Cedi woes: 'There's no magic bullet; insults, arrogance, partisanship' worrying – Botchwey
Ghana's longest-served Finance Minister, Professor Kwesi Botchwey, has raised concerns about the insults and bipartisan public discourse concerning the exchange rate of the Ghana cedi to other international currencies, especially the dollar.
In an interview with The Vaultz Magazine published on Wednesday, 24 April 2019, Prof Botchwey highlighted the need to have a stable exchange rate.
He said Ghana has “an exchange rate problem”, explaining that “between December 2018 and February 2019, the exchange lost about 13% of its value against the dollar, compared to a modest appreciation in the same two-month period in 2018”.
He continued: “The consternation is understandable. When the cedi’s value drops, especially steeply, it does have consequences that are destabilising for businesses, and consumers alike, it doesn’t make planning easy. It is something that must be moderated and kept within a band that is sustainable”.
“I see two problems”, Prof Botchwey said. “One is that the public’s perception of the magnitude and causes of the problem is in part a function of the narrative from some policymakers that suggests that the stability of the cedi is just a function of the sheer brilliance and competence of economic managers and that, by sheer dint of such competence the cedi can be somehow immunised from the vagaries of the market”.
Professor Botchwey noted that: “The other problem is that the public discourse on exchange rate issues is so ridden with partisanship, arrogance and even insults that a principled discussion becomes impossible”.
For him, “Nobody is omniscient and I mean nobody! Among economists, there’s always room for disagreement. It is not for nothing that George Bernard Shaw, the Irish playwright, polemicist and social activist, famously said that: ‘If all economists were laid end-to-end, they’d never reach a conclusion’. We must foster an environment in which principled and dispassionate debate is possible”.
Suggesting possible solutions to managing the falling rate of the Ghana cedi, Prof Botchwey observed that: “First, you identify and deal with the proximate causes such as seasonal and other short-term factors and hope that the particular episode [of extremities] subsides.
“And then you deal with the longer-term structural issues in the economy that affect foreign exchange demand and supply. Trust me, there is no magic bullet. We’ve been here before this latest episode, and it won’t be the last”.
Members of Ghana’s two main political parties – the governing New Patriotic Party (NPP) and the main opposition National Democratic Congress – have been at each other’s throat over who are better managers of the economy in relation to the control of the cedi’s depreciation.
The country’s Vice-President, Dr Mahamudu Bawumia, had said in the past that ‘if the fundamentals of the economy are weak, the exchange rate will expose’.
The opposition party repeated Dr Bawumia’s words against him following the worst recorded cedi to dollar rate of 1$ to GHS5.8 in March 2019.
However, Dr Bawumia returned with a lecture to suggest that it is “warped” reasoning on the part of the NDC to say that the fact that there has been a fall in the value of the cedi necessarily means Ghana’s economic fundamentals are weak.
Speaking at a town hall meeting in Accra on Wednesday, 3 April 2019, Dr Bawumia said the worst performance of the NPP is better than the best cedi depreciation rate recorded under the NDC.
Also, an opposition MP for Bolga Central, Mr Isaac Adongo; and the Ranking Member of the Finance Committee of Parliament, Mr Cassiel Ato Forson, refuted the comments by Dr Bawumia in a lecture on Ghana's economy in Accra on Thursday, 4 April 2019.
Mr Forson even charged President Nana Akufo-Addo to gag Dr Bawumia because, in his view, the former deputy governor of the Bank of Ghana caused the depreciation of the Ghana cedi with his utterances.
The Minority has constituently accused Dr Bawumia of twisting facts and figures to deceive Ghanaians.