Cedi did better under NPP, Amissah Arthur finally confesses
8/11/2012 1:16:03 PM -
Vice President Paa Kwesi Amissah Arthur Monday finally made a tacit acknowledgement about the fact that the nation's currency witnessed superior management under the previous New Patriotic Party government headed by former President Kufour.
In seeking to defend his performance in the handling of the rapid depreciation of the cedi, as head of the Bank of Ghana, the new vice president last week claimed that the cedi had performed better under his watch this year than any other election year since 1992.
'I know that the record of the cedi will be an issue in this election but every election year in this country, from 1992 to date, the cedi has been destabilized. Really if you look at the data, this is the year where it has been lowest. In other years, there has been 60% depreciation, 40% depreciation in an election year. So we have learnt lessons from those depreciations and not all of them are economic factors,' Mr Amissah Arthur told Citi News.
However, when he appeared before Parliament's Appointments Committee Monday, Vice President Amissah-Arthur acknowledged for the first time that the lowest depreciation of the cedi was recorded in the election year of 2004.
Indeed, figures available to the New Statesman indicate that the depreciation of the cedi against the dollar in 2004 under former President Kufuor was a meagre 2.2%, falling from ¢8,850 in January 2004 to ¢8,900 at the end of 2004.
Similarly in 2008, an election year, the cedi depreciated by 20.9%, from GH¢0.98 in January to GH¢1.15 at the end of the year. This was also better than the legacy Mr Amissah-Arthur has left behind at the Bank of Ghana in respect of the management of the nation's currency.
From the beginning of this year, the cedi has seen its value depreciated by some 25% against the dollar. As of July 31, 2012, the cedi had seen its value against the dollar plummeted from GH¢1.67 in January to GH¢2.08.
As reported in our Monday edition, in 3½ years as head of the Bank of Ghana, Mr Amissah Arthur superintended over an 80.9% depreciation of the Ghana cedi against the dollar, with similar rates of depreciation against all the major trading currencies.
This contrasts sharply with the fall of the cedi to the dollar in the eight years of the Kufuor administration, where the cedi depreciated by 58.2%.
According to Kofi Amoabin, an economics expert, Ghana's situation regarding the fall of the cedi mimics the currency crisis that hit Mexico and Russia in 1994 and 1998 respectively.
Under Mr Amissah Arthur, the Bank of Ghana spent over $2 billion of the nation's foreign exchange reserves, this year alone, in an attempt to stabilise the cedi. But, the cedi continues to fall.
Mr Amissah Arthur's tenure as head of the Bank of Ghana saw inflation dropping to single digit, with interest ironically rising to 30%.
Similarly, Producer Price Index, including the cost of manufacturing, is now almost as high as 20% even though inflation is at single digits.
This apparent disconnect between interest rates, exchange rate stability and inflation, according to economic analysts, is an indication of 'the shambolic running of Ghana's monetary policies' instituted by Mr Amissah Arthur.
According to the Bank of Ghana's own surveys over the last four years, both business and consumer confidence in the economy have been, by and large, low. This has been described as a vote of no confidence in how the economy has been managed under the NDC government.
It is recalled that President John Mahama, the current finance minister, Kwabena Duffuor, were all members of the economic management team in 2000 that saw the cedi losing half of its value in just one year, interest rates hovering over 40%, with no money to pay contractors and workers, rising debts, bounced BoG cheques, false accounting which led to an IMF fine, and finally HIPC.
It is virtually the same team that has managed the economy in the last four years and, interestingly, a lot of the 2000 challenges have come back to haunt Ghanaians.