Dr. Mahamudu Bawumia
The opposition New Patriotic Party (NPP) has asserted that the new economic prescription made by the International Monetary Fund (IMF) on Tuesday is a vindication of the bleak economic picture recently painted by the NPP’s running mate, Dr. Mahmudu Bawumia.
According to Kwaku Kwarteng, policy advisor to the NPP, Tuesday’s discussions between the NDC government and the IMF revealed that Ghana’s economy was indeed in trouble.
“The falling value of the cedi, the escalating imports as compared with our exports, the rising prices of things on the markets, the growing deficits, corruption in our payroll management, etc, were all areas of concern,” Mr. Kwarteng stated in a press statement released on Wednesday.
At the May 2 annual Ferdinand Ayim Memorial Lecture of the NPP, Dr. Bawumia delivered a scathing lecture that punched several holes in the glowing economic achievements touted by the Mills government.
In the lecture themed ‘The True State of the Ghanaian Economy,’ Dr. Bawumia alleged that the Mills government was presenting a false picture of the economy to unsuspecting Ghanaians.
He questioned why even though the government claimed inflation rate was constant at a single digit, the real cost of living was shooting through the roof.
He dismissed the entire rosy picture painted by the NDC communication and finance team led by Fiifi Kwetey, Deputy Minister of Finance as a bunch of propaganda. Dr. Bawumia observed that all the economic fundamentals were degenerating, yet the NDC was trumpeting its economic prowess. “You cannot manage an economy with propaganda,” he stated.
“Government should accept criticism of its economic management strategies and respect the input of even the political opposition, including Dr Bawumia, into the management of the economy,” Mr. Kwarteng noted.
Indeed the head of the IMF delegation to Ghana, Christiana Daseking, corroborated Dr. Bawumia’s observation about the declining state of the Ghanaian economy. “The cost of living has increased because of the depreciation and we do think it’s important and we will certainly support you in extending social programmes,” she stated.
President Mills admitted the dire situation of the economy and the prescriptions made by the IMF. According to him, “It is important that the two groups [the IMF and the government finance team] learn from one another … these are issues that some of us talk about and you can be sure that we want to do something that is going to inure to the benefit of our dear nation”.
The IMF advised that for the Mills government to solve the declining state of the economy, it needed to channel more resources into social programmes by cutting off subsidies on petroleum products. “The price of oil imports has risen a lot, the domestic price has however not been adjusted. This is now creating cost of about 60 million cedis every month, which is very expensive and risks crowding out other important spending,” the IMF representative stated.
They surmised that a cut in subsidies would free up more funds for social programmes that would benefit the vulnerable in the society. This reasoning has been criticized by sceptics, who believe a cut in subsidies would result in higher ex-pump prices of petroleum products, which would correspondingly increase the cost of transportation, which would translate directly to the cost of goods and services.
The critics reason that higher costs of goods and services would defeat the very purpose of the IMF’s suggestion for subsidy cuts because the vulnerable segment of the society would be compelled to purchase these goods at higher prices.
“Ghana’s economy will be best managed by Ghanaian expertise, not development partners like the IMF,” Mr. Kwarteng said.
By: Raphael Adeniran
