Dr. Bawumia And The Talk-About Economic Fundamentals – Iddi Muhayu-Deen

If you ever thought of giving up on Ghana; if you ever thought that Ghana’s economy is not being managed efficiently; if you ever thought that Ghana’s centre cannot hold; if you ever thought that our economic future is bleak; if you ever thought that Ghana is heading nowhere; if you ever thought that our country is in incompetent hands; if you ever thought that we are losing our economic fundamentals, then all you needed to CLEAR all your thoughts, was Wednesday’s Town Hall Meeting with the Bawumia-led Economic Management Team.

It cannot be gainsaid that the Economic Management Team, competently addressed all the vex economic issues cudgeling the minds of Ghanaians, at the Town Hall Meeting. Of course, as you would expect, Dr. Bawumia’s scholarly presentation was the icing on the cake. It touched on all the crucial sectors of the Ghanaian economy and was replete with unimpeachable factual indices. His presentation was all that even the most ardent cynics needed to cure their cynicism and have a renewed hope in the Ghanaian dream.

First of all, His Excellency the Vice President and the Economic Management Team are deserving of all the praises and commendations being showered on them, for this novelty. It is, as you know, the first time in our history that the nation’s Economic Management Team is opening up to Ghanaians from all walks of life, and responding directly to all the questions bordering the ordinary Ghanaian.

There were certainly a lot of positive takeaways at the maiden EMT town hall meeting which had, rightly so, since generated a productive national conversation. For the purpose of this piece, I want to zero in on Dr. Bawumia and his response to the famous statement he made sometime in 2014 thereabout, about the direct relationship between economic fundamentals and the exchange rate. He is widely quoted as having said that, “IF THE ECONOMIC FUNDAMENTALS ARE WEAK, THE EXCHANGE RATE WILL EXPOSE YOU”, in direct critique of the then Mahama government.

The celebrated economist did not run away from the position he took in 2014 thereabout. He indeed reaffirmed the position and proceeded, very eloquently, to draw a sea of distinction between the state of affairs then and now.

“Ladies and Gentlemen, you will recall that I stated in 2014 that if the fundamentals are weak, the exchange rate will expose you. That was true then and will always be true. It is 100% correct. But it is warped logic to jump from that to a conclusion that if there is a depreciation of your exchange rate then the fundamentals must be weak. That defies logic. There could be other external factors causing the exchange rate depreciation.

For example, if I tell you that if your leg is broken you will be unable to walk, it does not mean that if someone comes to tell me that you are unable to walk, I can conclude that your leg must be broken. There can be other reasons why you are unable to walk. But the NDC logic will insist in the face of contrary evidence that since you cannot walk then it must mean that your leg is broken”, he said.

In 2014 when Dr. Bawumia made that comment, the cedi had depreciated by a whopping 31.3%, almost unprecedented in our history. All the relevant economic fundamentals were glaringly weak, so, it was very easy to associate the weak economic fundaments with the fast depreciating cedi, as the causal factor. Hence, the cedi depreciation was easily noticeable and explainable. What it clearly meant was that, the exchange rate had exposed the weak economic fundamentals prevailing at the time. It was clearly not caused by high-rise buildings or dwarfs contrary to what the NDC was telling us.

For instance, the Inflation Rate at the time was 17%, Fiscal Deficit Balance was -10.2%, Debt to GDP Ratio rose as high as 70.2%, GDP growth had drastically reduced from 7.3% to 4%, Non-Oil Real GDP growth was at 2.7%, Industry growth was at 0.5%, Wage Bill as a percentage of GDP stood at 52.9%, Gross International Reserve was at US$ 5.5 billion, Trade Balance as a percentage of GDP was at -1.3%, Monetary Policy Rate was at 21%, whereas Interest Rate was as high as 24.8%. How worse could that get!

In fact, the economic fundamentals were so visibly and manifestly weak to the extent that government officials could no longer be in a state of denial. You would recall that, the then President, H.E. John Mahama, openly admitted, at the Senchi Economic Forum that, fiscal and monetary discipline had completely eluded them, and that, his government had lost policy credibility. In the light of this, he openly declared that his government had no option but to go to the IMF for a bailout, essentially handing over the economic management of the country to the Bretton Wood Institution to help fix our shattered fundamentals and restore policy credibility.

In sharp contrast, all the economic fundamentals today, are much rosier and stronger under the Bawumia-led Economic Management Team than what pertained under the NDC. Inflation is now 9.2% (the lowest in more than 5 years) as against the NDC’s 17%, Fiscal Deficit Balance is now -3.9% as against the NDC’s -10.2%, Debt to GDP Ratio is now 62% as against the NDC’s 70.2% , GDP Growth Rate is now 8.5% as against the NDC’s 4%, Wage Bill as a percentage of GDP is now 45.6% as against the NDC’s 52.9%,

Industry growth is now 17.5% as against the NDC’s 0.5%, Gross International Reserve is now US$ 7.0 billion as against the NDC’s US$ 5.5 billion, Trade Balance as a percentage of GDP is now 2.7% as against the NDC’s -1.3%, Monetary Policy Rate is now 17% as against the NDC’s 21%, whereas Interest Rate has now been reduced to a paltry14.6% as against the NDC’s 24.8%. I can go on and on and on…

From the foregoing factual statistics, it is evidently clear that the fundamentals today are much solid and stronger. Unlike what pertained in 2014, the slight depreciation of the cedi we are seeing today can certainly NOT be a result of weak economic fundamentals as Dr. Bawumia explained. It can therefore only be as a result of some external economic nuances including but not limited to the time inconsistency of an IMF prior action on reserves target, emerging market pressures and US interest rate increases, as well as investor sentiments and speculations.

But even with the cedi depreciation we are seeing today, data on annual rate of depreciation of the cedi in recent years shows that the worst performance from 2017-2018 is much better than the best performance between 2012 and 2016. What it means is that, the worst performance of the cedi we are seeing under the NPP government (8.4%) is much better than the best performance of the cedi under the entire 8 years of the NDC government which is 9.7%. I agree with Dr. Bawumia that, any comparison of the NPP record with the NDC’s cannot be likened to a “boot for boot”, but probably, the case of “boot for kyalewote”.

Nonetheless, this government is still deeply concerned about the exchange rate volatility and is committed to arresting the trend. This commitment, coupled with the fact that the market is correcting itself, is what has resulted in the sudden reversal in the hitherto sharp depreciation. The investor sentiments, expectations and uncertainties have acknowledged that the fundamentals are much stronger than suspected, and that even without the IMF, fiscal and monetary discipline are assured. The reversal of the depreciation that has taken place thus, supports the fact that the fundamentals are indeed STRONG.

Again, as the Vice President put it, “the weak fundamentals in 2014 meant that the NDC government of the day had to end up seeking a bailout from the IMF! The difference today is stark and glaring. Because our fundamentals are strong Ghana only yesterday (April 2nd, 2019), formally exited the IMF program which the NDC government got Ghana into in 2014 because of weak fundamentals”. The NDC should be educated that a country cannot exit an IMF program it willingly entered into if it does not meet all the IMF targets in relation to the economic indicators and more.

“Indeed, the strength of Ghana’s fundamentals was confirmed on March 16, 2019 by Standard and Poor’s (S&P) Global which affirmed Ghana’s sovereign rating as B with a stable outlook after upgrading Ghana’s sovereign credit rating from B- to B with a stable outlook last year. This was the first upgrade by S&P for Ghana in 10 years!

Furthermore, Ghana also successfully issued a $3 billion on the Eurobond at more favourable rates than previous issues. The amount offered by investors of $20 billion is a record in Africa and a strong affirmation of the positive assessment by the international financial markets of Ghana’s economic fundamentals”, Dr. Bawumia added.

With these, you can understand why there is an overwhelming unanimity among all the nation’s finest independent economists including Professor Gbopkins, Professor Quartey, Dr. Osei Asigbe as well as among several independent communicators and analysts including the reigning GJA Journalist of the Year, Bernard Avle of citi fm, that, the NPP has a much superior record than the NDC in relation to the management of Ghana’s economy. The economic fundamentals or data we have now under the Bawumia-led EMT are incomparable with what pertained under the NDC. They however want the NPP to be judged by a much higher standard, which the party has duly acknowledged.

Else, as clearly elucidated, the NPP’s economic management record is the best the nation has seen. It is thus not surprising that we are now being told that Dr. Bawumia is deserving to be associated with Adam Smith, the father of Modern Economics in the World. The contrast, however is that, whiles the Bawumias are being associated with Adam Smith, the NDC’s so called fine economic brain, Isaac Adongo, is being associated with Bob Okala, one of Ghana’s finest comedians of all times.

Only when I thought Ghanaians were unfair to my MP, I had the opportunity to listen to his [Adongo’s] presentation, and I could not help but agree that my MP, unfortunately, is indeed, “an award-winning comedian”. He is probably, just probably, in a wrong profession, and needs career guidance. I overheard a lot of seasoned communicators and economic analysts refer to Adongo’s presentation as a monumental joke of an exercise, with one popular broadcaster with the multimedia group, likening the whole exercise to a Concert Party Comedy. Certainly, this was not what we voted for, and I expect my MP to get serious.

In conclusion, my fellow countrymen and women, I wish to once again confidently make the point that, Dr. Bawumia’s emergence in the country’s political landscape is by far, one of the greatest things to have happened to Ghana in our history. Not only will he be remembered for everything COMPETENT, but more importantly, Dr. Bawumia will forever be remembered for changing the face of politics in this country, and redirecting the focus of political conversation from one of extreme partisanship and name-calling to one of ISSUES, which issues are largely expressed in DATA or FIGURES.

To the international award-winning economist [Dr. Bawumia], politics should, at all times, be issues-based, and these issues should be communicated with humility, finesse and candour, using DATA as reference material. Politics, to him, should not be about propaganda and arrogant effusions. This, he has amply demonstrated and continues to demonstrate in all his engagements.

He has made us to understand that politicians resort to insults only when they have nothing to say, or record to tout. And because it is counterproductive to engage in propaganda and politics of insult, he prefers to always remain in his comfort zone; being politics of facts and figures. Facts and figures, as they always say, do not lie. You can have your personal opinions and disagreements with them, but point is that, they remain facts and therefore cannot be disputed.

Like him or hate him, Dr. Bawumia has earned a rightful place in the hearts and minds of Ghanaians. His unimpeachable reputation is certainly well earned. He is humble, truthful and all-forgiving. Even whilst his detractors are wishing him “evil”, he is, in return, wishing them well, and praying for them in addition. This is what you get in a Bawumia; nothing more, nothing less. Vindictiveness is something you CAN NEVER find in the Bawumia lexicon. Such a gem and blessing to our country!

Assalamu alaik

By Iddi Muhayu-Deen