“If the fundamentals are weak, the exchange rate will expose you” is one of the many profound quotes ascribed to Vice President Mahamudu Bawumia.
This statement which was made in 2014 was meant to highlight the cause of the cedi depreciation under the Mahama administration.
In 2019, now Vice President, Dr. Bawumia was compelled to answer questions on the cedi’s depreciation under his reign as the head of the Economic Management Team.
Bawumia reiterated the economic theory albeit with nuances and what could be termed as ‘excuses”.
“You will recall that I stated in 2014 that if the fundamentals are weak the exchange rate will expose you. That was true then and it is true now. It is 100% correct. So if the fundamentals are weak, the exchange rate will expose you. But is warped logic to jump from that to a conclusion that if there is depreciation in your currency then the fundamentals must be weak. It is a very warped logic. If the fundamentals are weak, the exchange rate will expose you but if the exchange rate moves, you cannot jump to that conclusion that the fundamentals are weak. That defies logic. There could be other external factors causing the exchange rate depreciation.”
But what was then celebrated as an example of Bawumia’s deep appreciation of economic issues is now being used to mock him.
Captain Smart, the suspended host of Angel FM’s morning show, in a Facebook live quizzed the Vice President on why the economy has been on a downward spiral under his watch.
Captain Smart said that the rise of the dollar against the cedi has exposed Bawumia’s theory.
Bawumia in one of his public addresses bragged that the “dollar has been arrested and the key has been given to the IGP”. Captain Smart is seeking to know the whereabouts of the key.
“Like you so much and you are a fine gentleman but what happened.” Mimicking Bawumia, he said, “When the fundamentals are weak, the cedi will expose you. Now, are the fundamentals weak or strong? The cedi has exposed you big time. The cedi has exposed you and landed you. You claimed to have arrested the cedi and given the key to the IGP. The IGP apparently slept and allowed the dollar to escape.
“My question is if the second lady was a businesswoman who went to Dubai or China, would you be okay with the dollar rate if you were not in power. Let’s assume your mom was beautiful Rebecca and she was a trader and the dollar had risen to this level, what would you have said?