What are they up to? Let’s examine !!!
AMENDMENT 1. Sec 2(a)(i) of The Covid 19 (Miscellaneous Provisions) Bill amends the Bank of Mauritius Act by introducing a new provision at sec 6 (1) (oa), as follows: Section 6. Powers of the Bank(1) Subject to the Act, the Bank may –(oa) on account of the Covid-19 virus having a negative impact on the economy of Mauritius, grant such amount to Government as the Board may approve to assist it in its fiscal measures to stabilise the economy of Mauritius.
This new provision gives the Bank of Mauritius the additional power, by Board approval, to extend an unlimited amount of finance to Govt for its expenditures. The BoM is one of the most powerful institutions that oversee the financial health of the country. Its independence is crucial for the effective implementation of monetary policy and controlling inflation. This government has systematically undermined the independence of the central bank affecting the Bank’s operations and its credibility. You recall at the time of the appointment of the cronies at the top management level we had queried government on the governance issues-“ How many of the nominess will go all the way to ensure the Bank’s independence to pursue price and financial stability and preserve its credibility for the proper conduct of monetary policy and object to the opening of the floodgates to excessive money financing to Government.?” Now with this amendement it becomes clearer why it was important to have their people in place at the Bank.
AMENDMENT 2. Sec 2(a)(ii) amends the existing Sec 6(1)(y) of the BOM Act as follows:.. with the approval of the Minister, subscribe to, hold and sell shares of, provide capital or invest in, any corporation or company set up for the purpose of facilitating economic development.
This amendment broadens the power of the Bank to provide any kind of financing to any corporation or company, private or state owned, by way of equity or debt. The Central bank is not a Development Bank. Are they not diluting the role of the Central Bank ? Will it not conflict with its supervisory and regulatory role ? The BOM will aslo be allowed, to hold its foreign exchange reserves in these new investments in corporate financial assets !!! Our foreign exchange reserves will be held in such illiquid assets with all the credit and liquidity risks it will mean for foreign reserves management !!! To what kind of an unrecognizable beast or rubber stamp are they turning our CB which was, once upon a time, laying a claim to the title of “Best Bank for Corporate Governance”
AMENDMENT 3. (6) Notwithstanding subsection (5), the Board may, on account of the Covid-19 virus having a negative impact on the economy of Mauritius, approve such grant from the Special Reserve Fund to assist Government in its fiscal measures to stabilise the economy of Mauritius.
Further to the above amendment to broaden the BOM powers, this amendment provides that the Special Reserve Fund will be a source of funds for Govt. The limitation of the 2019 amendment to use SRF funds only for Govt debt repayments was meant to preserve the independence and effectiveness of monetary policy, as this would have a neutral impact on domestic liquidity, and hence also not affect the conduct of monetary policy by the Bank. The new provision allows the Board to make transfers to Govt, without the safeguarding limitations. Unfettered provision of central bank finance to Govt is pure money creation, adding to liquidity, and putting pressure on prices, the foreign exchange markets, and on the rupee, ending up in excessive rupee depreciation and inflation.
Once they have dipped into BOM Special Reserve Fund, you guess how its future replenishment will be made ? -by more of rupee depreciation
They are legislating for the central bank to become a “planche à billets” for Govt – du helicopter money. In my article “Financing the rebooting of the economy”, published in the "Weekly", I had alerted readers to the fact that the sudden tumult about helicopter money seemed to have been pre-planned by sending some hand-picked economists (who are constantly being interviewed by the pro-Govt Radio and press to convince doubters on helicopter money) to the frontlines to prepare the grounds in favour of CB's special efforts to buttress the economy via helicopter money.
They are legislating for the central bank to become a “planche à billets” for Govt – du helicopter money. In my article “Financing the rebooting of the economy”, published in the "Weekly", I had alerted readers to the fact that the sudden tumult about helicopter money seemed to have been pre-planned by sending some hand-picked economists (who are constantly being interviewed by the pro-Govt Radio and press to convince doubters on helicopter money) to the frontlines to prepare the grounds in favour of CB's special efforts to buttress the economy via helicopter money.
You understand now why they wanted to prepare and manipulate public opinion on helicopter money , And with such amendments they will ensure that BOM's financing will not impact on public debt and will thus hide their economic irresponsibility. But watch out for the DEPRECIATION OF THE RUPEE.
The economy is indeed at risk. Some have already dared to coin out the following: " SAJ le père du Miracle Economique mais PJ père de la Faillite Economique"
