling the holes up, and both employment and GDP numbers should go up! They were hardly meant as serious policy prescriptions.

We should recall that what Friedman had in mind was a country with a reserve currency that the rest of the world was prepared to hold in unlimited quantities and happily accept them in exchange for their exports of goods and services or add to their reserves. He assumed that the domestic — and also the greater part of the international — banking/trading/production/ supply/distribution/transport system, etc., were all open for normal transactions, i.e. everything was all right with the world, except for the little matter of the monetary authority of this one particular country, which had reached the zero-lower-bound in its policy rate, finding itself unable to make its monetary policy stick as it was effectively trying to push on a string. In those limiting circumstances, there was nothing left to do but to call out the helicopters, stack them with cash, and offload the cash in the back garden of consumers to get them spending again, and thus get the entire economic machine back into gear in spite of a failure in the monetary transmission mechanism.

A lot has happened since to tweak the original proposal for circumstances approximating the conditions envisaged. Yes, the US has thrown out money from helicopters in occupied and war-torn countries. More relevant, for our present purpose, is how the 2008-2010 global economic crisis— at its core, a systemic financial crisis —which began as a debt-crisis, was actually fixed by the counter-intuitive method of increasing debt. This goes under the label of QE, or quantitative easing, and it took a US Treasury Secretary going down on his knees in Congress for it to happen. Friedman would have approved, had he been around. There was no one fixating about the level of public debt going through the roof in the countries whose central banks were at the origin of this flood of liquidity. There were bigger fish to fry.

The current crisis is much worse than the sub-prime crisis as we said earlier. If we may know how to fix a financial crisis, we know little about fixing the hydra-headed monster of a virulent pandemic-cum-economic crisis occurring simultaneously across the entire world, and possibly feeding on each other, especially when the state of scientific knowledge doesn’t allow us to be at all confident that the current medical approach to combat the virus will work without giving rise to further rounds of re-infections also spreading across the world. Economics, like other social sciences, is often laughed at as lacking the scientific rigour and precision of the natural sciences. The irony of economics trumping medicine in the present crisis will not be lost on the keen observer.

This crisis is taking the world into a deep recession, probably much worse than the Great Depression of the 1930s. The IMF forecasts negative global growth of minus 3% for this year. For Mauritius, the growth collapse is much worse at minus 6.7%. Next year may be worse. Recovery is not on the horizon anytime soon.

In a classic banking crisis, the lender of last resort is the central bank. If a central bank does not have the resources and is not up to the task, the government must reinforce its firepower by drawing on resources available to it, e.g. under IMF quotas or other such facilities, or recapitalize the bank. Note that the debt is assumed by the borrowing country, never mind the debt level which will be addressed after fixing the banking crisis. Il faut parer au plus pressé.

In a systemic banking crisis, this function is taken over by central banks of the affected countries acting in concert. We’ve just mentioned the US Fed and its critical role in providing international liquidity in the 2008-2010 economic crisis. It’s playing that role in the present case too.

Taking care of only the financial half of the hydra-headed monster will not work. The pandemic part of it must also be addressed, as well as the economic part resulting from the fallout of the pandemic. Governments must step in because there is no one else.

It’s the common citizen who backstops his government, having delegated to it, amongst others, the power to tax and spend. The ultimate burden rests on the citizen, not just the taxpayer. If the question were put to the man in the street, surviving the pandemic will no doubt be his highest priority. So it must be for his agent, the government.

Just as central banking authorities are doing everywhere to save their financial and banking system, governments must also pull out all the stops to wage war against the other half of our hydra-headed monster, and protect the citizen. In a lockdown situation, Government must provide food and essential supplies, including income-support — not just for the low-income and unemployed but also for all the new unemployed such as daily-paid workmen, the self-employed who cannot work from home, taxi-drivers who cannot ply their trade, and so forth.

Government must pay or subsidize or postpone all utilities bills payments and pay the agencies directly, with safeguards to prevent abuse. Had Friedman been around this time, those helicopters would be dropping, not bank notes, but food parcels and other supplies – to cut out the financial intermediary and shorten the supply chain, support the lockdown, and minimize the risk of contagion. Some countries are delivering electronic vouchers – helicopter money 2.01?

How much it will cost? In the current state of knowledge where we don’t know the duration of the crisis, it’s like asking how long is a piece of string? We just don’t know. What we do know is that it just has to be done, it requires total transparency and accountability, with the strongest possible penalties with mandatory prison sentences and reimbursements for those defrauding the system, profiteers, etc

We’ll breach fiscal deficit targets and public debt ceiling? So what? So will everybody else! Targets and guidelines are man-made constructs to provide safety in these areas in normal times. In abnormal times like these, all such norms are implicitly or explicitly suspended. In the banking sector in the US, Europe and elsewhere, they have been explicitly lowered or made more flexible, with more to come if required.

We should not worry overmuch about debt/GDP or deficit/GDP ratios for now. We should focus on efficiency and transparency in delivering what it takes, for however long it takes, to tide our economy and our people over the crisis. Since, in my view, accepted norms will change post-Covid, it also matters very little whether we classify it as public debt or leave it on the central bank balance sheet. It matters little because every other country will be having recourse to similar final resort financing.

We could simply get an amendment to raise the limits currently applicable to central bank financing of public sector deficit. Or we could use an unusual provision in our central bank legislation — one which has always raised eyebrows with every new IMF staff-member taking over the Mauritian desk — which allows the central bank, with the approval of the Minister of Finance, to finance development projects.

I ask you: What greater development project can there be but to save our nation?

* Published in print edition on 17 April 2020

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