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Opinion: A letter to Randy Abbey, Your outburst on debt analysis by Danquah Institute is borne out of ignorance

Dr Randy Abbey

I have read your angry outbursts about Danquah Institute’s debt analysis and was dumbfounded by your ignorance and the emptiness of your sentiments.

Danquah Institute (DI), at its engagement with the media last week, analyzed the debts Ghana has accrued over the years, between 2009 to 2023, and which political party judiciously utilized the loans contracted.

Danquah Institute based their analysis on data sourced from the Bank of Ghana, the Finance Ministry, and even International bodies like the World Bank and the IMF.

In your response to them, you said these; “Danquah Institute, NPP has managed Ghana’s debts better. You guys just can’t help getting people upset and angry every day. “And I read the analysis. I couldn’t just believe the level of intellectual dishonesty in this analysis that has been made. Even in the face of DDEP (Domestic Debt Exchange Programme), you have the nerves to speak like this,”.

For someone who claims to have a PhD to respond to such facts-based analysis with vitriol instead of disagreeing with counter facts or data, one wonders if your PhD is serving its intended purpose.

I expected you to disprove Danquah Institute’s analysis with counterfacts but not vituperative rantings. You were driven by your love for Mahama and his NDC to attack the analysis put forward by the Danquah Institute.

Danquah Institute is a think tank that has well-educated fellows like any other think tank.

Moreover, just like other think tanks, DI has the right to freedom of speech and will choose to express itself on matters of national importance.

The lack of respect and appreciation of data from you, Randy Abbey, a supposed colleague is quite perplexing. You should question with data and not sentiments laced with attacks with the view to gagging the institute.

Retorts like those from you just expose the biased opinion you now profess. You simply betrayed your ignorance for someone who professes to hold a PhD!

For the benefit of your ignorance and those of your colleagues in the NDC, let me educate you on what Danquah Institute posited, with FACTS and DATA!

Let me point out to you that if intellectual dishonesty was a person, then you loudly represent it.

Ghana’s economy, just like many others across the globe, was plunged into an economic depression due, mainly to COVID-19 and the raging war in Ukraine, between 2020 and 2022.

The onset of the COVID-19 pandemic precipitated the shutdown of economies, disrupted revenue streams, and exacerbated public debt burdens via high shipping costs, and increases in crude oil prices, amongst others.

To illustrate the impact of high shipping costs amid the pandemic, let’s examine the Freightos Baltic Index (FBI) Global Container Freight Index. This index serves as a measure of shipping costs on major routes worldwide.

Comparing data from February 2020 to September 2021, the index surged astronomically, increasing by a staggering eightfold. In February 2020, shipping costs per container were approximately $1300. This soared to a peak of around $11,000 by September 2021.

Increase in shipping cost had widespread implications on consumer prices, primarily by impacting import prices directly. This is because the local prices of imported goods tend to rise proportionately with the increasing shipping costs. Inflation skyrocketed as a result of these factors.

Are you saying that the NPP or President Akufo-Addo had control over these increased prices in the shipping of goods into the country?

What the above also means is that it brought undue pressure on the country’s currency as demand for the US Dollar increased. In this respect, since the reserves we had as a country were not able to meet the demand, it automatically made the Dollar quite expensive to acquire, driving it upwards as the local currency tumbled. This is basic and a whole PhD holder fails to grasp? Strange!

You seem to have issues with why the Danquah Institute used the US Dollar in its analysis instead of the Ghana Cedi, there is a reason.

The US dollar is used in such analysis due to its status as the world’s primary reserve currency, and its widespread usage in international trade.

Furthermore, the US dollar is recognized for its stability, maintaining its unit of account and purchasing power consistently over extended periods.

Another important take away from Danquah Institute’s analysis is that, foreign currency debt carries an exchange rate risk. This implies that the debt stock in local currency terms, could even rise with no new borrowings.

For example, the public debt of $29.2 billion in 2016 would have been the equivalent of about GHc380 billion today without any borrowing. It is, therefore, disingenuous to suggest even remotely that this government has borrowed more than any other administration and also, has taken the debt from around GHS140 Billion to about GHC610 Billion.

Let me reiterate this point. Akufo-Addo has borrowed almost the same amount of monies Mahama borrowed and he has done more with his borrowing than his predecessor.

The reasons for the rise in the debt levels have been explained vividly. Update yourself on these facts and stop your emotional outbursts and attacks on Danquah Institute. DI spoke with facts. Bring your facts and let us compare them. The truth is that, there are no other facts to these issues apart from what DI employed in its analysis.

Before I end my piece, let me give you information on the strength of the Cedi as against the US Dollar and the percentage increases between the two main political parties. This data is from the Bank of Ghana.

Interbank Exchange: BoG
2008 – 1.2
2016 – 4.2
2017 – 4.4
2018 – 4.8
2019 – 5.5
2020 – 5.7
2021 – 6
2022 – 8.5
2023 – 11.8
2024 – 12.74 (March)

Your NDC took the Ghanaian Cedi from 1.2 to the dollar. As at the time Mahama was leaving office, it was 4.2. In nominal terms, this translates into about 250% increase.

Akufo-Addo took it from 4.2 to 12.7, which translates to about 202%. This simply means that in the management of the local currency as against the US Dollar, the NPP administration has done far better than the NDC despite the unprecedented challenges the economy has faced as a result of extraneous factors (COVID-19 and Russia/Ukraine conflict).

The NDC never faced a quarter of the challenges the Akufo-Addo/Bawumia administration has encountered, yet the currency has been managed better by this administration than Mahama did.

If honesty was a trait you hold dear, you’d come to appreciate and admit to the fact that the data supplied by the Danquah Institute cannot be controverted. Your people failed Ghana even when the global economic conditions were favourable.

The writer is P.K. Sarpong, Whispers from the Corridors of the Thinking Place.

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