Bawumia On Shaky Road To Flagstaff House


…Ex-Finance Ministry Staff Observes

Commentary: Can NPP Ride On Shaky Bawumianomics To The Flag Staff House?

By Abdul Hakim Ahmed

Ordinary Ghanaians might overlook it, or perhaps consider it as trivial, but timing is one area that Dr. Mahamudu Bawumia has been very adept at when it comes to delivering his much-vaunted lectures on the national economy. In fact, it is the area that he can confidently be awarded 100 per cent points by any examiner, since his series of lectures started in 2012.

Since his appointment or selection as the running mate to the New Patriotic Party (NPP) Presidential candidate in the run up to the 2008 elections we did not witness any public lecture from the former Deputy Governor of the Bank of Ghana (BoG) on the state of the economy and the performance of the economic managers, especially in the heated election campaign. This can be understandable because the NPP was in power and therefore the former Deputy BoG governor had no incentive to find faults with his own government. Again, from 2009 to 2012, when the national economy was in spectacular shape, we did not witness any lectures on the state of the economy from the banker turned politician. This is also understandable because he has nothing to criticize as the nation was being showered with praises both nationally and internationally for its handling of the economy.

However, since the second quarter of 2012 till today, Dr. Bawumia does not flinch in delivering a potent jab on the NDC government and its economic managers in the name of academic lectures, any time the opportunity offers itself. The ‘opportunity’ has always been when the economy finds itself in a fierce battle with exogenous shocks or speculative activities by market players and one or some of the macro variables are not in good shape. In all the four lectures that Dr. Mahamudu Bawumia has delivered so far since his party lost power in 2008, the coincidence is very palpable to any observer. On 2nd May, 2012 when he delivered the maiden Ferdinand Ayim Memorial Lecture under the heading “The State of Our Economy”, it was to take advantage of the tumbling local currency at that time to reinvigorate the political base of the main opposition NPP preparing for the December 2012 elections. The Cedi had then depreciated by about 15 per cent in the first half of 2012 as a result of speculative activities, forcing the monetary authorities at the central bank to adopt administrative and policy measures to combat further foreign exchange depreciation. Prior to that, the currency had seen massive stability for almost three years. It was in the midst of the currency turbulence that the former Deputy Governor fired his maiden lecture on the 2nd May, 2012 which elicited swift and fiercest response from the Ministry of Finance and Economic Planning (MOFEP).

After a robust response from government on the 3rd of May 2012, in fact within 24 hours of the lectures, coupled with the massive gains made by the currency in the second half of 2012 and beyond, Dr Bawumia CONVENIENTLY disappeared with his lectures and the managers of the economy had some serene atmosphere to operate until after the grueling elections which the NDC won and President Mahama was sworn in on January 7th, 2013. However, on November 13, 2013 almost a year and half after his maiden lecture, Dr. Bawumia resurfaced with the First Aliu Mahama Memorial Lecture. Again, the opportunity was handy because the local currency had started its cyclical depreciation. Further, on March 25th 2014, the former Deputy Governor of the BoG delivered his third lecture at the Central University College as a visiting Professor of Economic Governance with title: “Restoring The Value of The Cedi”. Again, with a good sense of timing from the former Deputy Governor of the BoG, the last year’s lectures at the Central University was also in the midst of a serious currency crisis, in fact one of the severest in recent times, with Cedi shedding about 30 per cent of its strength to the major international currencies, according to official data from the Bank of Ghana (BoG). The fourth lecture was just delivered last week exactly a year after the last one.

This year’s lecture in my opinion is not any different from the previous three in terms of the timing and the objectives. The Cedi has yet again nosedived in the first quarter of the year shedding some 12 per cent of its value, economic growth has tumbled over the last two years, inflation is still in double digits and fiscal deficit is still high. While government in the past two years has been fidgeting with fiscal consolidation, the International Monetary Fund (IMF) has come in handy to provide the needed fillip to the macro-economic stabilization measures being undertaken by the government to ensure economic recovery and transformation.
Creating Fear and Panic

In my opinion, the timing of all these four papers delivered by the former deputy Governor of the BoG was not sheer coincidence but carefully choreographed to support the central objectives of the NPP and the running mate. The objectives are first to create maximum anxiety and apprehension in the market on the national economy and undermine efforts at recovery and secondly to excite his partisan political base who are yearning to see more weaknesses and vulnerabilities in economic management in order to capitalize for the impending election campaign.

Cherry Picking of Data
I have argued time and again that because of his meteoric rise to the enviable position of Deputy Governor of the Bank of Ghana, Dr. Mahamudu Bawumia is among the few Ghanaians who have been privileged to have a combined strength of academia and practical experience in economic management at the highest level. His background as both an academic and consummate technocrat has put him at a position that he could play with the national economic data to achieve his political objectives. One would have thought that as a Visiting Professor of Economic Governance he would have overcome the temptation of delivering a one sided lecture to his audience most of whom are junior members of the academic family of the Central University. One would have wished that he would have defied the pressures from his party and its leaders who were also present at the gathering in their numbers to deliver a TRUE ACADEMIC paper that looks at all the possible faces of the issues under consideration. Instead, the true academic and the consummate technocrat reduced his lectures to mere PROPAGANDA tool to advance the political cause of his party by indulging in what I can confidently call cherry picking of data.

The National Debt
Led by Dr Bawumia, the NPP has always sought to play partisan politics with the national debt. For instance, recently he was widely reported to have surmised that the NDC government has added $27bn to the national debt in six years when indeed the total public debt currently stands at about $22bn? This includes the $8.1bn that the Mills-Mahama-Amissah Arthur administration has inherited from the Kufuor administration. In his last week’s lecture at the Central University, the NPP running mate seems to have run away from his US$27 billion figures and now conveniently uses the Bank of Ghana’s Monetary Policy Committee’s (MPC) total current debt figure of GHC76.1bn (67.1 per cent of GDP). He however maintained that the NPP had left behind a public debt of GHC9.5bn and to him and his party that is equivalent to US$8.1bn using a much favorable exchange rate. While GHC 76.1bn can be seen as a staggering figure in Cedi terms, in Dollars, it is just around the Ministry of Finance’s US$22bn quoted in the 2015 Budget. So, there is an element of deception here to the unsuspecting layman. Again, Cherry picking of data at play!

NDC Government Had More Money

Again, in all his recent media or political encounters, he has been arguing that the current government is broke despite the unprecedented dollop of cash available to it in the last six years in the area of revenue, loans and export receipts. In the last week’s lectures, he pointed out that total revenue under the eight years of NPP was GHC15.5bn while it is GHC62bn in the last six years. Again, total debt has moved from GHC9.5bn to GHC76.1bn. Export of gold under NPP was US$9bn while under NDC’s six years, it is US$25bn. For cocoa, the NPP exported US$7.4bn while the NDC exported US$14.5bn. Finally under NPP, there was no oil export, but under NDC, there was export of US$13.7bn worth of oil. He said, despite all this the NDC government is going to the IMF because the public finances is not being managed well.

However, first of all, the former Deputy BoG Governor talks about export revenue as if all of it comes to the central government. Whether cocoa, gold or oil, the state has its shares in terms of taxes or royalties depending on the agreement and the chunk of the revenue goes to the producers or the investors. With regard to cocoa, about 70 per cent goes to the farmer to compensate for his toil in tilling the land. With regards to oil export and revenue, he seems to have amended his position from that of an encounter at the University of Development Studies (UDS) where he suggested that all the US$13.7bn made from oil exports comes to the government chest. He now suggests that Ghana makes US$3bn from the above figure.

For avoidance of doubt, since 2011 when the nation commenced commercial oil production, we have made just about $2.6bn as a nation.
Available data indicate that Ghana made only $444.12 million in 2011, $541.07 million in 2012, $846,767 in 2013, and from January to September 2014, we made $780.07m.”

As a responsible government, since 2011, the nation has strictly complied with the provisions of the Petroleum Revenue Management Act (PRMA) in the allocation and utilization of the oil revenue, by allocating 70 per cent to the Annual Budget Funding Amount (ABFA) with the remaining 30 per cent going to the Ghana Petroleum Funds (GPF) i.e. the Heritage and the Stabilization Funds,”

Again, on other revenues from taxation and exports, the nation has used its share judiciously building infrastructure, paying government workers and meeting all the nation’s international obligations regarding loans and debts. These obligations include the payment of the US$75bn Eurobond contracted by the NPP government in 2007 with a coupon rate of 8.5 per cent and repayment period of 10 years.

One would have thought that as a technocrat and academic that he is, the former Deputy Governor of the Bank of Ghana should have known that as country’s population increases, its needs in terms of infrastructure also expand and that comes with increased expenditure. So, there is no way one can compare Ghana of today to the Ghana under President Kufuor or President Rawlings or President Nkrumah. For instance, none of these governments has ever allocated GHC10bn for payment to government workers alone in a single year. One needs to just observe the number of cars on the street of the major cities of the country and would appreciate the burden on government to provide road infrastructure to cater for the weary citizens who are eager to make ends meet in their activities on daily basis.
IMF and the so-called conditions

The former Deputy Governor of the Bank of Ghana also painted a gloomy picture on the nation’s move towards IMF for a stabilization program. He predicted doom hardship as a result of what he claims are strict conditions such as removal of subsidies on utilities and fuel, expenditure cuts including capital expenditure, elimination of ghost workers from government payroll and others. In his own words, the conditions and the program themselves are supposed to lead to the reduction of the fiscal deficit from the current 9.5 per cent of GDP to 7.5 per cent of GDP.

Since he himself has agreed in his paper that the NPP government was in the IMF program from 2001 to 2006, the question that one must ask the NPP running mate is how did his government manage to navigate through the conditions for the six years they were in the program with the Fund? Again, is he suggesting that there is something wrong to undertake fiscal consolidation in order to stabilize the economy for sustainable growth?
GDP Growth

Dr. Bawumia also took swipes at government for what he thinks is the declining economic growth. However it must be mentioned to him that the average GDP growth in the last six years under the NDC far surpassed the first six year of the NPP. At 4.2 per cent in 2001, 4.5 per cent in 2002, 5.2 per cent in 2003, 5.6 per cent in 2004, 5.9 per cent in 2005, 6.2 per cent in 2006, average economic growth in the first 6 years of the NPP stands at about 5.3 per cent.

On the other hand, growth averaged 8 per cent in the first six years of the NDC. Per the January 2015 revision of the Ghana statistical Service (GSS) the economy grew by 4.8 per cent in 2009, 7.9 per cent in 2010, 14 per cent in 2014, 9.3 per cent in 2012, 7.3 per cent in 2013 and 4.2 per cent in 2014.
Questioning the Credibility of Data

The NPP running mate, for some reasons has been consistent in his attacks on state agencies responsible for national economic data especially, the Ghana Statistical Service (GSS), the Ministry of Finance and the Bank of Ghana. Ironically in his entire life as an academic, a technocrat and now a politician, he has relied on data from these institutions for his research and yet he still raises eyebrows about the genuineness or accuracy of the data. What logic is that? If he has any superior methodology on the computation of these data he should avail them to these agencies rather than the persistent attacks. It must be noted that data no matter the methodology used, is collected by human beings and therefore not error proof. Even the IMF with its armchair officials is able to predict global, regional and sub-regional economic growth on frequent basis and make revisions as and when necessary from its data. If one can accept the data from the IMF in his analysis and conclusions on the local economy, why not from credible national institutions like the GSS, the Ministry of Finance and the Bank of Ghana?

Bawumia the Messiah
After four research papers in four years, Dr. Bawumia seems to be assuming the status of a Messiah in the NPP. What is baffling is that Dr Bawumia, despite his Messianic status was after all a deputy to Dr. Paul Acquah at the Bank of Ghana and much junior in terms of practical economic management to Mr. Yaw Osafo Marfo who was a finance minister for four years under President Kufuor. Others within NPP who are senior to the NPP running mate in economic management are Dr Anthony Akoto Osei and Prof Gyan Baffour, a former minister of state at the finance ministry and a former deputy minister of finance, respectively under the Kufuor administration.

The question that one must ask from the excited NPP supporters is that all of a sudden, where are all these senior members of the party or the Kufuor government appointees? Have they truly ceded their seniority to Dr. Bawumia? In the unlikely event of NPP forming the next government on January 2017, would Dr. Bawumia be the one to actually lead the government’s Economic Management Team? Dr Bawumia himself should ponder over these and many other issues.
By Abdul Hakim Ahmed, Member of Government Communication.

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