The 2016 running mate of the opposition New Patriotic Party Dr. Mahamudu Bawumia has said Ghana’s economy performed much better under the late President John Mills than it is doing currently, under President John Mahama.
According to him, although the Mahama administration has had more revenue at its disposal, it has failed to live up to expectation.
Speaking on the economy at a public lecture in Accra Thursday, the former deputy governor of the Central bank said the Mahama government has been worst with the economy than any other government under the fourth republic.
“Any assessment of the state of the economy and the performance of the government must be against the background. At a public lecture in September 2008, then Vice-Presidential candidate John Mahama said: "To whom much is given much is expected." I would like, with his permission, to borrow his exact words to describe his government’s exact performance in the last 8 years. In this regard, it is important to emphasize for the record that measured in terms of today’s dollars and cedis, no government since independence has had the amount of resources in terms of tax revenue, cocoa exports, gold exports, oil revenues and loans as the two NDC administrations between 2009 and 2016.
“Under the 8 years of the NPP government, from 2001-2008, taxes and loans amounted to GH¢20 billion. In contrast, taxes, oil revenue, and loans alone over the 8-year period of 2009-2016 would amount to some GH¢248billion. The Mills-Mahama governments would have had in eight years, more than 12 times the nominal resources that the NPP had,” Bawumia said.
In terms of GDP Growth, Dr. Bawumia noted that without oil, the NPP competently managed the economy to increase growth from 3.7% in 2000 to 9.1% in 2008 while with oil and unprecedented resources; economic growth had declined to 3.9% in 2015. “Between December 2000 and December 2008, without oil, economic growth increased from 3.7% to 9.1%. After declining to 4.8% in 2009, real GDP growth increased to 7.7% in 2010 and 14% in 2011 following the onset of oil production. Since 2011 however, real GDP growth has declined steadily and drastically to 3.9% in 2015, basically the growth rate Ghana attained in the year 2000.
Between 2000 and 2008, the size of Ghana’s economy increased from some $5.1 billion to $28.5 billion, a 459% increase in eight years (Figure 3). Even in the face of a global economic and financial crisis in 2007/8 (with oil prices reaching a record high of $147/barrel), economic growth in 2008 rose to 9.1%. Ghana’s GDP, notwithstanding the discovery of oil, has only increased from $28.5 billion in 2008 to a projected $40 billion in 2016 (a 40% increase in eight years). However, between 2012 and 2016 i.e. during John Mahama’s tenure as president, the economy, in dollar terms, shrunk by 5%.”
GDP Per Capita
Similarly, Dr. Bawumia explained that under John Mahama, the Per Capita income had amazingly declined by 12% despite all the opportunities prevalent. “Under the NDC, GDP per capita has recorded a growth of 17% (from $1,266 to a projected $1,481) with oil revenue. Under John Mahama’s tenure as president (2012-2016), GDP per capita has declined by 12%. Under NPP on the other hand, GDP per capita recorded a growth of 187% in 8 years (from $440 to $1,266) without oil revenues. While the NPP increased per capita incomes by $826 during its term, the NDC, with twelve times more resources, has increased per capita incomes by only $215. With twelve times less resources, the NPP increased GDP per capita by some four times more than the NDC. This is essentially the difference between competent economic management and incompetent economic management. It also tells us that fundamentally, Ghana’s problem is not about resources. Our problem is the efficient and honest management of our resources.”, he said.
Again ,Dr.Bawumia disclosed that under the tenure of John Mahama, the Minimum wage had declined by some 23.6% and that in all, the Minimum Wage under the 8 year NDC administration had declined by 4% in dollar terms.
“In dollar terms, under the NDC, the minimum wage declined from $2.12 to $2.02 by 2016 (i.e. by 4.6%). Between 2012 and 2016 (during the tenure of President Mahama) the minimum wage in dollar terms declined by 23.6%! (Figure 5). In comparison, the NPP increased the minimum wage from the equivalent of $0.62 in 2000 to $2.12 in 2008 (i.e. by 244%)”
As a mark of the incompetence and recklessness of the Mahama administration in the area of economic management, Dr.MahamuduBawumia noted that for the first time in Ghana’s history, Ghana had recorded three consecutive years of double digit deficits.
“At the heart of Ghana’s current economic difficulties is the government’s reckless management of public finances; especially in the run up to the 2012 elections, over which John Mahama presided as President. We should recall that the economy ended in 2012 with a fiscal deficit of 12.2% of GDP, 11.7% of GDP in 2013 and 11.9% of GDP in 2014 (Figure 8).
This was the first time in Ghana’s history that double digit fiscal deficits were recorded for three consecutive years (and this occurred under John Mahama’s presidency)”, he said.
Another critical area which underlines the incompetence of the John Mahama – NDC administration is the unprecedented borrowing that has been undertaken. From 9.5 billion Ghana cedis in 2008, the NDC has incredibly increased Ghana’s total debt to GHC105 billion. “In the last seven years alone under this NDC government, Ghana’s total debt has ballooned from GH¢9.5 billion to GH¢100 billion by the end of 2015 and GH¢105 billion in May 2016! Some 66% of Ghana’s debt, GH¢69 billion of it, has been accumulated under the presidency of John Dramani Mahama in just last three and a half years! “, he noted.
Dr. Mahamudu Bawumia also touched on the fall in the value of the cedi, which had seen the cedi gain the notoriety of being one of the worst performing currencies in recent years.
“The Ghana cedi has recently obtained the dubious distinction of being one of the worst performing currencies in the world as a result of weak fundamentals and some misguided policies by the central bank. The cedi has depreciated from some GH¢1.2 to the dollar in 2009 to GH¢ 3.95 (almost GH¢4) to the dollar currently (Figure 14). This is in contrast to the remarkable stability of the cedi during the eight years of NPP government.
In terms of exchange rate depreciation, the worst performance between 2001 and 2016 has been between 2012 and 2016 (during the tenure of John Mahama as President).” he indicated.