Wonderful things are happening in Ghana under President Mahama. For those who are of spiritual perception, they interpret it as a divine manifestation of God's power. Two things that have never experienced depreciation in their value in the history of Ghana have over the last 12 months shown a new fascia of unpredictability. The dollar and petrol are two things that in the history of Ghana have appreciated in value and never reversed.
DOLLAR
The dollar, since the devaluation of Prime Minister Kofi Abrefa Busia's time in office, has been on the ascendancy, gaining in value consistently over an ever weakening cedi. The strident forward march of the dollar over the cedi has been incessant with no opportunity for remission.
Ghanaians have therefore gotten used to betting on the dollar against the cedi at all times in our history. But, now, all that is beginning to change.
Twice in the last 12 months, Ghanaians have had their fingers badly burnt when a badly bruised cedi revived and gave the almighty dollar a pummeling. Within the past 12 months, the cedi has shown wonderful resilience in its value against the dollar. A few days ago, for the second time in a period of 12 months, many Ghanaians lost tons of money by betting on a continuous appreciation of the dollar over the cedi.
Many factors account for the determination of the exchange rate. The basic one is an issue of demand and supply. As in the theory of economics, if there are too many cedis chasing the dollar, the cedi will depreciate in value and the dollar will gain in value. There is also the issue of cedi liquidity. In times when there have been issues of fiscal deficit due to high Government expenditure, excess cedi liquidity has pushed up the dollar value.
The also is the issue of speculation. Opposition economists led by the running mate of the NPP, Dr. Mamudu Bawumia, supported by some members of the clergy and Civil Society Organizations have developed an industry in talking down the economy and the currency. The doom and gloom they constantly spread about the Mahama administration's management of the economy has made some Ghanaians believe that the economy is on a downward slide and the cedi will continue to lose value until the NPP comes to power.
Many Ghanaians on the back of this negative propaganda have continued to hedge on the dollar and constantly changed their cedi savings into dollars in order to beat the expected depreciation of the cedi. However, the cedi in recent times has proved the bookmakers wrong. People who bet against the cedi have had their fingers badly burnt. In the second of such revivals the cedi has rebounded strongly after losing a hefty percentage of its value from the first quarter of the year.
Many Ghanaians are still reeling from the shock of the behavior of the Ghanaian cedi. But what is obvious is that prudent management of the economy is beginning to display a turn around. Only recently, the review mission of the IMF gave the thumbs up to the Mahama Government on its management of the economy. On the current trajectory, the economy is on track to over exceed its deficit of 7.5% by 3 basis points hitting about 7.2% of GDP.
This positive review has permeated the entire international community. Multi Donor Budget Support which was withheld by the European Union and all the bilateral and multilateral institutions have begun to pour in and are partly responsible for the stabilization of the cedi.
The recent successful international cocoa syndication will also see an inflow of $1.8 billion forex inflow. This is coupled with The IMF approval for the Ministry of Finance to raise another Euro bond of 1.5 billion this year. A significant portion of the new bond is to go to refinancing domestic debt which has been strangulating the budget over the last few years.
PETROL
Now, there is also the issue of petroleum products, the fuels that drive the economy. The Mahama administration has been one Government in history that has undertaken the most austere measures. Removal of subsidies on petroleum and electricity have been implemented to try to rein in an ailing economy. It is a mark of courage on the part of President Mahama to have implemented the petroleum deregulation liberalization of petroleum prices and energy tariffs which have been the desire of many governments from the independence period but which has eluded them. Today Ghanaians are benefiting from the positive outturn on the international oil market and the stabilization of the cedi; no more under recoveries and subsidies on petroleum products are serving as a dead weight on the economy.
Competition among BDCs and OMCs is inuring to the benefit of Ghanaians. Petrol prices have been on the downward slide. Many drivers check the prices on the signboards of filling stations before driving in. Currently UBI and Goil have the lowest prices and it's not unusual to see queues outside those stations. The downside of this bonanza has been the refusal of the Transport Unions to reduce the cost of transport fares. It is a reflection of our greed that transporters are quick to increase fares when petrol prices go up and yet are unwilling to reduce when the prices come down.
GOOD ECONOMIC TAIL WINDS
It is obvious that Ghana is experiencing good economic tailwinds that should push the economy faster towards a destination of prosperity. Certainly President Mahama has dribbled his detractors and made nonsense of all the "Won Gbo" demonstrations and other opposition agitations. Known as the proverbial "dead goat", it is clear that this young man from Bole fears no knife. He has often said that he makes decisions in the national interest no matter the political costs.
It is worth noting that an economist with the Economic Review think tank has commended our President for taking some of the boldest decisions in Ghana's economic history. He said if the President can keep his nerve and sustain his economic management, it could mark the beginning of a take-off for the Ghanaian economy. Ghana is no doubt a country on the move thanks to the bold leadership being provided by President Mahama.
