“When we said we were going to arrest the cedi, it doesn’t mean we are going to lock it at one rate but essentially lock it within the range of the fundamentals such that the lower inflation rate will produce lower depreciation,” Vice President Dr. Mahamudu Bawumia has given an account of the government’s handling of the economy since 2017.
He said the NPP government led by President Nana Addo Dankwa Akufo-Addo is “running a flexible exchange rate regime; we don’t do fixed exchange rate regime” adding that the “exchange rate moves according to the market forces but fundamentally, the exchange rate is going to be determined by your inflation rate. Other things being equal, if you have high inflation, you’ll have high depreciation; if you have lower inflation, you’ll get lower depreciation; that’s fundamental. “
In 2017, Dr. Bawumia after four months in office claimed they have arrested the fall of the cedi and the keys given to the Inspector General of Police (IGP) for safekeeping.
“When we came in, it [cedi] was running, essentially we have arrested it [cedi], and the IGP has the keys, he’s locked it up, we want to make sure we pursue sound policies to keep the cedi stable, it has appreciated for this year.
“Inflation has come down from 15.4 percent when we came into the office to 12.8 percent now and we’ve restored confidence in the macroeconomy by anchoring fiscal policy on credibility, clarity, and transparency,” he said.
But Dr. Bawumia talking about his promise of arresting the dollar in an interview on Accra-based Peace FM on Tuesday, August 25, 2020, said the NPP has done better at managing the free fall of the cedi.
He said “From 2013 to 2015, the exchange rate was depreciating by 18 percent on average. When we came in 2016 to 2019, it is 8.7 percent on average…So, we have reduced by 50 percent, the rate of depreciation of the currency.
“Our currency, under the NDC, when they came to power, was $1 to GH¢1 but by the time they left office, they had taken it to $1 to GH¢4.
“So, it was a quadrupling of the nominal rate of the cedi. When we came to power, if we had also quadrupled it, we would have had $1 to GH¢16.”
“But we are at almost GH¢6 today,” Dr. Bawumia said.
He added: “If we had followed their trajectory, we would have been talking about GH¢16 [to a dollar].”
“But when you talk about depreciating at an exchange rate of 8 percent on average and you’re having inflation around that amount…you have really performed well because the exchange rate is consistent with the fundamentals,” Dr. Bawumia said.
Hardship reduced
Dr. Bawumia noted that the government has significantly reduced the hardship of Ghanaians.
According to him, though, the government has eliminated the sufferings on Ghanaians, it is a known fact that the government has comparatively brought relief to everyone.
“We haven’t eliminated hardship but compared to what we inherited, we have reduced hardship tangibly,” he added.
