DR BAWUMIA MOCKS IEA, TUC OTHERS ...-Over the state of the economyBy Francis Xavier Tuokuu - The Al-Hajj
5/7/2012 11:42:48 PM -
Dr. Mahamadu Bawumia, running mate to the New Patriotic Party (NPP's) 2012 presidential candidate, Nana Addo Dankwa Akufo-Addo seemed to ridicule establishments like the Institute of Economic Affairs (IEA) and Trade Union Congress (TUC) for giving thumbs-up on Ghana's economy.
Whiles the IEA led by a Senior Economist of the Institute Dr John Kwabena Kwakyi, last Monday in an address to the media in Accra as part of the IEA's review of the economy for the second half of 2011 stated categorically without mincing words that, the Ghanaian economy posted the highest rate of GDP growth worldwide; the TUC acknowledges the nation's prevailing economic boom and said available data indicates that Ghana, under the Mills administration has achieved the longest period of macro-economic stability in its recent economic history at this year's May Day celebrations in Sunyani
But Dr. Mahamadu Bawumia last week Wednesday at the Ferdinand Ayim Memorial Lectures under the theme 'The true state of the economy" cast doubts over the 'unprecedented' economic achievements being touted by the ruling National Democratic Congress (NDC).
'The lesson from history for governments is that you cannot manage the economy with propaganda. In fact, you can engage in all the propaganda you want but if the macroeconomic fundamentals are weak, the exchange rate will expose you,' Dr. Bawumia stated.
He virtually described as a charade, statistics being put out by the Ghana Statistical Service (GSS), the TUC and the IEA, stating 'single 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 'inflation' in their pain and suffering'.
Dr. Bawumia said food prices were hitting the roof, with families being dislocated and mentioned tomatoes, the prices of basic commodities like sachet water, cement, oranges, an 'olonka' 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.
He used the International Monitory Fund and World Bank figures of 2000-1 to argue his point about how economic indicators were distorted at the time. He said Ghana has no Independent Statistical Service.
However, Senior Economist of the IEA, Dr John Kwabena Kwakyi said Ghana posted the highest rate of GDP growth worldwide with over 14 per cent, which was driven by oil-fueled economy and a strong growth in the industry.
According to him, 'as a matter of fact, Ghana needs to sustain a sufficiently high rate of growth if all the Millennium Development Goals (MDGs) are to be attained and Ghana's per capita income is to reach higher levels and join the middle-income group of countries'.
However, he said it was important that the economic growth spreads to other non-oil sectors to generate more jobs adding that, though the country's growth potential was huge, there was still high unutilized industrial and human capacity as a result of insufficient jobs.
Dr. Kwakyi added that annual revenues and expenditure were both higher than budgeted; tax revenue and grants exceeded their targets while non-tax revenue fell short of its target; recurrent expenditure was lower; spending on the public sector wage bill and transfers which include statutory payments and subsidies continue to rise and place undue strain on the budget'.
On his part, Mr. Kofi Asamoah, General Secretary of TUC in an address at this year's May Day celebrations in Sunyani agreed, the country had registered the highest level of economic growth in the country's history with available data showing Ghana under the Mills administration achieved the longest period of macro-economic stability in its recent economic history.
He was however worried that the unprecedented growth rates had failed to create decent jobs for Ghanaians, as unemployment was on the rise stating that 'the vast majority of young women and men coming out of our universities and other tertiary institutions cannot find decent jobs'.
In his reaction, the Minister of Employment and Social Welfare, Moses Asaga said Bawumia was comparing tomatoes with oranges. 'He goes back to 2000 to change figures, which at that time I was a member of the board of the Central Bank. He was literally head of research and we had confidence in him to advice on macroeconomic and monetary policies. So if he is now churning figures, indicating that macroeconomic figures were seriously distorted then what was he doing in that bank?'
'Bawumia is behaving as if an economy is just managed on only daily basis. He knows very well that interest rates have fallen. For him to be saying that lending rates have not come down, that is not correct. Lending rates are moving. Treasury rates are now in single digits', he added.
Mr. Asaga said 'he has misled Ghanaians by saying that we are rather in triple digit inflation. Inflation is calculated on a year by year basis. As a reputable economist he shouldn't let the clout of NPP let him lose sight of the way inflation is calculated.'