He is misleading the Public about the State of the Economy
1. Foreign Exchange Reserves
First, by boasting that the level of foreign exchange reserves have risen to a record high of Rs311 bn at end July 2021. The reality is that foreign reserves, in US dollars, have fallen sharply this year, by USD500 mn, from USD7.7 bn in Jan 21 to USD7.2 bn in July 21. Foreign reserves in rupees over the same period have remained about the same, at around Rs310 mn, only because of a depreciation in the rupee of close to 8% against the USD between Jan 21 and July 2021.
If foreign borrowings of a total of USD 490 mn, namely USD290 mn from Japan in Mar 21, and USD200 mn in Feb and July 21 by the Bank of Mauritius, are excluded, foreign reserves would show a higher decline of USD990 mn, or around USD1bn, over the period Jan-Jul 21.
The country’s foreign exchange reserves are under growing pressure, and the Minister of Finance is deceiving the public by claiming that reserves are at a comfortable level.
2. Inflation
The annual (year on year) inflation rate has risen steadily sharply in recent months from 0.2% in Apr 21, to 2.3% in May 21, to 5.9% in June 21, and to a record 6.5% in July 2021. The CPI stood at 111.7 in July 21, compared to 104.9 in July 20, thus reflecting an annual inflation rate of 6.5%. (The year-on-year growth of the Broad Money Liabilities and the Monetary Base which peaked up to 20% and 78% respectively in April , showed an increase of 19% and 61 % in June- a reflection of the excess liquidity in the market and the problems ahead to contain the inflationary pressures without constraining growth)
Rising inflation is seriously affecting the public’s purchasing power, and is mainly a result of the depreciation in the exchange rate of the rupee. The rupee has been depreciating steadily, since early 2020, and the year to year depreciation in the rupee stood at 6.3% in June 21.
The Mauritius Exchange Rate Index (MERI) computed by the Bank of Mauritius increased from 113.3 in June 20 to 120.4 in June 21, or by 6.3%. MERI represents a weighted average rate of the rupee vis a vis Mauritius’ main trading partners.
With a faster depreciation in the rupee in the month of July 21, representing a monthly depreciation of 3%, or an annual depreciation of close to 9%, the year on year CPI inflation rate is likely to climb even further in the coming months.
Higher inflation is having an adverse impact on the living conditions of the majority of the population, which is already affected by the consequences of Covid on the economy, especially the lower income groups which are the most vulnerable, but also middle income families. The deliberate policy of Govt and the central bank to allow the rupee to weaken is causing inflationary pressures to intensify. The authorities are pursuing a policy of rupee depreciation in order to deflate the real value of the mounting public debt and raise more tax revenue on the inflated value of consumption.
3. PRB Report
The Minister of Finance has also been confusing the population about the date of application of the Pay Report as Jan 2022. On 10 June 2019, the then Prime Minister and Minister of Finance, Pravind Jugnauth had himself announced at para 430 of the 2019/20 budget that “the PRB Report is due in January 2021. I am pleased to announce that pending the publication of the Report, I am providing for the payment of an interim monthly allowance of Rs1,000 to all public officers as from 1st January 2020.
The "Manifeste Electoral" of the Alliance Morisien, dated October 2019, stated among its 15 ‘mesures phares’ that “Le prochain rapport du PRB prendra effet a partir de Janvier 2020 au lieu de Janvier 2021."
