You are here: HomeWallOpinionsArticles2012 02 28Article 230735

Opinions of Tuesday, 28 February 2012

Columnist: Amponsah, Jerry

Cedi paralysis in a weak Econo -Mills

Cedi paralysis in a weak Econo-Mills

As President Atta Mills gets messier, he is wholeheartedly taking the cedi with him.

Soon, Ghanaians may feel “geeze” as the cedi – that is weaker-than-expected – uncontrollably heads to doom with a speed of wind. The economy is behaving erratically under the Economic Professor.

In the light of the much-touted rosy economy, the Bank of Ghana (BoG) is considering starting weekly dollar auction and will continue to sell foreign- exchange reserves to support the cedi against the dollar this year.

The central bank sold $4.1 billion in 2011 to support the currency – which has fared much worse –, up from $1.7 billion in 2010.

Moonlighting on the true state of Ghana’s bleak economic standing:

Last year, though it was an “action year,” the cedi recorded a continuous decline in value. This year, too, it is still sinking – heavily! It has fell “2.9 percent this year and hit a 17-year low last month.” Producer-price inflation in Ghana accelerated to 15.3 percent in January.

Now, our current account deficit stands at $3.5 billion.

Dr Kwabena Duffour, Finance Minister, told Joy FM that the recent depreciation in the value of the cedi is only a temporary setback in the country’s economic development.

Where “temporary” means?

Now, the cedi, in a seesaw, is trading at 1.6951 per dollar. The cedi has lost its purchasing power – and still losing. There is a clear indication that “the cedi is under a significant pressure.”

Ghana’s economy feels hell but the falsities by the government label it heaven.

National Economy: This is the other side of the political equation majority of the denizens are not much interested in – leaving the NDC government to engage in twist and turns to bury the truths. Economy is a respectable discipline treated with integrity – but the NDC government does not get it. The Mills-Mahama administration is out of step with the true picture of the economy. They have resorted to blending economics with politics.

Yes. They promised to serve, but they are killing the economy.

It seems we have lost focus along the learning curve: The obvious meltdown of the cedi currency. We ought to follow the arc (the performance of the cedi against the dollar), rather than falling for the government’s falsities that the economy is thriving. The current realities speak directly opposite to what the NDC government officials force down our throats. They are playing politics – not only with the hearts and with minds of the people – with the economy; teasing off investors; driving away potential investors.

According to a New York-based Ghanaian Economist, “everything business in Ghana now evolves around the dollar: Import and export” He added, “even some domestic businesses are transacted in dollars. These activities have actually shot up a very high increase in demand for the dollar.”

Under the Mills-Mahama administration, the economic policymakers have no idea on how to actively respond to events let alone foresee and shape future developments.

Now, massive unemployment in Ghana has taken a life on its own.

There are good reasons to fear the worst: Utility costs rose 9.3 percent from 9.1, prices of foodstuffs and building materials have shot up astronomically.

“Prices of items, like maize, groundnut, beans and millet have shot up from GH¢2.00, GH¢5.50, GH¢ 3.50 and GH¢ 2.50 per “olonka”,(a measuring tin) to GH¢3.00, GH¢7.50p, GH¢4.80 and GH¢3.50p respectively.” According to Ghana News Agency (GNA) report. It went on to add that “a bunch of plantain which was formally sold at five and six Ghana Cedis is now selling at between GH¢10 and GH¢15 for large ones with the least cost of a medium size tuber of yam being GH¢4.00 compared to the previous price of GH¢2.50. A pound of both mutton and beef was selling for GH¢4.50p as compared to last year’s of GH¢4.00.”

A bag of cement which was selling at GH¢12 in the beginning of this year is being sold at GH¢17. “20 pieces of galvanized roofing sheets are now going for GH¢140 instead of GH¢130 previously while the same quantity of aluminum roofing sheets is now selling between GH¢350 and GH¢400 instead of GH¢320 a week ago.”

Peril as Ghana’s economy seems, with election spending waiting to hit the country like a tsunami, expect the cedi – which was trading at somewhere 1.1 per dollar in 2008 – to hit 2 cedi per dollar.

Osu Castle has skillfully covered up the ugly picture of the economy – a much-interested side.

Rewind: In 1999, the then Vice President Atta Mills, who was also the head of the economic management team, with Kwabena Dufour as the governor of the Bank of Ghana with Amissah Arthur as his vice, the IMF fined Ghana $20 millions for given out fake and inaccurate figures to represent the economic indicators at that time. Now mills, Kwabena Dufour, and Arthur are in the picture again.

One thing for sure: With election spending waiting to hit the country like a tsunami, expect the cedi – which was trading at somewhere 1.2 in 2008 – to hit 2 cedi per dollar.

This year, President Mills – whose favorability has largely remained low – is wildly gearing up to oil the elections, buyout the whole country in securing another term in office.

The incumbent NDC government is set to go scalp hunting to ensure a win – and tip the scale to eventually do damage to the country’s economy. They already have their thumb firmly placed on the scale of the general elections.

Dubbed election traders, – who have extreme lust in election spending – they are all out to do the actual killing in this year’s general elections. President Atta Mills, the super spender, has already baptized himself with over GH¢50 million on his presidential primary. Irrespective of their poor performance in office, they are optimistic that huge spending will set the tone and tempo – and dominate the central nervous system of the general elections.

Jerry Amponsah (Sabbato)

Communications Group – NPP-New York