The Economic Committee of the opposition New Patriotic Party (NPP) has argued that the mismanagement of the country’s economy by the Mills-Mahama NDC administration in its three-and-half year rule is the sole cause of the rapid depreciation of the Ghana cedi and its attendant hardships imposed on Ghanaians.
The Chairman of the NPP Economic Committee, Yaw Osafo Maafo, stated that rapid depreciation of the cedi under the current administration has not only had a negative effect on the economy, but has also caused massive increase in the cost of living for the average Ghanaian.
According to Mr. Osafo Maafo, the spiralling rise in the cost of living evident in the daily rise in the prices of goods and services on the market “is the result of the NDC government's inability to keep the currency stable.”
“The government appears to be totally lost as to how to resolve this problem, while prices of goods and services keep rising by the day! This makes untenable the reported single digit inflation as there seems to be a disjoint between cost of goods and the inflation rate,” the NPP man said.
Mr. Osafo Maafo cited the basic supply and demand for foreign currency, trade imbalances, inflation, interest rates and the loss of confidence in a country’s economy as factors which influence the exchange rate of currencies.
He said: “The NDC government has been poor at managing the exchange rate... In the year 2000 the cedi lost its value as rapidly as it is doing today. At that time, the key members of the then government’s economic management team were Prof J.E.A Mills, as Chairman, John Mahama as member, Dr. Kwabena Duffuor, then Governor of the Central Bank and Paa Kwesi Amissah-Arthur, the Deputy Minister of Finance and Economic Planning. Today Prof Mills is the President. John Mahama is the Vice Presdient, Dr. Duffour is the Minister of Finance and Economic Planning and guess what Paa Kwesi Amissah-Arthur is the Governor of the Central Bank. Need we say more?
“We of the NPP have shown by our record that we are capable of managing the exchange rate. During the first 4 years of the NPP administration, the exchange rate depreciated at an average of 11%. Infact in 2004, an election year the total depreciation was only 2.2%. Thus far the NDC government had given Ghanaians 22% average depreciation rate so far. By June, 2012 alone the cedi has depreciated by a whopping 19% and still counting. Indeed, during the period 2001 to 2008 the cedi depreciated on the average by 7.9 % as compared to a depreciation of 26.7 % between 1993 and 2000.
“If you factor out the crisis years of 2008 and 2000 the record is even better. Between 2001 and 2007 the average depreciation rate was 6.1 % as compared to an average depreciation of 23.4 % between 1993 and 1999. If you look at the crisis years our performance is still better. In 2008 (in the midst of severe global financial crisis) the depreciation was 20.1 % whiles in 2000 (in the midst of another global financial crisis the cedi depreciated by 49.8%). THE JUDGEMENT IS YOURS?”
Ghanaians, according to Mr. Osafo Maafo, have lost confidence in the economy because of the NDC’s record of poor governance, eroding credibility in state institutions, fiscal excesses in an election year and the saga of fraudulent payments of “judgement debts” to political cronies.
“When such incidents occur it leads to loss of confidence in the economy by both resident and non-residents. Non-residents react by not bringing their investments into Ghana for fear of not receiving fair justice, while residents react by moving their assets out into foreign assets. The cumulative effect is a decrease in the supply of foreign currencies and hence a depreciation of the local currency,” he added.
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