Dr. Mahamudu Bawumia, on Wednesday, February 7, 2024, addressed Ghanaians in a highly publicized event titled “Bawumia Speaks: Ghana’s Next Chapter: Selfless Leadership and Bold Solutions for the Future.”
The event, held at the University of Professional Studies, Accra (UPSA), provided an opportunity for the vice president to share his vision for the future of Ghana, particularly in light of the country’s ongoing International Monetary Fund (IMF) bailout.
See below for excerpts followed by a text of the full document:
Ladies and Gentlemen, three months ago, I was elected as leader and flagbearer of the New Patriotic Party (NPP) to lead the party into the 2024 Elections. I am eternally grateful to His Excellency the President, Nana Addo Dankwa Akufo-Addo, for allowing me to serve as Vice-President.
Just 11 days ago, the party also completed its election- of parliamentary candidates for 2024 elections. Let me use this opportunity to also appreciate the leadership and grassroots of our beloved party, the NPP, for the seamless organisation of the Parliamentary Primaries following on the equally successful Presidential contest.
I believe the time has now come for me to speak to you, the good people of Ghana, about my candidature, what we have experienced as a nation, my vision and priorities, and why I believe I am the best candidate for the presidency of this country in the 2024 Presidential election.
I recognize that submitting myself to your service, the electorate, to vote for me as President is no different from interviewing for a job. One needs to tell a prospective employer what he has accomplished in his previous job, and how he can successfully deliver in the new position he is seeking. Which is what I seek to do in this speech. Even tonight is about sharing my vision and policy priorities with you, I crave your indulgence to broadly set up the context. I will first talk about the record of our government and my contribution as Vice President, before laying out my vision. So I ask for your patience.
Ladies and Gentlemen, when we assumed office in 2017, we were confronted with an economy with declining economic growth along with several problems and challenges. A graphic description of the state of the economy at the time was provided by the former President and my main opponent for the 2024 presidential election, who announced to the nation when he was President that all the meat was finished and the economy was left with bones. Notwithstanding the difficult economy we inherited, we had to get on with it and start to fix the problems.
We started with a clear, decisive and deliberate program to, among other things, stabilize the economy, fix dumsor, fix the NHIS, fix the roads, clear the arrears, make education free and accessible, significantly enhance social protection for the vulnerable in society, industrialize our economy, tackle youth unemployment and empower farmers. Between 2017-19 all the key economic indicators such as economic growth, agricultural growth, industry growth inflation, interest rates, fiscal deficit, exchange rate depreciation, and trade balance were moving in the right direction.
However, between 2020 and 2022, we experienced severe challenges, triggered by the pandemic which brought the world and our country to a thundering halt. We may be tired of hearing it but there is no avoiding the fact that the COVID-19 pandemic, and the Russia-Ukraine war, resulted in the greatest economic depression in the world since the 1930s, with most countries recording negative GDP growth. The severity, especially of the Pandemic, was captured in the words of the IMF Managing Director then thus:
“this is a crisis like no other…Pandemics don’t respect borders, neither do the economic shocks they cause. The outlook is dire. We expect global economic activity to decline on a scale we have not seen since the Great Depression.”
Supply chain disruptions and the rising price of oil resulted in major increases in the prices of fuel, freight and food across the globe.
I believe it is worth pointing out that in addition to the external factors, there were two major items of expenditure that are critical to understanding the difficult economic situation we have faced. And these are, the banking sector cleanup and the energy sector excess capacity payments. The three items (including Covid-19 expenditure) cumulatively amounted to GHC50.1 billion and this was financed from borrowing.
The fiscal deficit which was reduced from 8.4% in 2016 to 4.1% by 2019 increased to 10.8% in 2020 (as a result of revenue declines in the midst of increasing expenditiures). In addition, our debt became unsustainable. Along with many emerging market economies, Ghana lost access to international capital market financing. This resulted in a balance of payments crisis as Ghana had to continue to honour its debt service obligations, energy payments and the import bill. We faced a serious global and domestic economic crisis.
There were many who predicted that we were going to end up like the situation in Sri Lanka with fuel shortages, food shortages, inability to pay workers, dumsor, anarchy and chaos. Indeed, Ghanaians were hit by rising food prices, increased exchange rate depreciation, rising fuel prices, rising transport fares. Bond holders also saw a sharp decline in their net worth following the debt restructuring program. We faced very challenging times. But with calm leadership and the support and understanding of the good people of Ghana, we weathered the storm. The government had to seek IMF support to stabilize our economy and restore fiscal and debt sustainability over the next three years.
I must salute and give particular recognition to the Bank of Ghana, which has come under unfair criticism for taking the necessary measures which helped pull the economy back from the brink. The central bank provided needed financing to the Government at that critical moment. What the Bank of Ghana did was very responsible, in putting the interest of the good citizens of Ghana first.
The data available shows that the financing provided to Government by the Bank of Ghana was temporary. The Bank of Ghana has provided zero financing to Government in five out of the last seven years (2017, 2018, 2019, 2021 and 2023). The Bank of Ghana financing to government in the COVID-19 year of 2020 and liquidity crisis year of 2022 was because of a domestic and global crisis (underperforming domestic revenue and no access to international capital markets).
Ladies and Gentlemen,
The good news is that the data shows that the economy is recovering from the crisis we faced. Inflation has declined from 54% in January to 23% in December 2023. Economic growth is rebounding, spending is under control with the fiscal deficit as a percentage of GDP has declined from 10.8% in 2020 to 4.2% in 2023. The debt to GDP ratio, after increasing from 2% in 2019 to 76.6% in 2021 has declined to 66.4% in 2023. And exchange rate depreciation has also slowed down sharply since February 2023, Whereas the exchange rate depreciated by 30% in 2022, between February and December 2023, it only depreciated by 9%.
What is remarkable is that notwithstanding the domestic and global crisis that we have experienced between 2020 and 2022, the economic performance as measured by the key economic indicators (such as GDP growth, Agricultural growth, industry growth, Trade Balance, Exchange rate depreciation, lending rates, Gross international reserves and jobs) is better than that of the 2013-2016 period when there was no global crisis. Let me give some examples:
GDP Growth
On GDP growth, it is worth noting that between 2013- 2016, Ghana’s GDP growth averaged 3.9%. During our first term (2017-2020) GDP growth increased to an average of 5.3%. Following COVID-19 and the global slowdown, Ghana’s GDP growth declined to an average of 4.9% between 2017 and 2022. What is remarkable about this performance is that notwithstanding the global economic crisis from COVI-19 and the Russia-Ukraine war, economic growth under our government is still stronger on average than under the 2013- 2016 era preceding our coming into office.
Agricultural Growth
The stronger GDP growth performance in the 2017-2022 period is underpinned by a strong agricultural GDP growth which increased from an average of 2.9% between 2013-2016 to an average of 6% (double) between 2017 and 2022. We have made a lot of progress in agriculture even though there is more to be done. Rice imports for example have declined by 45% (from 805,000MT to 440,000MT) between 2021 and 2023! The goal is to be a net exporter of rice by 2028. It is clear that some of our policy interventions such as planting for food and jobs have born fruits.
Industry
Industrial GDP growth also followed a similar trend. After averaging 3.3% between 2013 and 2016, industrial growth increased to an average of 7.5% between 2017 and 2020. Industrial Growth however declined after the global crisis with a recorded average growth rate of 5% between 2017 and 2022. Again, what is remarkable about this performance is that notwithstanding the global economic crisis from COVI-19 and the Russia-Ukraine war, industrial growth under our government is still stronger on average than under the 2013- 2016 era. Our programs and policies such as the revival of Anglogold Ashanti (Obuasi mine), revival of Ghana Publishing Company, revival of Ghanapost, revival of State Housing Corporation, revival of State Transport Corporation, IDIF, and the attraction of international automobile companies to Ghana, amongst others have clearly yielded positive results. The Ministry of Trade reports that under IDIF, 169 factories are currently in operation and 152 factories are under construction. 211 out of the total of 321 (66%) are new projects whist 110 companies are existing projects being supported.
Trade Balance
Ghana’s trade balance (the difference between exports and imports) prior to 2017 was in persistent deficit (for best part of 30 years!). Between 2013 and 2016 the trade deficit averaged $2.5 billion. The trade balance improved significantly to a surplus that averaged $1.8 billion between 2017 and 2020. Notwithstanding the global crisis, Ghana has continued to record a trade surplus which has averaged $1.9 billion between 2017 and 2022, a better performance than in the 2013-2016 period when there was no global crisis. This is evidence that we have indeed increased productivity and exports relative to imports.
Gross International Reserves
Ghana’s gross international reserves also increased from an average of $5.8 billion in the 2013-2016 period to an average of $7.9 billion between 2017 and 2022.
Exchange Rate
On the performance of the cedi exchange rate, it is interesting to note that between 2013 and 2016 the cedi depreciated by an average of 17.7%. Between 2017 and 2020 there was a significant decline in the cedi depreciation to an average of 7.5%. The average cedi depreciation further declined to 6.8% between 2017 and 2021. However, following the 30% depreciation of the cedi in 2022, the average cedi depreciation between 2017 and 2022 is 10.75%. So again, notwithstanding the domestic and global economic crisis, the depreciation of the cedi under our government is lower than what we inherited from the 2013-2016 period.
