The new Governor of the Bank of Mauritius recently took office with the firm intention of restoring the integrity of the institution, following irregularities detected under the previous administration. Rama Sithanen, appointed after the November legislative elections, has been working to closely examine the accounts of the Mauritius Investment Corporation, a private subsidiary created by the Central Bank during the Covid pandemic.
In June 2020, in response to the health and economic crisis caused by the pandemic, the Bank of Mauritius set up the Mauritius Investment Corporation to support struggling businesses. However, suspicions have surfaced of dubious practices, with some potentially taking advantage of this entity for personal gain or political favouritism.
This subsidiary had a fund of $2 billion, the origin of which has raised questions. The current Governor has clarified this issue, stating that the money was not converted from foreign currency, but created electronically. This money creation has, however, had repercussions on inflation and the value of the rupee, raising debates among local economists.
Some Mauritian economists consider this measure as a last resort palliative to support the economy during the crisis, but question the legitimacy of the Central Bank in creating a private entity and carrying out commercial operations such as real estate investments or the purchase of shares.
The new governor of the Bank of Mauritius has expressed reservations about these practices, stressing that the main role of the Central Bank is to guarantee the financial stability of the country and to promote balanced economic development, and not to engage in commercial activities.
The IMF recommendations to disengage from this controversial entity and calls for transparency remain at the heart of the debates. The authorities are under pressure to shed light on possible financial malfeasance committed by the former administration of the Bank of Mauritius, in the interests of transparency and restoring confidence.
Ultimately, the management of the Mauritius Investment Corporation and the actions of the Bank of Mauritius raise critical questions about morality, transparency and accountability within financial institutions. The new Governor is committed to restoring public confidence and ensuring that the integrity of the Central Bank is preserved, while working towards a healthy and ethical financial sector.