Vice-President Dr. Mahamudu Bawumia has defended government’s handling of the cedi insisting it has never been better in the last eight years.
Although the cedi is trading close to 5 cedis to a dollar and more than 5 cedis on the black market, the Vice-President seen as the government’s economic czar, explained the rate of depreciation is much slower than previously.
Comparing the data from 2012 to 2018, Dr. Bawumia said the cedi recorded 17.5% in 2012, 14.6% in 2013, 31.3% in 2014, 15.6% in 2015, 9.6% in 2016 and 4.9% in 2017.
Bawumia during his days in opposition famously quipped that if the fundamentals of the economy are weak, the exchange rate will expose you.
But that has not been the case under his government, he defended Friday, during at the launch of the National School Entrepreneurship Initiative in the Northern Region.
He pointed out that the slower rate of depreciation is because under the Akufo-Addo government, the ‘fundamentals of the economy are getting stronger’.
Additional evidence of a strong economy he said, is in the increasing economic growth rate, decreasing inflation rate, decreasing fiscal deficit, decreasing debt to GDP ratio and an improving gross international reserves.
Bawumia who once said government has arrested the cedi explained, the cause of the depreciation is down to happening in the US economy.
The US Federal Reserve has increased interest rates which has made the dollar attractive to investors.
“You see investors moving money into the US to buy US-denominated assets” because the rewards will be much better, he observed.
This move by the US government has far-reaching global implications on the strength of other currencies.
Bawumia pointed out that in Argentina, the Peso, has depreciated by 50.2% over the US’ move while the Lira used in Turkey has lost 42% of its value alone.
Eerging market economies like India have seen the Rupee slump to 11% against the dollar while the UK Pound Sterling has shed 4.29% of its worth to the dollar.
Bawumia said Ghana’s 7% depreciation shows, the managers of the economy have significantly strengthened the cedi against shocks from the dollar.
The Akufo-Addo government, he said, has done “much better than our predecessors and much better than other countries”.
The Vice-President turned on Ghana’s main opposition National Democratic Congress (NDC) which has criticised the government over the depreciation.
He said a sign of good economic management is seen in the-debt-to-GDP ratio. The ratio from 73.3% in 2016 is down to 69.8% at year-end 2017.
Dr. Bawumia said under the NDC, the debt to-GDP ratio was increasing whenever the government borrowed but under the NPP, “when we are borrowing, the debt to GDP ratio is falling”.
“This is a big difference” he stressed and pointed out the reduction in debt to GDP ratio under Akufo-Addo government is the first since 2007.
“We rightly criticised the NDC for reckless borrowing. Interestingly, they are criticising us for borrowing. They don’t notice the difference and I always tell them to read the data”.