Mauritius | Finances

June 25, 2013

Lower Interest Rates: 4 Dangers For Economy ... and Average People

The Monetary Policy Committee of the Bank of Mauritius decreased the Repo Rate by 25 basis points on Monday, bringing it to 4.65%. It should be noted that the decline in interest rates is a double-edged sword. If borrowers and investors benefit from such a measure, however, investors pay the piper. Here behind the scenes!

1. Lower savings

Jayen Chellum, secretary general of the Consumers' Association of Mauritius (ACIM) is out of it. Lower interest rates, he insists, is far from encouraging savings. "We should expect that the level of savings, which is already low, fall further," warns the Economic Observer Feroz Dahoo. The figures are also eloquent. National saving fell from 27% of gross domestic product in recent years to fall below 15%. Statistics Mauritius expects a rate of 14.6% this year. They are retirees, says Dr. Chandan Jankee 'Associate Professor' in economics at the University of Mauritius, which will be most affected because they do not often have income other than their money banked.

2. Inflationary risks

Governor Rundheersing Bheenick persists and signs. Inflation is indeed a threat, he said. It also expects a yoy inflation of 5.3% to 5.8% by the end of the year. "The decline in interest rates will cause inflation. People are not interested in saving and are more likely to consume. Which will drive inflation. This will lower the purchasing power of the Mauritian "Chandan Jankee advance. Eric Ng, Director, Office PluriConseil, sharing the same concerns. "If people consume more than they save, there will be an increase in demand and this will drive up prices. This decrease also encourage credit and create more inflationary pressures will push futures prices, "he says.

3. Depreciation of the rupee

With lower interest rates, the rupee will tend to depreciate. Good news for exporters, but bad news for consumers. "The products will lift and life will become more expensive," he warns. Jayen Chellum and adds: "A depreciation of the rupee may affect our rating import over the medium term and it is the consumers who will have to pay a high price," says Feroz Dahoo the Economic Observer. The risks associated with the depreciation of the rupee focus primarily on the oil bill. Currently, it is around Rs 32 billion. Because our oil Note is paid in dollars, this means that every time that changes, the greenback gained 1 rupee, our bill climbed Rs 3.2 billion.

4.65%

This is the new repo rate that is in effect from Monday, June 17 after the decision of the monetary policy committee of the lower of 25 basis points.

4. Games and promoted dubious investments

Abdel Ruhomutally operator in financial services, is categorical. With the savings rate which is not interesting, he says, investors will try to find other ways to make their money grow. "This may cause people to turn to dubious and risky investments such as Ponzi Schemes," he argues. Chandan Jankee expressed the same fears. "People are getting scammed by dubious investments or be tempted by games."

Creating or not creating jobs

Jayen Chellum does not hide his skepticism to the effect that the lower rates will encourage businesses to create jobs. "In the past, we have had more substantial declines and it had no impact on job creation," he says. Opinion shared by Eric Ng. "If this decline encourages businesses to invest and create jobs, it will be a good thing for Mauritians. But I doubt that companies will create jobs and recruit people into a crisis where uncertainty persists. " Chandan Jankee and concluded: "I doubt that this fall will bring an improvement in terms of growth, creation and distribution of wealth. "

Most banks have not yet revised their rate

Defi Media journalists contacted several banks on Thursday to see if they have seen their rate of borrowing and savings down. In the list below, MCB Bank and AfrAsia played the game. For. other banks, some of them told that the revision of rate will be held next week.

 

 

Savings rate 

Prime lending rate 

Mauritius Commercial Bank 

 Le taux est passé de 3,65 % à 3,4 %

Le taux est passé de 7,40 % à 7,15 %

State Bank of Mauritius

3,5 % (aucun changement)

7,4 % (aucun changement)

Bramer Banking Corporation

3,3 % (aucun changement)

 8,30 % (aucun changement)

Bank One

 3,65 % (aucun changement)

7,65 % (aucun changement)

Barclays Bank

3,4 % (aucun changement)

Le taux est passé de 7,65 % à 7,40 %

Mauritius Post and Cooperative Bank

3,4 % (aucun changement)

7,9 % (aucun changement)

The Hongkong and Shanghai Banking Corporation

3,25 (aucun changement)

7 % (aucun changement)

ABC Banking Corporation

3,65 % (aucun changement)

7,75 % (aucun changement)

AfrAsia Bank

3,15 % (nouveau taux)

7,15 % (nouveau taux)

 

 

 

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