The theory of Paa Kwesi Amissah Arthur, vice president of Ghana that the depreciation of the cedi is normal in an election year has been argued on by pundits.Many believe its just a fabrication and baseless in his capacity as the BoG boss to defend his performance in the handling of the rapid depreciation of the cedi in such manner.
In an interview with Citi FM, Mr Amissah Arthur said: “I know that the record of the cedi will be an issue in this election but every election year in this country, from 1992 to date, the cedi has been destabilized. Really if you look at the data, this is the year where it has been lowest. In other years there has been 60% depreciation, 40% depreciation in an election year. So we have learnt lessons from those depreciations and not all of them are economic factors.
Figures revealed to the New Statesman has disputed this claim and even gone to overturn this assertion.According to the reports,the depreciation of the cedi against the dollar in 2004 under former President Kufuor was a meager 2.2%. The cedi fell from ¢8,850 in January 2004 to ¢8,900 at the end of 2004. Similarly in 2008, an election year, the cedi depreciated by 20.9%, from GH¢0.98 in January to GH¢1.15 at the end of the year.
In total,the cedi’s value has depreciated by some 25% against the dollar. As of July 31, 2012, the cedi had seen its value against the dollar plummeted from GH¢1.67 in January to GH¢2.08.
The competence of Mr.Amissah-Arthur has been contemplated on looking at the rate of depreciation in his 3½ years as BoG boss and the $2 billion spent on foreign exchange reserve.Stateman reports that Mr Amissah Arthur has superintended over an 80.9% depreciation of the Ghana cedi against the dollar, with similar rates of depreciation against all the major trading currencies. This contrasts sharply with the fall of the cedi to the dollar in 8 years of the Kufuor administration, where the cedi depreciated by 58.2%.
Mr Amissah Arthur’s tenure as head of the Bank of Ghana has seen inflation dropped to single digit but has overseen the rising of interests rates to 30%. Similarly, Producer Price Index, including the cost of manufacturing, is almost as high as 20% even though inflation is said to be in single digits.
This apparent disconnect between interest rates, exchange rate stability and inflation, according to economic analysts, is an indication of “the shambolic running of Ghana’s monetary policies” instituted by Mr Amissah Arthur.
According to the Bank of Ghana’s own surveys over the last four years, both business and consumer confidence in the economy have been, by and large, low. This has been described as a vote of no confidence in how the economy has been managed under the NDC Mr Amissah Arthur.
It is recalled that President John Mahama, the current finance minister, Dr Kwabena Duffuor, were all members of the economic management team in 2000 that saw the cedi losing half of its value in just one year, interest rates hovering over 40%, with no money to pay contractors and workers, rising debts, bounced BoG cheques, false accounting which led to an IMF fine, and finally HIPC.
It is virtually the same team that has managed the economy in the last four years and, interestingly, a lot of the 2000 challenges have come back to haunt Ghanaians.