Vice President Dr. Mahamudu Bawumia has slammed former President John Dramani Mahama over a recent tweet on the depreciation of the Ghana cedi. The second gentleman of the land is claiming that, the former president lacks understanding on matters relating to cedi depreciation.
“I understand the difficulty of the former President in appreciating the currency depreciation debate. I would try to simplify the explanation for him,” he wrote.
The Vice President stated that “in the entire 8 years of President Kufuor’s (NPP) rule from 2001 to 2008, the price of the Cedi relative to the dollar moved from GHc0.7 to GHc1.2, representing a depreciation of 72%”.
On June 12, 2018 Mr Mahama posted on Twitter “Today, GHC4.7 to $1. Weak fundamentals?”. Reacting to the tweet, the Vice President wrote: 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.
I understand the difficulty of the former President in appreciating the currency depreciation debate. I would try to simplify the explanation for him.
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 1992. The data is clear on this indisputable fact.
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 8 years of President Kufuor’s (NPP) rule from 2001 to 2008, the price of the Cedi relative to the dollar moved from GHc0.7 to GHc1.2, 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 GHc1.2 to GHc4.2. Such higher rate of depreciation in less than a decade is simply unacceptable and signifies high levels of incompetence. Although it is early days, there is much optimism for a more 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%.
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. The graphics below tell the story. I hope the former President takes his time to read the facts