Mauritius’ embattled central bank chief has said he will step aside temporarily to help an inquiry into accusations that he abused expenses, if the Indian Ocean island’s prime minister asked him to do so. An increasingly acrimonious feud among the board at the Bank of Mauritius this week saw Governor Rundheersing Bheenick reject calls from a majority of board members for his resignation.

Bheenick said in an interview with Reuters late on Friday he was ready to assist the inquiry called for by the Treasury. “I am willing to step aside while the fact-finding committee is doing its job if the prime minister, who appointed me as governor of the Bank of Mauritius, gives his approval,” he said. Analysts warn that the central bank’s independence has been thrown into question by the deepening rift at a time when the Indian Ocean island’s almost $10 billion economy remains vulnerable to the fragile global outlook.

Bheenick said the six board members who publicly demanded he step down should also “take some distance from the bank” during an eventual inquiry. Relations between Bheenick and Finance Minister Ramakrishna Sithanen, who nominates board members, have been strained since the governor’s appointment by the prime minister in early 2007. The poor rapport came to a head last year when the central bank and Treasury were at odds over how to tackle a slowing economy and near double-digit inflation.

NO IMMEDIATE RATE RISE A Reuters poll this week showed the annual average rate of inflation falling to 2.7 percent by end-December from a peak of 9.9 percent in October 2009. It was forecast to rise to 5.1 percent by the end of 2010. Bheenick said he saw no need to increase the bank’s benchmark lending rate from 5.75 percent until there were clear signs of the economic recovery fuelling inflation. “For the moment the problem is not inflation, it is deflation. I don’t think the repo rate is going to increase immediately,” he told Reuters.

Consumer prices in the import-dependent economy are expected to trend upwards mid-2010, Bheenick said, as economies worldwide rebound and commodity prices pick up. Official forecasts put economic growth at 4.3 percent next year. Respondents to the Reuters poll were less optimistic, with a median forecast of 3.6 percent.

Mauritius, which analysts say imports some 80 percent of its food, should move to shield itself from future spikes in food and oil prices, Bheenick said. “As an import-dependent nation, Mauritius must think about developing offshore farming in neighbouring countries like Madagascar and Mozambique,” he said. The palm-fringed island, which is widely covered by sugar cane, plans to buy 20,000 hectares of prime farmland in Mozambique to ease food security worries.