By Justice Lee
It turned out that in the midst of vehement claims by the leadership of the New Patriotic Party (NPP) on the economic record of the National Democratic Congress (NDC) government, the economic indicators continue to disprove the NPP stance.
As the Ghana Statistical Service announced the decline of headline inflation to 9.2 percent in October 2012 compared with the 9.4 percent recorded in the previous month, Bank of Ghana also announced its decision to maintain the Policy Rate, the benchmark rate that guides commercial banks in setting their lending rates at 15 percent.
The dipping inflation was demonstrated as no fluke as food inflation was said to have dropped from 4.4 percent inflation in September to 4.2 in October.
“While food inflation recorded 4.1 percent in October, compared with the 4.4 percent recorded in the previous month, non-food inflation was 12.2 percent, compared with the 12.4 percent recorded for September,” Acting Government Statistician announced in Accra recently to explain why inflation dropped.
Ghana's inflation trajectory is intrinsically tied mainly to the patterns of food prices in the market as inflation tends to rise in the lean season when food prices are up, and declines during the harvest with food prices coming down.
In the October review, inflation in local food products were significantly lower than that of imported food products, with imported rice and wheat having higher inflation rates than their local counterparts.
“This is how it should be, because country which has majority of its consumption produced locally and exports the surplus is more likely to manage inflation and other vagaries of the global economy better than one that depends largely on imported items,” commented Edward Kareweh Deputy General Secretary of the General Agriculture Workers Union (GAWU).
He added that the phenomenon had great prospects for the country since about 80 percent of our agriculture products come from small-holder farmers who do not depend largely on imported inputs,”
Kareweh believes Ghana must emulate countries like China and Germany which have export-led economies and so are insulated from the global economic recession.
Anlysts believed that the arguments by the NPP’s presidential running –mate, Mahmood Bawumia seeks to suggest that Ghana’s economy is being badly managed under the NDC government.
His supporters, mainly those from the NPP insist that Dr. Bawumia is a western-trained economist who has been a deputy governor of the Bank o Ghana, so attention must be paid to him when he speaks nn the economy of Ghana.
This, assertion, has not been disputed by anybody, except that some experts express disgust at the way the economist-turned politician was handling crucial national issues.
The Vice Presidential candidate for instance believes that the over two-year r single-digit inflation regime under the NDC government was just mere numbers with no economic substance as prices were still rising by the day on the domestic market.
In his speech titled “The true State of the Economy” delivered at the Ferdinand Ayin Memorial Lectures on May 2, Bawumia questioned the reason in spite of single-digit inflation, prices of certain commodities were still on the rise.
Prices of basic commodities like sachet water, cement, an ‘olonka’ of gari, maize, as well as petroleum products and tariffs Bawumia observed had all been increased by triple digit percentages and wondered how that could contribute to real single digit inflation.
“Single digit inflation has not reflected in a reduction in the cost of living and in this regard has been rendered practically meaningless. Ghanaians are, in fact, experiencing triple digit “inflation” in their pain and suffering,” he stressed.
However, Kofi Agyeman-Manu, Acting Deputy Government Statistician insists that the method of using actual prices of a few goods on the market to cast doubt on statistical figures was disingenuous as it is not done so in statistics.
“It is a whole basket of 242 goods and services whose prices are multiplied and an average overtime is derived for them, using a weighted average,” the statistician explained.
Technically speaking, that is the best explanation that can be given to Bawumia’s and his cohorts who choose to engage in deliberate intellectual dishonesty to feather their political nests, is the belief of most other economists and statisticians spoken to.
The GSS official only fell short of telling Ghanaians that inflation is not measured by Mrs. Bawumia’s market basket.
In the mean time, this crusade by Bawumia, which many see as injurious to the international image of no mean institution than the country’s statistical bureau and the central bank where he cut his teeth as an economist, is described by political and economic analysts as a deliberate ploy to excuse the NPP for its failed attempt to anchor inflation during their eight-year at the helm of affairs.
Most analysts recall that it was the NPP that introduced the issue of using inflation figures as a benchmark to measure a government’s economic performance, when they launched attack upon attack against the NDC government under Jerry Rawlings for bringing inflation mismanaging the economy and recording an end-point inflation of 40.5 percent in that crucial election year.
Moreover, the West Africa Monetary Zone (WAMZ) has set convergent criteria for all member countries to achieve in order to be able to introduce the proposed sub-regional Eco currency.
These criteria included a sustained single-digit inflation, which the NPP government could not achieve, but has been achieved under the current NDC government, following the sound fiscal and monetary policy combination which its antecedent PNDC/NDC regimes adopted previously to bring inflation down from 160 percent to the 40.5 percent NPP met in 2001.
Meanwhile, Dr. Bawumia’s assertion at the IEA Vice Presidential debate in Takoradi that the Ghana Statistical Service was going to rebase the inflation basket to about 272 products, as a means to correct the mistakes he (Bawumia ) had pointed out is seen by many as a vain attempt in self aggrandizement.
Agyeman-Manu rejected Bawumia’s claim vehemently explaining that the inflation basket has always been based on the Ghana Living Standard Surveys (GLSS) which is conducted with personnel sent out to live in representative households across the country over a specified period.
The current inflation basket which was also the one used during the NPP era is based on the forth GLSS conducted in 1998/99.
The same basket was what NPP used to bring inflation down to 20.6 percent for which they tickled themselves and laughed at the top of their voice for achieving an unprecedented economic feat.
Many wonder why Bawumia’s sudden amnesia since at the time this basket was being used, Bawumia was the Deputy Governor of the Bank of Ghana, and he did not find anything wrong with the basket, but as soon as he jumped into opposition, the basket has become a torn one.
The previous inflation baskets in recent memory were based on the third GLSS conducted in 1992/93, while the next inflation basket going to be introduced in 2013 is based on the fifth GLSS conducted in 2005/06.
This is consistent with the practice of the GSS, as a former Government Statistician Dr, Joe Abbey confirms to this reporter.
According to him, in the past 10 years the inflation basket has been based on the GLSS against the previous practice of basing it on the Ghana Household Consumer Surveys (GHCS)
He agreed that the practice has been to change the inflation basket in every 10 years, so the GSS was doing the right thing by changing the current basket after the 10th year of use.
Dr. Abbey however appealed that due to technological advancement, the basket be changed every five years from now onwards.
Experienced economists have started pointing out, albeit privately, the clarity in the lie Bawumia told during the IEA debate when he claimed that GSS “is now trying to correct the mistake after I pointed it out to them.”
The GSS with all of its international pedigree and reputation, many assert will not rebase the inflation basket based on Dr. Bawumia’s wife’s market basket. That would have meant going to the market each month, and picking prices of a few items whose prices have either gone up or down and announce to Ghanaians that inflation has either dipped or risen.
Indeed, political and economic analysts believe Dr. Bawumia knows the lie in what he had been propagating, but in his quest to be Vice President at all cost chose to indulge in deliberate distortion of facts and lie his way to the castle.
No matter what he says, the NDC exudes much more confidence in the fact that the single digit inflation which had eluded their opponents, the NPP for eight whole years has been secured by the NDC government for 29 months and still counting.
As a Senior Lecturer at the Institute of Statistical Social and Economic Research (ISSER), University of Ghana, Legon, Prof. Kwabena Anamang, was quoted recently as affirming, it is the consistent investment by government in crop production that is lowering the price of food, thereby lowering food inflation and brining inflation down. Enditem
Copyright © 1994 - 2024 GhanaWeb. All rights reserved.
