The Covid-19 Bill

Editorial

The Explanatory Memorandum to the The Covid-19 (Miscellaneous Provisions) Bill states that the object of this Bill is ‘to amend a number of enactments to cater for the impact of the novel coronavirus (2019-nCoV), the infectious disease commonly known as COVID-19, and for matters connected, consequential or related thereto’. The scope of these latter matters is indeed broad and wide-ranging, and there can be no doubt that a lot of work and consultations with different stakeholders have gone into the drafting of the 84-page document.

What is of particular interest to us relates to the proposed amendments to the bank of Mauritius Act and the Workers’ Rights Act 2019, which, if voted by a simple majority, will have long-lasting impacts on the way public funds and debts are managed and utilised, and on the acquired rights of workers and their protection under the laws of the country. These concerns have also been flagged by Roshi Bhadain, who has called for concerted action by the Labour Party, MMM, PMSD and his Reform Party to oppose the proposed legislation.

The view has been expressed here as elsewhere that only governments can prevent the ‘spiral of despair’ brought in by the Covid-19 pandemic by ‘restoring business and consumer confidence, providing income support to prevent mass poverty, and directly intervening to revive industry’. Thus the calls for governments to take centre stage in restructuring crippled companies… if necessary by taking strategic stakes in vital industries, by providing higher – and unconditional – benefits for the millions who will be unemployed, by taking a much more active role in the labour market, heavily subsidising jobs and training, etc.

We concur with the view that exceptional times demand exceptional measures. But Covid-19 should not serve as a pretext to drive questionable changes in our polity. For instance, the provision to presumably increase labour flexibility – through amendments to the Workers’ Rights Act 2019 which, through the insertion of a new section (72A. Reduction of workforce in certain enterprises in the services) – will allow the Redundancy Board (in case it finds that the reasons for reduction of the workforce or the closing down are justified) shall order that the worker shall be paid only 30 days’ wages as indemnity in lieu of notice. Workers can no doubt seek redress from the law courts for abuses by employers, but the cost and time it takes to secure reparation can not only deter any challenge by aggrieved parties.

What is also likely to give rise to heated debate relates to the amendments being envisaged to the Bank of Mauritius Act, in particular Section 6, which will see the addition of a new paragraph (oa) which will allow the BOM to ‘grant such amount to Government as the Board may approve to assist it in its fiscal measures to stabilise the economy of Mauritius on account of the Covid-19 virus having a negative impact on the economy of Mauritius’. Furthermore, there is also the projected amendment of Section 46 for the addition of a new subsection (5) which will authorise the BOM to ‘invest, with the approval of the Board, such amount of the official foreign reserves as the Board may determine in any corporation or company set up for the purpose of facilitating economic development’. There is moreover the new subsection (6) in section 47, which may allow the Board to ‘approve such grant from the Special Reserve Fund to assist Government in its fiscal measures to stabilise the economy of Mauritius’.

Readers will remember that in light of the Finance Bill 2019, which proposed an amendment to the Bank of Mauritius Act with a view to utilising the central bank’s Special Reserve Fund for repaying Government’s external debt, the view had already been expressed in different quarters and in the columns of this paper that the proposed amendment was not compatible with the notion of independence inherent in the legal provisions of the BOM Act and that it would undermine the Bank’s credibility for the proper conduct of monetary policy.

One would also expect the proposed utilization of the official foreign reserves of the BOM in any corporation or company ‘set up for the purpose of facilitating economic development’ would cause much more disapproval. Dissenting views are already being heard about what are perceived to be some dangerous provisions of the Bill, which would give the government a blank cheque to print money with little by way of safeguards to manage this exceptional public funding to prevent abuse and protect the public interest. It has also been argued that the BOM had been ‘one of the rare central banks whose founders were farsighted enough to enable it to fund “development-related” projects with full accountability unaffected as it was the Minister of Finance (himself accountable to the Assembly) who was required to approve any such project’. There was thus, it is felt, no need to amend the BOM Act to take on the Covid rescue plan.

Former Finance minister Rama Sithanen seems to hold a different view. He says in today’s interview that ‘we should throw away some taboos and consider some unconventional financing methods which other countries have embraced’, and goes on to suggest that in the exceptional testing times in the wake of Covid-19 the ‘Minister of Finance simply has no choice than to depend on the two reserves of the Central Bank and on its electronic money transfer machine to save the country from both an economic and a social crisis. All countries are doing it – from the US and the UK to the EU and Japan’.

There are obviously different perspectives to this issue. We would like to think that the recourse to the BOM to save the economy has not been taken lightly and would not serve any objective contrary to the public interest. The critical issue in this transaction is rigorous oversight, preferably through a parliamentary mechanism as suggested by Rama Sithanen. Were such a mechanism to be adopted, as well as any other ideas offered in a spirit of genuine collaboration, this will no doubt go a long way towards facilitating wider acceptance of the amendments being proposed – with the important caveat that this should be a one-off measure.

* Published in print edition on 12 May 2020