The Vice-Presidential candidate of the New Patriotic Party, Dr. Mahamudu Bawumia, yesterday took on the much-touted economic gains of the Mills administration, exposing the various inconsistencies.
Delivering the Ferdinand Ayim Memorial Lectures, Dr. Bawumia took time to explain the gains achieved under the eight-year Kufuor administration which, according to him, turned a Highly Indebted Poor Country (HIPC) economy into a lower middle income economy.
The over 2000-capacity auditorium was full.
Present at the lecture were NPP gurus as well as representatives from overseas branches of the party.
A rousing ovation greeted the arrival of party gurus such as former PresidentÂ Â John Kufuor, who chaired the function, and his former Vice, Alhaji Aliu Mahama.
When Dr. Bawumia and Nana Akufo AddoÂ Â entered the auditorium, they were received with rapturous applause.
Dr Bawumiaâs ovation was particularly loud.Â The reason for that was not exactly clear, but it could be because he was the key focus of the memorial lecture, or perhaps because many party members were seeing him in person for the first time since he was re-nominated as running mate.
Whilst outlining the challenges the NPP administration faced on assumption of office, he indicated that any attempt to compare the economic performance within the first three years of the Kufuor administration and the economic performance of the NDC within its first three years in office, was like comparing the performance of a Korea-branded Tico car to a German-made Mercedes Benz or Metro Mass bus.
âBy analogy, if you hand over to me a Tico car and a few years later I work hard to buy a Mercedes which I then hand over to you, how can you turn around to say that you want to compare the performance of the Mercedes with that of the Tico you originally handed over to me?â he queried.
The NPP running mate proceeded to point out the massive economic opportunities which had been available to the Mills administration.
He indicated that the countryâs production of oil, coupled with the virtual doubling of the prices of Ghanaâs two major exports, cocoa and gold, Ghanaâs core terms of trade, had seen an improvement of some 73% just within the last three years.
These improvements, as well as the unprecedented borrowing, according to Dr. Bawumia, meant that the government was placed most fortunately to deliver a true better Ghana.
However, Dr Bawumia, an economist, indicated that this expected better Ghana was not the prevailing case.
He cited the case of the agricultural sector which, as pointed out, had seen a drastic reduction in growth from 7.4% in 2008 to 0.8% in 2011.
That, he said, was worrying in view of the fact that agriculture was a major sector in Ghanaâs economy and supported so many livelihoods.
Free Falling Cedi
In tackling the depreciation of the cedi more concisely, the NPP running mate stated that the free fall of the cedi âis a vote of no confidence by market players in the management of the economyâ.
He added that as a result of this apparent lack of confidence in the management of the economy, many players were now anticipating the cedi to dollar rate to reach 2:1 soon.
He lamented that instead of tackling the fundamental causes of the rapid depreciation of the cedi, the government was rather trying to blame speculators for the fall in the cedi.
Dr. Bawumia also made an issue out of the NDC governmentâs much touted âsingle digitâ inflation figures since, according to him, inflation was supposed to be consistent with the fundamentals of the economy and key economic indicators like cost of living, interest rates and exchange rates.
He however noted that this was not the case under the current administration as food prices were hitting the roof, with families being dislocated.
The economist explained that though Ghanaians were being told of how government had achieved single digit inflation, the statistics did not reflect in the lives of the ordinary people.
That, he said, was evident in the fact that the prices of basic commodities like sachet water, cement, an âolonkaâ of gari, maize etc. as well as petroleum products and tariffs had all been increased by triple digit percentages and wondered how that could contribute to real single digit inflation.
âSingle digit inflation has not reflected in a reduction in the cost of living and in this regard has been rendered practically meaningless. Ghanaians are, in fact, experiencing triple digit âinflationâ in their pain and suffering,â he stressed.
He observed that while inflation was supposed to be consistent with interest rate figures, this was not the case, recalling that when the NPP reduced the inflationary figures it inherited by over half, the interest rates also saw a decrease tremendously, with banks chasing people for loans.
The NPP Vice Presidential candidate also mentioned the unprecedented increase in the public debt of the nation, stressing that with a rise from GHÂ˘9.6billion in 2008 to GHÂ˘25.3billion at the end of 2011, government had succeeded in borrowing more than all previous governments combined since Ghana gained independence.
Dr. Bawumia said one fundamental question that needed to be asked was what all these huge inflows had been used for.
He equally bemoaned the high levels of corruption observed in the inflated pricing of items in education, health and infrastructure and the payments of huge judgment debts for no work done.
âThe overpricing of supplies contracts in areas such as health, education, infrastructure, etc. as well as judgment debts paid for work not done is a major area of concern. Government is not getting value for money and is paying monies for no work done. âThe increasing resort to single-source procurement compromises the transparency of the procurement process. When monies are paid for no work done, as is the case of some judgment debts, it creates a liquidity overhang (i.e. too much money relative to output), which finds its way into prices and ultimately results in the depreciation of the cedi.
âIn the case of two such payments of such judgment debts, the total amount could easily have constructed 750 six-classroom blocks even at the currently inflated prices or 1500 at more realistic prices,â he stated.
The former Deputy Governor of the Bank of Ghana pointed out that credibility and transparency were extremely important in successfully managing an economy.
âYou cannot manage an economy by propaganda. You cannot claim to have created 1.6 million jobs and your Minister for Employment would say he cannot vouch for that. You cannot ask government officials that when they see a small goat, they are supposed to tell us that it is a big fat cow and expect the markets to consider you credible. You cannot claim that all the gold reserves in the Bank of Ghana have disappeared and expect the markets to consider you as credible. Today, we have a Green Book touting âunprecedentedâ achievements! Hyperbole has its place but certainly does not belong in the realm of economic management. The best response Ghanaians can give to the Green book is to show the NDC a red card in the December 2012 elections,â Dr. Bawumia stressed.
Â By Charles Takyi-Boadu & Raphael Adeniran