Reset vs Upgrade The Economic Fundamentals Debate

The literal interpretation of reset and upgrade makes the difference clear. Upgrade in its literal interpretation means, improving on the formidable fundamentals.

Contrarily, reset is to alter the system so that the dysfunctional and the defective fundamentals will be corrected.

So what are the fundamentals? This takes us back to the famous statement made by Dr Bawumia; "if the fundamentals are weak, the exchange rate will expose you". So what fundamentals did he refer to? Does the current exchange rate depicts weak fundamentals? Has it exposed Dr Bawumia?

Obviously, Dr Bawumia referred to the economic fundamentals. So what were the economic fundamentals when he made that statement?

The Total Debt was Ghc 120 billion, the exchange rate was $1to Ghc 4, unemployment rate was 8.5%, agriculture was growing at 2.7%, Debt to GDP ratio was 55.6%, inflation was 15%, sinking fund had accrual of $500 million, Stabilization fund had $300 million and infrastructure fund had $250 million.

Annual Cocoa production was 969, 000 metrics tonnes and in 2016 IMF projected the economy to grow at 8% in 2017 due to the fundamentals mentioned above.

The economic fundamentals under Dr Bawumia's government amid volatile forex have really exposed him.

Ghana's Total Debt now stands at Ghc 742 billion as at July 2024 and it keeps rising, the Debt to GDP ratio is above 80%, the exchange rate is $1 to Ghc16, unemployment rate is now 15%, agriculture is growing at 0.7% even with planting for foods and jobs (Pfj), inflation is now over 20%, sinking fund had been abandoned and annual Cocoa production now stands at 580,000 metric tonnes.

Additionally, they have introduced nuisance taxes; e-levy, COVID levy, levy on betting winnings and emmission levy, amidst high cost of living and widening inequality gap. The economy is expected to grow at 5.4% in 2025 compared to 8% projection in 2017 based on the fundamentals in 2016.

These are some of the economic fundamentals which have exposed Dr Bawumia.

Due to excessive borrowing, reckless spending and inadequate revenue generation, the Dr Bawumia's government exposed us to fiscal vulnerabilities with fiscal deficit at 12% of the GDP in 2022.

This led to the suspension of funding for future projects by our creditors and halted many projects across the country for over a year.

When the government decided to go to IMF, they were asked to undertake measures to deal with these fiscal vulnerabilities. They then resorted to the Domestic Debt Exchange Program amid 'haircuts' to control the Domestic Debt, 'demonizing' investment for future investors.

The 'shady' Gold for Oil (G4O) was introduced to manage the escalating depreciation of the cedi but failed its purpose. Currently, these are the fundamentals Dr Bawumia is calling for an upgrade.

These are not formidable fundamentals but dysfunctional and defective economic fundamentals.

These fundamentals need a reset not an upgrade. alter is the only option for the Ghana we want to build together.Samuel Yaw Adusei/Former Deputy Ashanti Regional Minister