Re: Ghana at the IMF
The government has issued a statement on the decision to approach the International Monetary Fund [IMF], and there have arisen misinformation and misconceptions about this decision since it was made two weeks ago. My readers will recall that my last column was devoted to this matter from my own perspective.
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Last Tuesday, the Information Minister, Dr Omane-Boamah, issued another statement on this matter. I find this particular statement, put online and unpublished in the major newspapers as I write, to be of importance in the public discourse concerning the decision to approach IMF. I have decided to reproduce the statement in full hence the repetitive title of today’s column.
Ghana and IMF stories
The Government of Ghana has taken note of the recent stories in the international and local media regarding its decision to open negotiations with the International Monetary Fund for assistance. While we appreciate the interest of the media in Ghana’s affairs, we wish to correct a few basic errors of fact in these stories.
It was reported by Reuters on August 3, 2014, that the Ghana cedi had “fallen by around 40 per cent against the dollar this year.” This is incorrect. According to Bank of Ghana, the cedi traded at 2.34 against the dollar in January 2014, and as of Friday, August 1, 2014, it stood at 3.035 to the US dollar, reflecting a cumulative depreciation of 22.9 per cent over the period.
It was also noted that the economy grew by 7.0 per cent in 2013, instead of the projected figure of 7.1 per cent. While the difference may seem trivial, it is important to point out the error for two reasons: [1] to promote accuracy as a matter of record, and [2] to highlight the fact that even fractional changes in an economy have significant implications.
Similarly, the Financial Times, headline of “Ghana Seeks IMF Help after currency falls 40 per cent” also repeats some of the misrepresentations in the Reuters story, with some hyperbole too. The paper makes the erroneous claim – which has been repeated by other media houses – that the cedi is “the worst performing currency in the world in 2014.” Subsequently, some commentators have twisted this headline to say that Ghana’s economy is the worst in the world, despite strong positive growth across all sectors of the economy last year and so far this year.
As proof, the Financial Times adds that the fall of the cedi is “a bigger slide than even the war-ravaged Ukrainian hryvnia and the Syrian pound.” What it failed to mention was that unlike Ghana, which for decades has had a market-determined floating exchange rate regime as well as a liberalised capital account [which allows unhindered repatriation of profits], Syria has a fixed exchange rate regime, with capital controls. Ukraine also maintains a “managed float” regime, after years of a fixed rate regime that artificially kept the currency strong. Therefore, any comparison across these three currencies is misleading, at best.
“The fact that one Ghana cedi, as of August 3, 2014, could buy 29.5 US cents, while one Syrian pound could buy less than one US cent and one Ukrainian hryvnia bought only 8 US cents is positive proof that the Ghanaian economy is fundamentally strong and has bright medium-term prospects despite its short-term challenges. We are working assiduously to address these in a ‘’home-grown’’ fiscal consolidation plan that we have already submitted to the IMF.”
“We wish to assure all journalists, both local and international, that our doors are always open for them to fact-check their stories with relevant sector ministries before they publish them. This would do as much good for their reputation as it would the quality of discourse that often relies on their stories’.’
“I am certain that by the time you read this column on Friday, this statement would have received wide publicity. But news which is designed to steady and becalm the political waters deliberately fouled by uncharitable commentary, coarsens public discourse on important matters, and makes us victims of our worst natures.”
This latest statement on the economy is pregnant with significant facts. Only one caught my eye, and I had referred to it in this column several times in the past. A seven per cent posted GDP growth is a far better performance than any of the Organisation for Economic Co- operation and Development (OECD) countries, and the United States in the past several years. Indeed, it can be persuasively argued that we have been victimised by our own successes, and our expanding horizons and appetites, welded onto a legitimate people-based government enjoying the unfettered freedoms of a truly democratic society, have been the catalyst for the shortcomings of today.
I am persuaded that sceptics and cynics never built anything. They only raise our hackles through misrepresentations and deliberate misconceptions of public policy. Some of them preach and practice boycotts as a matter of principle and policy. The truth of the matter, however, is that do-nothingism is neither principle nor policy. It is almost akin to the abdication of citizenship. True patriots never cease active engagement and collaboration to fashion out a better tomorrow, and share in the rewards of joint effort. Our pride in our common citizenship deserves no less from all of us.