Following former President, John Dramani Mahama’s mockery of the New Patriotic Party (NPP) administration over the depreciation of the cedi, Vice President Dr. Mahamudu Bawumia has issued a scathing response to him.
The former President recently took on the government over the depreciation of the cedi on his Twitter handle.
Mr. Mahama had tweeted the current cedi to dollar exchange rate, which he said currently stands at GHc4.7 to $1.
He accompanied his words with a short video of Dr. Bawumia supposedly expressing misgivings about the NDC’s handling of the local currency while they were in power.
The Vice President who has not taken these comments lightly indicated on his Facebook wall that Mr. Mahama’s comments only exposed his lack of understanding on issues bordering on key 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.
In Mr. Bawumia’s view, NPP has demonstrated to be “by far, better managers of the Cedi” than the NDC.
Quoting figures to support his claim, Mr. Bawumia said “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 Vice President added.
The performance of the cedi against major trading currencies was a major campaign issue ahead of the 2016 elections with both the NPP and NDC trying to topple the other with claims for and against the performance of the cedi.
Dr. Bawumia was the most vociferous critic of the NDC government, taking them on for mismanaging the economy and failing to arrest the fall of the cedi.
“The NDC government does not understand what is happening to this economy. They are clueless,” he said a mini-rally ahead of the polls.
He also criticised a number of moves by the government at the time to correct the trajectory of the currency including placing a ban on the quotation of goods and services in foreign currencies, including dollars.
“Trying to solve the cedi’s depreciation by focusing on de- dollarization really is attacking the effects of the problem and not its causes and it’s really an exercise in futility.
“Why is dollarization suddenly rearing its head at an unprecedented rate today. It only rears its head when economic fundamentals are weak and it’s not the cause of poor economic performance,” Dr Bawumia said in 2016.
Today, GHC4.7 to $1.
Weak fundamentals? pic.twitter.com/brwDNlanCA
— John Dramani Mahama (@JDMahama) June 13, 2018
Speculation causing cedi drop?
As at May 7, the cedi was trading at 4 cedis, 41 pesewas, but by June 7 it had depreciated by 0.7 percent to 4 cedis, 44 pesewas.
The central bank has already assured that the changes in the exchange rate are temporary, and the cedi will soon see some stability.
But speaking to Citi Business News, Head of Economics Department at the University of Ghana, Prof. Peter Quartey, said the recent depreciation of the cedi relative to the U.S dollar could be due to speculative activities.
“When there is speculation in the news, false information, or expectation, that can also affect the exchange rate. So in my view, what is happening to some extent is purely due to speculation,” he said.