questions_from_the_Minority_for_Dr_Bawumia

The Minority in Parliament on March 20, 2019, called on the Vice President, Dr Mahamudu Bawumia to respond to their questions on the Ghanaian economy.

It said the sharp cedi depreciation has worsened the country’s economy, which has resulted in the collapse of companies, loss of jobs and decreasing investor confidence.

Speaking at a media encounter on the state of Ghana’s economy in Accra on Wednesday, the Minority Spokesperson on Finance and Ranking Member on the Finance Committee of Parliament, Mr Cassiel Ato Forson, said “things are falling apart and the expected Gross Domestic Product (GDP) growth rate of 8.8 per cent cannot be achieved.”

Meanwhile, Vice-President Dr Mahamudu Bawumia, who heads the government’s Economic Management Team, will on 3 April 2019, address Ghanaians on the state of the economy at a town hall meeting on the theme: “Our progress, our status, our future”.

It is however uncertain whether Dr Bawumia will respond to the said questions from the Minority.

Below are the Minority’s five questions:

Question 1: Why would an independent central bank with focus on price stability decide to reduce the monetary policy rate against its own research findings that US policy normalization is strengthening the US dollar and causing investors to move funds away from emerging economies and that upward adjustments in domestic prices of petroleum products are likely to affect transport and utility prices?

Question 2: Why would an independent central bank, with a focus on price stability, decide to lower the policy rate in the face of dwindling net international reserves and a rising interest rate abroad?

Question 3: Why would an independent central bank with focus on price stability decide to reduce the monetary policy rate in favour of growth, which has been projected to be higher than the previous year’s, while the local currency is under pressure?

Question 4: Why would an independent central bank with a focus on price stability decide to lower the policy rate in the face of excess liquidity in the banking sector emanating from banks increasing their minimum capital by over 100 percent, while the local currency is fast depreciating?

Question 5: Clearly, an economy cannot be externally unstable and internally stable. How can a rapid exchange rate depreciation be accompanied with a single digit inflation rate as captured by the posted macroeconomic indicators?