"The poor cannot sleep because they are hungry and the rich cannot sleep because the poor are awake," someone once said. I'd like to share these thoughts with a person who is dear to us - our minister of finance, Xavier Luc Duval.
For, the devaluation of the rupee he has been engineering is tantamount to a transfer of wealth from the larger community of defenceless savers, wage earners, pensioners and taxpayers, to a handful of business owners. And, apart from a few rent-seekers, nobody is going to thank him for that. His move of handling the monetary policy elsewhere than where it is supposed to be carried out, that is in the Central Bank, is heavy-handed, ill-advised and out of line with the principle of independence of an important institution such as the Bank of Mauritius.
Frankly, this whole saga and folklore around the rupee has lasted for far too long and has to be sorted out once and for all. Before the Monetary Policy Committee sits each time, some exporters come out in droves lobbying and trying to put pressure for rupee devaluation. To them, a devaluation of the rupee is the panacea to all their problems of competitiveness. That is too easy and, instead of feeding red meat to these lobbyists, the minister of finance would actually benefit by looking at the larger good and the interest of the country as a whole.
The business owners the minister of finance is trying to protect are not the only stakeholders in the economy. So, he cannot even be accused of defending 'big capital'. Among the big economic operators are many importers. Rupee devaluation will naturally affect the prices they pay for their imported goods and these will also be difficult to sell to an impoverished population whose purchasing power will be further eroded as weakening our currency would cause inflation to surge out of control. It is effectively an insidiously and perniciously impoverishing tax on the public at large.
Xavier Duval should not and cannot go against the forces of the market. Even countries which live in the backyard of the euro zone, like Morocco and Tunisia, have allowed their currencies to free-float, thereby letting market forces and economic fundamentals determine their exchange rates.
Let's also not forget that our rupee only seems strong because of the euro and sterling weakness, which is due to the daunting, some might say self-inflicted, macro-economic problems of Europe and the UK. Why should we make their problems ours? Don't we have enough of our own? And those economic operators who had enough foresight to re-invest a sufficient amount of their profits in machinery rather than pay out dividends and saved for lean days have little to complain about today. They continue to play a crucial role in the economy while holding their heads high. Those who didn't maybe have no place in the economic scene and should certainly not be subsidized by the poor. Xavier Duval should not dent his credibility to save their skin. And if neither the rich nor poor can sleep, we do not wish the consequences of that upon him.