Unveiling the Fallacies and Misleading Narratives of Dr. Bawumia's February 7th Lecture

Dr. Bawumia’s lecture speech attempts to attribute Ghana's economic challenges to external factors such as the Russia-Ukraine war and the COVID-19 pandemic. However, upon closer examination, it becomes evident that these arguments lack substantial merit and fail to address the underlying issues plaguing the economy under Dr. Bawumia’s NPP-led government.

Firstly, let's debunk the assertion regarding the Russia-Ukraine war. Dr. Bawumia conveniently blames this geopolitical conflict for Ghana's economic hardships. However, it's crucial to note that the war began in February 2022, when the world crude price was $97.13 per barrel. Curiously, Ghanaians were already grappling with exorbitant prices at the pump, with diesel costing 8.11 GHS per liter. Statista data reveals an inverse relationship between Brent crude oil prices and the price per liter of diesel in Ghana. As crude prices fell, the cost at the pump increased. Hence, Dr. Bawumia's attempt to scapegoat the Russia-Ukraine war for Ghana's economic woes appears disingenuous and misleading.

Secondly, Dr. Bawumia's claims regarding the economic performance of his government from 2017 to 2019 are questionable. While he asserts that key economic indicators were moving in the right direction during this period, the reality tells a different story. Before the onset of the COVID-19 pandemic, the NPP-led government had already borrowed $5 billion from the Eurobond market between 2017 and 2019. Despite these substantial borrowings, the fate of these funds remains unclear. Additionally, Ghana had reached the midpoint of a $918 million IMF program launched in 2015 during the administration of former President John Mahama.

Under the stewardship of Dr. Bawumia, Ghana's borrowing through Eurobonds reached a staggering $11 billion by the conclusion of 2021. This significant accumulation of debt over just four years demands scrutiny and reflection on the utilization of these borrowed funds.

It is imperative to question the allocation of such substantial financial resources under Dr. Bawumia's administration. With $2 billion borrowed in 2018, $3 billion in 2019, another $3 billion in 2020 amid the challenges posed by the pandemic, and a further $3 billion in 2021, the pressing inquiry arises: what tangible benefits have these loans brought to the Ghanaian people?

Former President John Mahama, in contrast, left office with a debt-to-GDP ratio of 57 percent, significantly lower than the inflation rate that soared to over 50 percent under Dr. Bawumia’s tenure. This underscores Mahama's prudent fiscal management and commitment to sustainable economic practices, a stark juxtaposition to the economic turbulence experienced under Bawumia's leadership.

In evaluating the efficacy of these two administrations, the stark contrast in economic stability and prudent debt management becomes evident. While Mahama prioritized maintaining a manageable debt burden and controlling inflation, Dr. Bawumia's tenure has been characterized by economic instability and escalating debt levels.

Thus, the choice between the two administrations becomes clear: Mahama's record of prudent fiscal management and economic stability stands as a testament to his superior leadership qualities, offering a compelling argument for why he is far better than Dr. Bawumia.

While Dr. Bawumia laments the economic challenges faced during the pandemic, questions linger about the utilization of funds allocated for COVID-19 relief. Ghana received a $1 billion allocation from the IMF's SDR allocation, yet transparency regarding the utilization of these funds remains elusive.

With reference to the former NDC administration, President Mahama left behind two oil fields, significantly boosting oil revenue potential for Dr. Bawumia compared to President Mahama’s tenure, during which only one oil field was operational. Mahama also left substantial funds in stabilization and infrastructural investment funds, raising concerns about the management of these resources under Dr. Bawumia’s administration.

I must emphasize that Dr. Bawumia's attempt to absolve his government of economic responsibility by blaming external factors like the Russia-Ukraine war and the COVID-19 pandemic lacks credibility. The evidence suggests a pattern of fiscal mismanagement and questionable economic policies under his leadership, contrasting starkly with the comparatively prudent stewardship of former President John Mahama.

Now, let's meticulously analyze Ghana's total public debt trajectory from 2014 to 2021, utilizing data sourced from the Bank of Ghana via https://mofep.gov.gh/sites/default/files/basic-page/Public_Debt_to_GDP_Ratios_2014-2021.pdf .

In 2016, upon the departure of President John Mahama from office, Ghana's total public debt stood at 122,165.46 million Ghanaian cedis. Fast forward to June 2021, under the leadership of Dr. Bawumia’s NPP-led government, the debt has skyrocketed to 334,782.06 million Ghanaian cedis. This staggering increase over the period raises pertinent questions about the contributing factors to such a substantial escalation.

The significant increase in debt can be attributed to various factors, notably the excessive borrowing undertaken by Dr. Bawumia’s NPP-led government. This borrowing surge was driven by ambitious project financing initiatives and a commitment to maintaining high spending levels. Contrary to popular belief, the borrowing spree was not exacerbated by the imperative to stimulate economic growth and address infrastructural gaps.

Undoubtedly, Dr. Bawumia’s NPP-led government fell short in ensuring prudent fiscal discipline and strategic investment, leading to an unsustainable debt burden that Ghana currently grapples with. The regrettable consequence of frivolous expenditure, marked by disproportionate government spending devoid of commensurate returns, has placed a strain on our economy, burdening future generations with daunting debt repayment obligations.

It is evident that Dr. Bawumia’s lecture failed to address the root causes and repercussions of Ghana's escalating public debt. Consequently, it is rational to conclude that since 2016, Ghana has witnessed a distressing surge in public debt, primarily driven by excessive borrowing, consumption-oriented policies, and unbridled spending. This trend underscores the pressing need for prudent fiscal management and sustainable economic policies. Initiatives like the 24-hour economy introduced by former President John Mahama serve as exemplary models to safeguard the nation's financial well-being and foster long-term prosperity.

By Ebenezer Ato Ntarkurfah Jackson
Cornell University-Johnson School of Business

MBA Class of 2015