Our fundamentals are strong and resilient – Bawumia replies critics
Contrary to the claim by critics that Ghana’s economy was weak and performing poorly, Vice President Dr Mahamudu Bawumia has said that growth parameters were buoyant.
“Our growth fundamentals are strong and resilient,” Dr Bawumia argued in his recent speech at the National Tertiary Students Confederacy (TESCON) Training and Orientation Conference at Kasoa in the Central Region.
He pointed out that comparatively, “GDP growth in Ghana has consistently outpaced the growth in sub-Saharan Africa since 2017”.
“Even in 2020, when as a result of COVID-19, sub-Saharan Africa recorded a negative rate, Ghana was one of the few countries with positive growth. Between 2017 and 2021, growth in Ghana averaged 5.3 per cent while that of Sub-Saharan Africa average 2. 2 per cent, which the evidence in the data is therefore very clear,” he stressed.
In his opinion, the current Akufo-Addo led administration has performed more creditably than its predecessors and should be credited as such.
“The government of President Nana Akufo-Addo put in a lot of effort to turn things around from the situation it used to be. Together, as a country, we proceeded to fix the economy. We made great gains, and the records attest to this.”
Addressing inflation concerns, Dr Bawumia said, “the path of inflation in Ghana has been similar to those of other countries following the COVID pandemic. Inflation had declined from an average of 17.5% in 2016 to an average of 7.2% in 2020. Since the pandemic, inflation has increased to an average of 10% in 2021.”
“As of February 2022, inflation 15 rose further to 15.7% as a result of global conditions, including a rise in crude oil and other commodity prices and the Russian-Ukraine conflict. It is important to note that between 2013 and 2016, inflation averaged 15.9%. Between 2017 and 2021, however, inflation has averaged 10.4% notwithstanding the impact of COVID-19.”
On interest rates, he said: “Before COVID-19, the steady disinflation process provided scope for significant monetary policy easing. The Bank of Ghana’s Monetary Policy Rate (MPR) was cut by a cumulative 11% between January 2017 and January 2021.”
“This translated into a reduction in short term interest rates, with the interest rate on the 91-day Treasury bill declining from an average of 21.2% between 2013 and 2016 to an average of 13.8% between 2017 and 2021. Lending rates have also fallen from an average of 28% between 2013 and 2016 to an average of 23% between 2017 and 2021,” he noted.
For him, the government has implemented a robust fiscal discipline that contributes positively to the economy.
“The developments in the fiscal balance show a remarkable and sharp dichotomy between the fiscal deficit (i.e. the 23 differences between government revenue and government expenditure) before the COVID-19 and after COVID-19. The fiscal deficit between 2013 and 2016 averaged 7% of GDP. Between 2017 and 2019 (before COVID-19), the fiscal deficit declined to an average of 4.5%.”
“For the first time in a decade, Ghana recorded primary balance surpluses (for three years in a row). To sustain the path of fiscal discipline, parliament passed into law a Fiscal Responsibility Act that limits the fiscal deficit in any year to a maximum of 5% of GDP and requires a positive primary balance (that is our tax revenues should exceed all government spending, excluding debt service payments),” he emphasised.
What is the current situation in Ghana?
According to the Ghana Statistical Service (GSS), consumer price inflation hit 15.7 per cent year-on-year in February from 13.9 per cent in January this year.
There is pressure on the government due to rising public debt estimated to be GH¢351.8 billion as of the end of 2021, an increase by GH¢60.2 billion from the same period in 2020, according to the Summary of Economic and Financial data released by the Bank of Ghana in March 2022.
Major agencies have downgraded Ghana’s credit ratings, with the Bank of Ghana (BoG) suggesting that there will be no Eurobonds in 2022.
Meanwhile, total revenue mobilised within the period stood at 15.4 per cent of revenue, with tax rating registering a paltry 12.6 per cent of GDP, far below the regional average.
The government is also faced with a free fall of the cedi against other major currencies, and the business sector is expecting measures to address the situation to curtail further increases in the cost of products and services due to huge imports.
According to Finance Minister Ken Ofori-Atta, the cedi has seen a 14% depreciation against the US dollar this year, making it one of the worse performing currencies globally.
Even though crude oil supply bottlenecks have caused a surge in prices on the international market, the depreciation of the Ghana cedi and taxes numerous taxes have pushed fuel prices at the pumps upwards.
Transport fares were increased by 15%, and barely a month later, fuel prices have shot up as high as GHC11 at some pumps, with fears of rising costs of goods and services as commercial operators clamour for a 20% fare increment.
Really? Why are we suffering so much then? Everything is so expensive now, and the e-levy that the majority of ordinary Ghanaians don’t want is being imposed on us!