Vice President Dr. Mahamudu Bawumia and Former President John Mahama
Vice President Dr. Mahamudu Bawumia says the performance of the Akufo-Addo administration in the management of Ghana’s currency, the Cedi, as against major trading currencies, particularly the US dollar, is second to none.
It follows a recent tweet by former President John Mahama, who attempted to ridicule the ruling government and Dr. Bawumia.
Mr. Mahama said the depreciation of currency was caused by weak economic fundamentals.
However, in a sharp response on his Facebook wall, Dr Bawumia, the economist and former Deputy Governor of the Bank of Ghana (BoG), indicated that such uninformed comments by Mr. Mahama only expose his lack of understanding on key aspects of the country’s economy.
“It has been brought to my attention that former President Mahama has recently been talking about exchange rate depreciation. The former President’s comments once again, sadly, demonstrate his lack of understanding on key aspects of our economy,” Dr Bawumia observed.
The Vice President, in the post, took Mr. Mahama through some basic lessons on how to assess the performance of a government as far as the exchange rate market is concerned to help guide him in future assessments.
“I understand the difficulty of the former President in appreciating the currency depreciation debate. I would try to simplify the explanation for him.”
Per his explanations, Dr. Bawumia stated, “The data on the performance of the cedi over the years shows that the cedi is recording one of its best performances in the Fourth Republic under President Nana Addo Dankwa Akufo-Addo. The depreciation of the cedi against the US dollar is one of the lowest in the first year of any government since 1993.”
Dr Bawumia supported his assertion with hard core facts and data from the Bank of Ghana in the form of infographics.
The data shows that the depreciation (4.9%) of the cedi against the dollar recorded under this government in 2017 is the lowest year-on-year depreciation recorded in the first year since 1992, beating the 35%, 5%, 15%, and 14.5% rates of depreciation recorded by Presidents Rawlings (1993), Kufuor (2001), Mills (2009) and Mahama (2013) respectively.
Dr Bawumia further revealed, “An equally instructive fact to note is that the NPP has demonstrated to be by far better managers of the cedi than the NDC. In the entire eight years of President Kufuor (NPP) rule from 2001 to 2008, the price of the cedi relative to the dollar moved from GH¢0.7 to GH¢1.2, representing a depreciation of 72%. However, in the 8 years rule of both Presidents Mills and Mahama (NDC) from 2009 to 2016 the Cedi depreciated by 247%, moving from GH¢1.2 to GH¢4.2. Such higher rate of depreciation in less than a decade is simply unacceptable and signifies high levels of incompetence.”
The Vice President added that the future holds significant prospects for the cedi under the leadership of President Akufo-Addo.
“Although it is early days, there is much optimism for a stronger currency under the leadership of Nana Addo Dankwa Akufo-Addo. Converse to the first 18 months of many governments in which the cedi depreciated by more than 10%, the first 18 months of this government has recorded a marginal depreciation of 7%,” he said.
In sharp contrast to what Mr. Mahama had sought to impugn, Dr Bawumia recounted, “The reason for our relatively strong exchange rate performance is that our economic fundamentals which Mr. Mahama sought to question under Nana Akufo-Addo, are strong. Much stronger than the mess he left us. The deficit is lower, inflation is single digit, the debt-to-GDP ratio is declining, interest rates are declining, our foreign exchange reserves are healthy, business confidence is rising and economic growth is increasing.”
Dr Bawumia, therefore, advised Mr. Mahama to take his time to read the facts well and appreciate them before making comments.