Bawumia Plays Blame Game With Ghana’s Economic Problems – Prof. Hanke

Professor of Applied Economics at Johns Hopkins University, Steve Hanke, has taken a swipe at Vice President Dr. Mahamudu Bawumia over the country’s economic woes.

According to him, Dr. Bawumia has always been dabbling in blame game when it comes to responding to matters on the economy.

On the specific issue of the free fall of the Cedi, Prof Hanke has consistently advised the government to establish a currency board to check the depreciation rate.

He said failure to heed the advice will mean the country “going down the tubes”.

“When it comes to the source of Ghana’s economic problems, VP Bawumia plays the BLAME GAME. You know, it wasn’t me, it was the guy behind the tree. Today, I measure GHA’s inflation at 80%/yr. Without a currency board, GHA is going down the tubes,” Prof Hanke tweeted on August 22.

The government has partly been blaming the Covid-19 pandemic, ongoing Russia-Ukraine war and financial sector cleanup as reason for an economic meltdown.

Vice President Dr. Mahamudu Bawumia speaking at this year’s Internal Audit Conference in Accra said the amount spent on the financial sector cleanup could have been channeled into other productive sectors of the economy but it was used to save deposits of Ghanaians.

“We had to undertake a major banking crisis reform. At that time, 2018/2019, it cost almost $7 billion in order to save the banking system. Now the choice that was available was that either you let the banking system collapse or you save there was really no middle way.

“So we had to save the banking system and the deposits of 4.6 million people [were safe],” he said.

Dr. Bawumia added that the government was particularly focused on saving the lives of citizens at the height of the Covid-19 pandemic rather than maintaining fiscal discipline.

“We had the worst economic depression since the 1930s in the global economy. Of course from the President’s point of view at the time of Covid-19, the emphasis was on saving lives and not on fiscal discipline.
“So yes, we focused on saving lives at great fiscal cost,” he noted.

The economy has in recent times been experiencing a downturn with citizens lamenting the increased cost of living.

Ghana’s inflation rate for the month of July was 31.7% per data put out by the Ghana Statistical Service.

The recent developments prompted the government to initiate contacts with the International Monetary Fund for a programme.

Amid the downturn, international rating agencies such as Fitch and Standards and Poor have downgraded Ghana’s economy. The Cedi as well has also been experiencing a free fall with the exchange rate pegged at GH₵10 to a US dollar at some forex bureaus.