- Vice President Dr. Mahamudu Bawumia has taken a dig at the opposition National Democratic Congress’ (NDC) explanation for the depreciation of the cedi.
The opposition party had trumpeted a popular quote from Dr. Bawumia that “if your fundamentals are weak, the exchange rate will expose you” to show that NPP government had also failed in the management of the cedi.
But speaking at a town hall meeting on Wednesday, Dr. Bawumia insisted that the fundamentals are strong and described such arguments as warped.
“You will recall that I stated in 2014 that if the fundamentals are weak the exchange rate will expose you. That was true then and it is true now. It is 100% correct. So if the fundamentals are weak the exchange rate will expose you. But it is warped logic to jump from that [argument] to a conclusion that if there is depreciation in your currency then the fundamentals must be weak.If the fundamentals are weak, the exchange rate will expose you but if the exchange rate moves, you cannot jump to that conclusion that the fundamentals are weak. That defies logic. There could be other external factors causing the exchange rate depreciation.”
“For example, if I tell you that if your leg is broken, you are going to be unable to walk, then I’m somewhere and somebody comes to tell me that this person is unable to walk. Can I conclude that the person’s leg must be broken? There can be other reasons why that person will not be able to walk. But the NDC’s logic will insist in the face of contrary evidence that since you cannot walk then it means your leg must be broken,” he insisted.
Dr. Bawumia made the comment in one of his lectures ahead of the 2016 election campaign.
The cedi had depreciated by 40 percent during that period, a situation that angered many Ghanaians and contributed to the NDC’s defeat.
In Dr. Bawumia’s analysis, if the fundamentals which highlight the management of the currency and economy are strong, the cedi will not depreciate.
