By William
Yaw Owusu
Monday
September 10, 2018
The Cedi politics that usually generates heated debate
has reared its ugly head, as a war of words has ensued between the ruling New
Patriotic Party (NPP) and the opposition National Democratic Congress (NDC).
Currently, the NDC and the NPP are claiming the bragging
rights over the management of the local currency following the poor performance
of the Cedi against major foreign currencies, particularly the United States
Dollar, in recent times.
Cedi’s
Performance
As at the close of last week, the Cedi had lost some
5.68% in value/depreciation in a Year to date (YTD) analysis to
major trading currency, the Dollar.
According to Bloomberg, it’s a worldwide trend.
Bloomberg also mentioned currencies like the Argentine
Peso whose YTD depreciation stood at 50.24%, Turkish Lira (42.30%), The Rand (19.24%),
Indian Rupee (11.27%), The British Pound (4.29), The Euro (3.52%), as well as
the Zambian Kwacha (3.05).
NDC Adamant
In spite of the trend and ample prudent economic
measures being taken by the government to build a stronger economy, the NDC is
adamant and appears to be singling out Vice President Dr Bawumia, who is the head
of the Economic Management Team, for bashing.
Bizarrely, these NDC elements, who appear to have no
expertise in economic management are mainly making the noise.
Felix Kwakye Ofosu, a former Deputy Minister for
Communications, posted on social media platform Twitter that the Vice President
engaged in ‘cheap talk’ as far as plans for strengthening the local currency were
concerned.
“The exchange rate has hit GH¢5 to a Dollar. No one
has proven that talk is cheaper than our current Vice President.”
The
Bawumia Factor
Dr. Bawumia, who has in-depth knowledge of economic
management, was a thorn in the flesh of the NDC during the previous Mahama
administration over its economic policies.
The Vice President has been leading the EMT to clear
the ‘mess’ left behind by the NDC since he became Vice President.
The NPP members have always challenged their NDC
counterparts to back their criticisms with data.
They said inflation has been at the lowest level in
the last four years and interest rates are lower than they were under Mahama-led
NDC administration.
They insisted that GDP growth rate is higher than it
was under the previous NDC administration, debt-to-GDP ratio is lower than it
was under Mahama-led government.
Mid-Year
Budget
In July during the mid-year budget review, Finance
Minister Ken Ofori-Atta said the performance of the Cedi during the 18 months
of the Akufo-Addo government had been impressive compared to the last six years
under previous administration.
“The year-on-year depreciation of the Ghana cedi
against the US dollar stood at 4.9% in 2017. It was 9.7% in 2016. It was 15.7%
in 2015. It was 31.3% in 2014 and 17. 5% in 2013,” he said on the floor of
Parliament, adding “a further interrogation from the Bank of Ghana shows that
the depreciation in the first half has been the best since 2012. It’s
instructive to note that from January 2018, to June 2018, the Ghana cedi
depreciation against the dollar was 2.4% as against 17.2% in 2012 , 3.3 % in
2016 and 3.7% in 2017. If this is anything to go by, it means the 2018
performance of the Ghana cedi is likely to be better than even the 4.9 percent
we experienced in 2017 which was an all-time low compared to the four years of
the Mahama administration.”
He added that the Cedi had come under pressure,
despite the strong fundamentals devised by the NPP government to stabilize the
currency.
“Despite the strong fundamentals we have seen the
cedi come under pressure primarily due to external pressures. In fact, Mr.
Speaker, aside from the short transitory volatilities recorded in June this
year the average performance of the dollar (cedi) has been one of the best in
recent years,” he said.
Mahama’s
Argument
A few months ago, former President John Mahama taunted
the NPP government about the Cedi to dollar exchange rate, which he said stood
at GHc4.7 to $1.
He supposedly touted the NDC administration’s handling
of the local currency at the time on Facebook.
Bawumia’s
Reply
Dr Bawumia subsequently issued a response, saying Mr.
Mahama’s criticism only exposed his lack of understanding on issues bordering
on crucial aspects of the 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,” said the Vice President.
Dr. Bawumia explained that “the NPP administration
has demonstrated by far to better managers of the Cedi than the NDC.”
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