On Wednesday, May 21, the former Finance Minister and Ranking Member of the Finance Committee of Parliament, Dr Mohammed Amin Adam, issued a statement in which he sought to claim credit for the current macroeconomic stability being enjoyed by Ghanaians. Typical of his NPP party and in sync with their 2024 Flagbearer, Dr Muhamudu Bawumia, the Ranking Member said his party built vast gold reserves prior to exiting power in December 2024, which are now helping to stabilise the currency and anchor inflation.
Earlier, Dr Bawumia said the same thing in his typical attempt to claim credit for anything good and dissociate from anything bad. (Recall his abandonment of the Akufo-Addo-led government’s policies on taxes, debt restructuring, surging inflation, corruption, arrogance of power and lack of ministerial reshuffle earlier this year and his continuous claiming of credit for so-called digital projects).
In all of this, two key questions worth asking Dr Bawumia or Dr Amin even before we go into the details is ‘If reserves alone can work this magic, why was the cedi hovering around GHS17 to one US dollar in 2024 when the Bank of Ghana had the strong gold reserves they alluded to at the time Dr Bawumia was the Head of the Economic Management Team and Dr Amin the Finance Minister? Also, what has suddenly happened to the infamous external factors (Russia-Ukraine war, still going on and geopolitical tensions, now worse than before) in the macroeconomic mix?
Their attempt to associate with the good, though typical of them, is not only disingenuous but lacks legs and falls flat in the face of reality and existing facts. The following facts speak to this:
- Macroeconomic stability is not the result of a single factor: The current positive economic indicators we are witnessing are the direct result of prudent macroeconomic management of the fiscals by the Ministry of Finance and the stern monetary stance adopted by the Bank of Ghana. While we acknowledge the contribution of our international reserves, it is important to clarify that the positive outcomes stem from a comprehensive economic strategy rather than any single inherited factor.
The stability of the cedi reflects President Mahama’s government’s commitment to fiscal discipline, effective monetary policy implementation, and strategic economic interventions that engender confidence in the government and the economy. The Bank of Ghana’s monetary policy stance has been instrumental in achieving this stability through carefully calibrated interest rate decisions and liquidity management. The GoldBod program represents an innovative approach to currency management, leveraging Ghana’s natural resources to support our currency. This strategic initiative has been implemented with careful attention to market dynamics and has proven effective in achieving currency stability.
The declining inflation rate, though gradual, demonstrates the effectiveness of our comprehensive anti-inflationary measures. These include not only monetary tightening but also strategic interventions in food supply chains and energy markets to address cost-push factors. It is also the result of growing investor confidence in the leadership of the John Mahama-led government, resulting in investors committing more funding to the economy. This is opposed to high rates of divestments of portfolios that we saw under the Akufo-Addo-Bawumia administration, which increased the pressure on the cedi.
It is instructive to note that interest rates are responding to these improved fundamentals, creating a more conducive environment for business growth and investment. This is not merely coincidental but the result of deliberate policy actions designed to create a stable macroeconomic environment.
- Reduced government domestic borrowing easing crowding-out effects: As Dr Bawumia and Amin would know, strong reserve build-up is nothing unless it is totally linked with prudent fiscal management anchored by transparency and discipline. Since President Maham took office on January 7, 2025, fiscal consolidation efforts have taken center stage, reducing the government’s reliance on domestic borrowing and freeing up credit for the private sector. This has eased the crowding-out effect that previously drove up interest rates as the government and private sector competed for limited domestic financial resources. Indeed, international media had accused the government in 2024 of undertaking shady borrowing where rates were unfairly determined, erasing the uniformity rule required by investors in the domestic debt market. These have become a thing of the past, strengthening confidence and certainty. Also, the government has demonstrated a commitment to structural economic reforms, including in the energy sector, public financial management, and state-owned enterprises. The launch of the Code of Conduct for appointees is a huge confidence booster in the economy, helping to assure investors that backdoor tactics will not be entertained by the President in their conduct with appointees. These consistent policy initiations and implementation of the reforms have built credibility with both domestic and international stakeholders.
- Improved export performance, particularly in the gold and cocoa sectors, Ghana’s traditional export sectors have shown remarkable resilience and growth. Gold exports have benefited from elevated global prices and increased production volumes, while cocoa exports have been bolstered by improved yields and favourable international market conditions. The speedy and prudent rollout of the GoldBod has strengthened confidence in the government’s ability to curb the gold smuggling menace, resulting in more miners passing their produce through the formal channels and increasing Ghana’s export revenues. These have increased foreign exchange inflows, supporting the cedi’s stability.
- Enhanced transparency in foreign exchange market operations. The Bank of Ghana has significantly improved the transparency of its foreign exchange operations through regular publications of intervention data, forward guidance on policy intentions, and clear communication with market participants. The bank’s Monetary Policy Committee has also injected more credibility, transparency and dynamism into its operations through the pre-meeting conference and the publication of voting decisions by members. These are novel but global standards, further anchoring investor confidence in a government that is fiscally prudent and citizen-focused. These have reduced uncertainty and speculation in the forex market, contributing to more orderly trading conditions.
- Improved sovereign risk profile following economic stabilisation: Following the prudent management of the economy, the IMF, World Bank, and rating agencies have acknowledged Ghana’s progress in economic management. These positive external validations have reinforced market confidence in the country’s economic trajectory and policy framework. On May 9, S&P Global Ratings raised its long- and short-term foreign currency sovereign credit ratings on Ghana to ‘CCC+/C’ from ‘SD/SD’ – the junk status that Akufo-Addo and Bawumia, with my brother, Dr Amin Adam, as Finance Minister, left us. At the same time, the international ratings agency affirmed its ‘CCC+’ issue ratings on Ghana’s debt and further affirmed their ‘CCC+/C’ long- and short-term local currency ratings on Ghana, citing growing confidence in the economy and its managers, declining debt metrics and a clear path to debt sustainability anchored on monetary and fiscal prudence. This is unprecedented and has reduced the risk premium demanded on government treasuries, allowing for lower borrowing costs that eventually feed into the broader economy.
- Gradual normalisation of yield curve and easing inflation: The result of all these efforts is the unprecedented stability in the cedi and the normalisation of the yield curve, helping anchor the disinflation on a sustainable path. These are beginning to translate into lower prices for the ordinary Ghanaian, just as President Mahama promised them during his campaign.
6. Conclusion: While I do not expect the NPP to praise the government, it is untenable to have them try to claim credit for the success. We all still remember how they tried very hard to associate the surging inflation, falling cedi and ballooning debts to so-called external factors – the Russia-Ukraine war, COVID-19 and the general geopolitics. Instructively, these same factors are in full swing, if not elevated yet, the economic indices are trending downwards. This is a clear case of leadership being the cause, and all other things are effects. President Mahama is clear in what he wants, and he is delivering that to the Ghanaian people, with whom he has a pledge. He will not be distracted by the distractions from people whose records are haircuts, obnoxious taxes and neck-breaking inflation rates.
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DISCLAIMER: The Views, Comments, Opinions, Contributions and Statements made by Readers and Contributors on this platform do not necessarily represent the views or policy of Multimedia Group Limited.
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