Supplementary Appropriation 2020-2021 Bill: Meeting the cost of the BAI Saga ! This Govt's end-of-the-year gift to the population.

The Supplementary Appropriation 2020-21 Bill provides for additional expenditure of Rs17 bn, of which the bulk relates to an equity injection of Rs11.9 bn into the National Property Fund.(NPF)

The BAI was a disaster waiting to happen, but the decision to dismantle it was politically motivated.

After the reckless decision to dismantle the BAI Group, the National Property Fund was incorporated by Government in May 2015 with the primary aim to repay BAI Super Cash Back Gold policy holders and Bramer Asset Management investors.

Government pledged in 2015 that it would not use public funds to repay BAI policyholders and that the cost of dismantling the BAI would not be borne by Government but met through a disposal of BAI Group assets, i.e., from its cash assets and by selling its investments, including in Britam Kenya, or even in an alleged castle in Italy.

The total cost of the BAI break up, already borne by public funds, will be around Rs 20 bn - an equity injection of Rs11.9 bn into the National Property plus the Rs 3.6 bn injected in MauBank and the repayment of some Rs 4.5 billion to the BOM line of credit in 2022 The public is heavily footing the bill for breaking up the BAI Group.

This is nothing but a bail-out of the NPF, which has proved incapable of meeting its commitments to refund BAI policy holders and investors from a disposal of BAI resources. In fact, NPF will have to find more financial resources to repay its remaining debt obligations, namely, the BOM lending facility repayable in June 2022 in one bullet payment of capital and interest, or about Rs4.5 bn.

The equity infusion into NPF and NIC also represents a bail out of NIC. The NIC which took over the assets and liabilities of BAI Insurance was already insolvent from its creation in 2015. A proper actuarial evaluation of NIC, namely of the liabilities arising from BAI insurance policies transferred to NIC, was not conducted at the NIC’s creation, because it would have revealed NIC’s huge solvency gap.

The obfuscations and downright lies fed to the population about illusory revenues from the sale of National Insurance Company, MauBank, Apollo Hospital, and other BAI assets are today fully exposed.

It vividly demonstrates the callousness and irresponsibility with which the whole BAI breakup was conducted. The truth is today revealed – that the public is bearing the cost of breaking up the BAI Group, contrary to Government’s past false assertions and phony commitments.

The BAI debacle is evident for everyone to see. Govt has obviously borrowed significantly to bear this cost, to finance the capital injections into NPF, NIC and MauBank. Our gross public sector debt is already at 90% of GDP, and inclusive of Bank of Mauritius borrowing to finance Govt, gross public sector debt has reached about 100% of current GDP. The cost of the BAI mess will add to the huge debt burden already falling on the next generation.

It’s a crying shame that the taxpayers should be bearing the cost of this regime's incompetence & misgovernance when the money could be used for more meaningful purposes.

12Prakash Neerohoo, Harish Chundunsing and 10 others

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