The "lies" of Bawumia cause the fall of a cedi – Ato Forson

Vice President Dr. Mahamudu Bawumia

Cbadiel Ato Forson, who holds the top position in the Parliament's Finance Committee, has asked Nana Addo Dankwa Akufo-Addo to yell Vice President Dr. Mahamudu Bawumia because caused the depreciation of Ghana's cedi..

AT him, the president should prevent the vice president from talking about the country's economy since the at any time on the economy, it negatively affects the currency of the country.

According to him, the cedi is depreciated against some of the major foreign currencies immediately after Dr. Bawumia held a public lecture on the performance of the country's economy at a public meeting organized by the country's economic management team on Wednesday, April 3, this year.

"I urge the president to restrain his vice president because every time he talks, the currency changes," said Forson at a conference organized by the National Democratic Congress and the Coalition for restoration to better understand State of the economy

Mr. Forson explained that Mr. Bawumia's presentation was full of lies, particularly with regard to the facts and figures he provided.

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"You've heard about justice and judicial systems. What does this have to do with the economic management team? He had nothing to say. He was only playing with numbers. And again, you know him and his references by lying with numbers. You can see lies, "said Forson.

However, on Wednesday, Bloomberg figures showed Ghana's Cedi to be between US $ 5.30 and US $ 1 according to the GHS. As of 4:00 pm on Thursday, April 4, 2019, Bloomberg figures showed that the Ghana Cedi ranged from 5.22 GHS to 1 USD, as shown in the chart below.

Dr. Bawumia said the NDC's "distorted" reasoning is that the fact that there has been a decline in the value of the cedi necessarily means that Ghana's economic fundamentals are weak.

Dr. Bawumia said the decline in the cedi was largely due to external factors rather than weak economic fundamentals, contrary to what he thought in 2014 when he (Dr. Bawumia) said, " If the fundamentals are low, the rate of exposing yourself ".

According to Dr. Bawumia, "such factors as the inflation rate, the trade balance, the budget balance, the money supply are what we call the fundamentals. But speculations and expectations on these fundamentals; External shocks, such as rising oil prices, can also have powerful short-term effects on the exchange rate.

"When we find pressure on the exchange rate, we must first determine where these pressures come from or whether they are transitory or permanent. And as all astute central bankers know, even with strong economic fundamentals, speculation, expectations, and investor sentiment can put pressure on the exchange rate.

"Ladies and gentlemen, you will remember that I said in 2014 that:" If the fundamentals are weak, the exchange rate will expose you ". It was true then and it's true now. It's 100% correct.

"But it makes sense to jump from there to the conclusion that if there is a depreciation of your currency, the fundamentals must be weak. Do you understand the logic? If the fundamentals are weak, the exchange rate will expose you, but if the exchange rate fluctuates, you will not be able to deduce that the fundamentals are weak. This defies logic, "said Dr. Bawumia, adding," There may be external factors responsible for the depreciation of the exchange rate. "

"For example," said Dr. Bawumia, "if I tell you that if your leg is broken, you will be unable to walk, so I'm somewhere and someone comes to me and says," This person is incapable to walk, can I just conclude that the leg must be broken?

"There may be other reasons why you can not walk. But the logic of the NDC will insist against the contrary evidence that, as you can not walk, it means that your leg is broken.

"In 2014 … the economic fundamentals were considerably weakened and, as a result, the depreciation was easy to explain. This was not caused by dwarfs or tall buildings, as we have been told. The exchange rate of 2014 had exposed the weakness of economic fundamentals.

"If you look at the screen, you will find the basic principles of those of 2014 and 2018. Each of them: real GDP growth, inflation, budget balance, wage bill, cost / GDP debt ratio, rate of return. Interest, current account, all fundamentals, you will see that we were in a much weaker position in 2014 compared to 2018. So, ladies and gentlemen, how did the cedi behave recently? At the end of December 2017, the Cedi had amortized by 4.9%, compared to 9.6% in 2016. This was the best performance of the Cedi since 2011. And at the end of 2017, we had the best performance of the cedi until 2011.

"However, the cedi has depreciated by 8.4% in 2018 mainly due to emerging market pressure and rising US interest rates.

"Data on the annual cedi depreciation rate in recent years shows that the worst cedi performance up here under the NPP government, the 8.4% depreciation we've seen since 2018, is worse than the best performance. under the previous government between 2012 and 2016. Our worst is better than the best. And when you say that, this one looks more like boot-for-chalewote.

"Ladies and gentlemen, the beginning of the year 2019 was characterized by a sudden new depreciation of the cedi, which was largely reversed. In a week, the cedi approached GHS5.9 for a dollar, then it returned to GHS5.07 and even threatened to go below GHS5, but this is an unprecedented development : decline when the exchange rate depreciates. And you will see that during this period when the cedi depreciation reversed, the Bank of Ghana did not intervene in the market, "said Dr. Bawumia.