Deputy Says Governor Treats Central Bank As Own Property

Gérard Sanspeur resigned as Second Deputy Governor following advice of PM tendered during a conversation on Friday. He then held a press conference to explain that things are pretty bad at the Bank of Mauritius because Sithanen believes that that institution is his kingdom, actively covering stuff up and taking decisions where he has serious and undeclared conflicts of interest. Sanspeur also declared that Tevin Sithanen, the Governor's son, meddles profusely into the internal affairs of the BoM and wants to have a say in hiring, firing, attribution of banking licences and tenders. During the presser the ex-SDG has dangled six pages of what he says are damning one-way WhatsApp messages from Sithanen Jr.

Sanspeur will be making statements to the police soon and has promised more revelations. He also mentioned that he has a copy of a recording with respect to the Menlo Park saga that if made public would leave the Governor with no other alternative than to resign within a few hours.

Self-deluded 71-year-old Sithanen, probably the biggest political liability ever in the history of Mauritius, has been Finance Minister on two occasions under two different PMs. The first one ended in 1995 with the opposition winning all the seats in Mauritius and the second in 2010 by becoming the first and only outgoing FM to be denied a general election ticket. It's not the first time he's having trouble with the Bank of Maurtius Act, trade unionists and sources tell us that the controversial and increasingly contested idea of postponing the age eligibility for old age pension by five years was his.

Learn an insane amount of important and interesting stuff on the Indian Ocean island by downloading my 2024 guide.

Ramgoolam Appoints Toxic Bean-Counter As BoM Governor

It came as a shock to people who had voted for the Alliance of Change as they haven't forgotten how Rama Sithanen had badly messed up their livelihoods during his last stint as Minister of Finance between 2005 and 2010 with an extreme version of trickle-down economics. It was so bad that he could not be given a ticket – a first for an outgoing FM – in GE2010 and didn't take the risk of running as an independent candidate. Of course before that the then PM had to give a second Presidential term to SAJ and help get PJ elected in the 2009 by-election to prove his goodwill before sealing an alliance with the MSM so as to avoid electoral mayhem. He was also not elected in GE2014 and GE2019 and that too in two different constituencies while for GE2024 the risk was too great for Ramgoolam to give him a chance to return to parliament.

The 70-year-old Sithanen has also made a number of disturbing statements. Here's one.

And here's some more.

Madhuri is 50

Tomorrow. That was her comeback movie five years after having moved to the states. The NYT remarked then that the dance queen still got it. Other famous people hitting the big milestone this year include Jurgen Klopp, Julia Roberts, Benicio del Toro, Anderson Cooper, Vin Diesel, Carrie-Ann Moss and The Wachowskis, Bobby Deol, Carla Bruni, Jason Statham, Nicole Kidman, Pamela Anderson and Akshay Kumar.

Plus another 20 million people. I'll try to put their names later today.

We should have a special thought for all of our freedom-fighters this August. And a month later the BoM will turn 50. Hopefully it will not celebrate the event by depreciating our rupee.

How A Referendum Would Deepen Our Democracy

There are some issues that are really fundamental to our well-being and these are better addressed in a referendum. Especially when they are not discussed in manifestoes and electoral campaigns. Here are four.

1. Tax policy can break an economy and send a country to the dogs. Which is what the Sithanen flat tax has done. And that too without asking us for our permission. 

2. Currency policy. Only morons believe that competitive depreciation is Tiger stuff. Plus it matters a whole lot who call the shots at the BoM. For example in 2010 we were told that Manou was coming back. We didn't know depreciation-obsessed Basant Roi would after 2014.

3. Party lists are the equivalent of an English Premier League without red cards. We don't want them.

4. Privatisation of any part of our public utilities or other national assets. A government that wants to sell the CWA or saddle it with a management contract because it doesn't like its hotline is a good-for-nothing government.

AGF Should Step Down

She's staying put. For now. But several opposition parties want her to go in connection with her involvement with Alvaro Sobrinho. If Collendavelloo is sacked pressure will mount for her to tend her resignation. But that might not even be necessary.

BoM Releases nTan Report, This Time

Here it is. I hope the first one will be released too. In the name of transparency.

2015: The Year in Review

Q1: Gerrard leaves Liverpool. Scrapping point system is wrong. Chinese economy largest for next 5 decades. Singapore turns 50 as LKY dies at 91.

Q2: BOM shuts down Bramer Bank. Say goodbye to our Tamarin salt pans. Two beautiful minds die in car crash. Dracula dead at 93.

Q3: How to thin-slice policy quality. Cecil shot. 5-year olds to get assessment. Journalist forgets inflation. 10 years of blogging.

Q4: Klopp predicts league title within 4 years. Canada gets another Trudeau. PM calls PR a komeraz. Waiting better than massive bat culling. Lomu dead at 40.

SAJ's Comments on Electoral Reform Refreshing

Rightly calling PR a komeraz. Who wouldn't? After seeing what happened to election results in Rodrigues. It's the same feeling one got when going through the dumb and dangerous Sithanen electoral galimatia: a heap of rubbish that doesn't take more than a couple of minutes to demolish. A bit like his 2005 promise that a flat tax would generate average robust growth rates of 8% forever after: 2015 will be the 5th consecutive year growth rates will be less than half of that.

Besides PR is so unLabour: Phillippe Rozemont was expelled from the Labour Party when he voted in favour of it. And roughly six decades later Navin Ramgoolam lost power and his seat after he flirted with PR. When an overwhelming number of Mauritians -- using an attractive feature of our wonderful FPTP system but one that Sithanen wants to get rid of with party lists -- said no to an electoral proposal that is vote wise and outcome foolish. There is no need to use a bazooka to get rid of a very mild headache.

Refreshing indeed. Reminded me of what another of our PMs said back in May 2010: "Ki zot tile? Pran zot dan godi dir ayo papa Euro! Euro! donn zot bibron? Pa Pwena! Devaliasyon zame tienn solisyon. Nu bizin vinn pli konpetitif".

Read The Manou Bheenick Affidavit Here

The Rawats Hit Back

With Laina Rawat asking the commercial division of the Supreme Court to restrain the two receivers of Bramer Bank, Andre Bonieux and Mushtaq Oosman, in a number of ways. She claims the Bank of Mauritius acted in a way which is contrary to its own statutory obligations, natural justice and basic management principles. Ms. Rawat also believes that the receivers have a conflict of interest and are therefore not in a position to carry out their duties as per the law.

On his side Basant Roi has called the revocation of Bramer Bank's license on April 2 our Lehman moment. He obviously doesn't know what he's talking about.

IMF Doesn't Trust Own Currency Valuations

As has been reported by the institution's Independent Evaluation Group (IEG) before. So if the currency models of the IMF have been found wanting I don't see how the Minister of Finance can use them to justify the sneaky double-digit depreciation orchestrated by the BoM. Here's a backgrounder to see clearer.

BoM Revokes Licence of Bramer Bank

Cites seriously impaired capital, conducting business which is detrimental to depositors and systemic risk and inability to show it can fix its liquidity and capital problems. The Prime Minster also held a press conference about an hour ago where he announced that his government has uncovered a huge Ponzi scheme in excess of Rs25 billions and has consequently acted quickly as Bramer Bank and BAI Co. were going to crash. Two conservators of BAI Co have been appointed while one newsgroup mentions that arrests on departure and on arrival have been lodged.

Vishnu is Lucky, Again

To be Finance Minister these days. After almost a quarter of a century. Because that's after almost 10 years of the worst economic management -- Paglanomics -- our country has seen and started by Rama Sithanen with the help of Bretton Woods Ali. And of course with the blessing of Andrew Scott and one pseudo-socialist, Navin Ramgoolam. So improving things should not be that difficult. For example increasing pensions has helped compensate the lack of reasonable progress that the weakest groups of our fellow countrypersons have registered with the toxic bean-counters. And there are many more low-hanging fruits to pick.

But monetary policy was definitely not one of them. So it was quite surprising that Manou Bheenick was asked to leave. And replaced by depreciation-obsessed Basant Roi. Who unsurprisingly since returning to the BoM less than 80 days ago has presided over a double-digit depreciation -- 12% as of today -- of our national currency against the USD. After our central bank had issued a communique on January 30 informing the nation that there would be no MPC meeting in February because Lutchmeenraidoo's budget was due March 16. Or 45 days later.

Hopefully the Minister of Finance who keeps on insisting that he will deliver a 'second miracle' understands how to assess the quality of economic policies. Computing our real GDP growth in USD for the current quarter might be quite enlightening.

Basant Roi Back, Rupee Down By 3%, Already

By yesterday our currency had lost 3.28% of its value against the dollar. In the mere 18 trading days since Basant Roi has been back at the BoM. He is known to have a strong and silly depreciation bias. In fact if you had to chart the number of times he has asked for a lower value for our rupee -- when he was not in a position to sink it himself -- you would literally have to use a log scale.

I hope Mr. Lutchmeenaraidoo's idea of a "second economic miracle" doesn't involve making Mauritius increasingly insignificant in the world. And keeping local pump prices artificially higher after oil prices collapsed is kind of contradictory about making SMEs the backbone of our economy. And is oblivious to the fact that he is presenting a budget in a few weeks. Besides we've been suffering from such a disconnect for way too long. And for very wrong reasons.

All has not been bad though. Swiftly increasing pensions to Rs5,000 will surely help restore some disposable income to those who need it the most. And that cannot do our economy any harm.

Bheenick Dismissal is Inelegant and Silly

Our learned Central Bank Governor was sacked on Friday probably on the basis of an irrelevant section of our excellent constitution. This is kind of inelegant towards a citizen of this country who has been a great Governor. You might want to check how the inflation rate -- the biggest enemy of the poor -- behaved during his tenure. Have a look at the external value of our rupee too. A smoother transition -- like the last three times we changed Governors -- would have been more appropriate for the kind of country we believe Mauritius to be.

And the nearly eight years Manou has been at the head of the BoM has made life a bit easier for at least two groups of people. The first one is an overwhelming majority of Mauritians who experienced the tangible benefits of a common sense approach to managing monetary conditions. The second one bloggers like me who had one less thing to rant against.

He will be a tough -- but not impossible -- act to follow. Because there are many people -- across all party lines -- who have gotten used to the anti-inflation capital he helped build. Despite having to deal with Finance Ministers from very small parties who seemed to be confused about monetary policy -- and many other things. At best. And a Financial Secretary who appeared to have a natural predisposition to establish contact with little green creatures that wear an antennae.

And silly because his successor hasn't been nominated yet. 

Bheenick Should Make Vision 2020 Public

He referred to it nine times at his annual dinner with the economic operators last week. The Governor talked about it again a couple of days ago. And if I remember correctly it is not the first time he's mentioning it as the boss of our Central Bank. Nice.

It would be even nicer if he would do the needful to have a pdf of the document on the BOM's website. Out of intellectual courtesy. Vision 2020 could be the first document to go under "Others" in "Research and Publications". So that a maximum number of citizens can have a look at it.

Why Government Securities Are The Safest

Because of two things it can do that private corporations cannot. The first one is to collect taxes and the second one is to print money. So that if a big payment is due the state can always raise income or corporate taxes or have its adviser -- the Bank of Mauritius -- order a container of the good stuff from Thomas de La Rue. But you don't want to play with these levers for day to day matters. Or to compensate for dumb policies. Nope. You want to design policies that are at least sustainable if not thoughtful.

Still these two trump cards puts government in a very strong position to undertake the biggest projects. Which is why, for example, it used to produce all of our electricity through one of its manifestations.

Sik Yuen Exercises Ministerial Prerogative

And sacks Robert Desvaux as Chairman of the MTPA. Xavier Duval is not happy about this and wants Sik Yuen to either reinstate his buddy or quit as Minister. In essence the PMSD believes it is the owner of the Ministry of Tourism.

This reminds me of Obeegadoo's recent comments about how electors literally aren't allowed to vote as they please. And of Sithanen's week-long whining-cum-crying back in February 2007 when he wanted to usurp the Prime Minister's prerogative of picking the Governor of our Central Bank. There was also that circus about him insisting to stay on as Finance Minister beyond April 2010. Could this explain why his report on electoral reform contains perverse recommendations to institutionalise the ownership of ridings and ministries? Aka double candidacy.

Returning to the current situation remember that Ramgoolam's government has a majority of 38-31 and that the PMSD has 4 MPs in Parliament. If 3 Coqs leave Ramgoolam will still have a majority of one. Of two if Guimbeau supports Government. More if a few unhappy MMM MPs cross the floor.

Duval who said he was a reasonable man should do a reasonable thing: resign from Parliament and face his voters immediately as many of them don't remember empowering him to attack our rupee with our own money.

Kahneman Not The First

Non-economist to win the Economics Nobel. Everybody knows that John Nash who won the prize eight years before Kahneman is a mathematician. Who doesn't remember the award-winning movie A Beautiful Mind anyway?

Nash is not the first either. This honour could very well go to Kantorovich who snatched the prize in 1975 or to Hayek who took the Nobel home a year earlier. Which confirms that you don't necessarily have to study economics to understand how the economy works. And that having a non-economist as first-deputy governor is a pretty lame excuse for not having launched the Monetary Policy Committee. When you should have.

Speaking about Economics Nobels, here are five broad categories in which the first thirty-eight ones can be grouped into. That's useful information. Just in case you might be in the mood to get one.

BOM Gone As Far As It Could

With the key repo rate given that savings haven't improved after two university buddies messed up our macroeconomic fundamentals. The bank is also making FX credit lines available essentially because cry-babies have stopped using swaps.

Listen to the post-MPC press conference. Or have a look at the slides used.