“It is the Mauritius Investment Corporation, the central bank’s subsidiary, which has mispriced assets massively in its generous lending to ailing sectors of the economy, thus impairing its own balance sheet on a risk-adjusted basis, and indirectly that of its parent, the Bank of Mauritius.”

The leader of the opposition drew the alarm last week on the Bank of Mauritius (BoM) not publishing its balance sheet two months in a row. We grabbed former BoM Governor Manou Bheenick for a quick reaction. We got a bit more than we bargained for.

The leader of the opposition and economists have shown their concern about the Bank of Mauritius (BoM) not publishing its balance sheet for two consecutive months. Does that surprise you?
No. The Bank of Mauritius is leading the way in plumbing new lows, the new easy game in which our country has become a trend-setter once we lost our foothold and fell off the unprecedented heights we had ascended to so patiently over so many years under exemplary (for Africa) sure-footed, even-handed, prudent and wise economic management.

When did we start going downhill? After the pandemic?
We began on our path to perdition when our economic and financial half-witted managers turned their backs on fiscal consolidation and financial stability by mounting their first raid on our central bank reserves, under a blue sky before the slightest spectre of any looming pandemic.  And, try to remember, many applauded! The journey downhill proceeded faster and faster, especially when the fight against the Covid pandemic turned into a frantic feeding frenzy with bare public coffers sustaining all manner of financial malpractices, public procurement boondoggles, creative accounting, loss of parliamentary accountability, with yet more recourse to the reeling central bank and its depleting reserves.

What choice did the Bank have?
A proper central bank, adequately staffed and true to its mandate, would normally have been expected to stand as a bulwark against the creeping rot that soon engulfed everything around us. The incompetent and pliant central bank management opted to swim with the tide.

Was what we did here the trend many other countries had to take to face the Covid pandemic?
No. The last time I recall having come across runaway creative accounting contaminating public finance and leading to the loss of credibility was in the case of Greece, and we know how that ended.

“I just cannot imagine any other reason for delaying publication of such vital data than the distinct possibility that the accounts show some impairment or other.”

Coming back to the balance sheet, what is the reason for its publication anyway?
There are solid reasons for central banks to publish their balance sheet monthly. Market-players, investors, rupee account-holders, creditors and many others need the high-frequency data to ensure that the central bank issuing the currency is solvent and has the balance sheet strength to back up deposits and borrowings of the financial system which it oversees.

So why do you think the Bank is delaying its publication?
There is the nub. I just cannot imagine any other reason for delaying publication of such vital data than the distinct possibility that the accounts show some impairment or other.

Where is the impairment in question?
It is the Mauritius Investment Corporation, the central bank’s subsidiary, which has mispriced assets massively in its generous lending to ailing sectors of the economy, thus impairing its own balance sheet on a risk-adjusted basis, and indirectly that of its parent, the Bank of Mauritius. Factor in the next element in this picture: any impairment of the BoM capital base must be made good automatically by the public treasury. Which means that the squandering of the central bank reserves which began with the pre-Covid hijack and all the rest that followed must now be made good via recapitalisation of the central bank.

Sounds very serious…
I very much hope I am misreading the situation and there is a perfectly anodine explanation for this reporting delay. I await it with bated breath.

“The Mission Chief gave some useful pointers which should have made those pulling the levers sit up. I, however, see no sign of that under the business- (or should I say?) scandal-as-usual façade.”

How worried are you about a possible downgrade by Moody's?
The negative outlook which Moody’s slapped on their standstill rating on the eve of a budget exercise should have sobered up the guys allegedly running the central bank and their minders.

Are we still likely to get downgraded?
I think a lot will depend on the full Article IV report, and any indication we can glean of any ongoing dialogue with the International Monetary Fund. However, the Mission Chief gave some useful pointers which should have made those pulling the levers sit up.

Did they sit up?
I see no sign of that under the business- (or should I say?) scandal-as-usual façade.