1 USD = 13.6 GHS is an Indicative of Dr. Bawumia’s Incompetence

Dr. Bawumia, Ghana's Vice President, has been a vocal proponent of economic policies, often espousing strategies to put the economy on the right path. However, upon closer examination, many of these policies appear to be nothing more than empty rhetoric and lacking substance. One such policy touted by Dr. Bawumia is the Gold for Oil (G4O) initiative, which, in theory, aimed to revolutionize Ghana's economy. Yet, recent events, including the depreciation of the Ghanaian cedi and the soaring fuel prices, cast doubt on Dr. Bawumia’s competencies.

The Gold for Oil (G4O) policy, unveiled by Dr. Bawumia, proposed a novel approach to mitigate the challenges posed by fluctuating fuel prices and currency depreciation. Under this scheme, Ghana would pay for imported oil products with gold, thereby circumventing the need to deplete its foreign exchange reserves. The idea was to stabilize fuel prices and alleviate pressure on the cedi by directly bartering gold for oil. However, the recent announcement by GOIL, the state-owned oil marketing company, to increase fuel prices paints a grim picture of the G4O's success.

In evaluating the effectiveness of Dr. Bawumia's Gold for Oil policy, it is instructive to draw insights from renowned economist Paul Krugman's analysis of the gold standard. Krugman's critique of the gold standard sheds light on the fallacies underlying Dr. Bawumia's policy approach. Krugman argues that the true sin of those who champion the gold standard lies in their failure to grasp the fundamentals of monetary economics. The belief in gold as an immutable standard of value is misguided, as gold is merely a metal whose worth is contingent upon societal conventions.

Moreover, Krugman highlights the inherent flaws of pegging currency to gold, emphasizing the volatility and instability it introduces into the monetary system. He underscores the pragmatic concerns associated with fixed exchange rates and the risks of deflationary pressures that arise from attempting to stabilize gold prices. Krugman's critique resonates with the current scenario in Ghana, where the attempt to link gold to oil purchases has failed to insulate the economy from currency depreciation and rising fuel costs.

For example, the recent adjustment in fuel prices by GOIL underscores the inadequacy of Dr. Bawumia's Gold for Oil policy. Despite Dr. Bawumia’s assurances of stability and security offered by the G4O initiative, the reality on the ground tells a different story. The persistent depreciation of the cedi against the US dollar, coupled with escalating fuel prices, exposes the shortcomings of the policy, and reflects poorly on Dr. Bawumia's competence as an economic steward.

It is now alright to conclude that the Ghanaian cedi trading at 13.6 GHS to 1 USD, alongside the recent fuel price hikes, serves as a stark indictment of Dr. Bawumia's leadership and his touted Gold for Oil policy. Despite lofty promises and grand rhetoric, the policy has failed to deliver tangible benefits to the Ghanaian people. Instead, it has exacerbated economic woes and deepened the country's reliance on volatile commodities. As Paul Krugman aptly notes, the true measure of economic policy lies not in glittering promises but in pragmatic outcomes, and by this measure, Dr. Bawumia's Gold for Oil policy has fallen short of expectations, revealing the facade behind the political rhetoric.

Ebenezer Ato Ntarkurfah Jackson, Cornell University, Johnson School of Business, MBA Class of 2015, [email protected]