Randy Abbey goofed in criticizing Danquah Institute’s debt analysis

An outspoken member of the governing New Patriotic Party (NPP), Patrick Kwarteng Sarpong, popularly called P.K. Sarpong, has described the outbursts of the Host of Good Morning Ghana on Metro TV, Dr. Randy Abbey, over Danquah Institute’s debt analysis as borne out of ignorance and emptiness of sentiments.

This follows Randy Abbey’s response to the policy think tank’s analysis of Ghana’s debt accrued over the years, between 2009 to 2023. In his newspaper review show, Randy Abbey said, “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.”

Response

But in a letter written to Randy Abbey, P.K. Sarpong said the Danquah Institute, at its engagement with the media last week, analyzed the debts Ghana had accrued over the years, between 2009 to 2023, and which political party judiciously utilized the loans contracted.

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

DI’s credibility

He stressed that the Danquah Institute is a think tank that has well-educated fellows like any other think tank. Moreover, he stated that just like other think tanks, DI had the right to freedom of speech and will choose to express itself on matters of national importance.

“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,” portions of the letter read.

P.K. Sarpong told Abbey in the letter that “that 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 Ph.D.”

He said for the benefit of Abbey’s ignorance and those of his colleagues in the NDC, he defended that what Danquah Institute posited, was facts and data. He pointed out to Randy Abbey that if intellectual dishonesty was a person, then Randy Abbey loudly represents 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, an increase in crude oil prices, amongst others,” he stated in the letter.

To illustrate the impact of high shipping cost amid the pandemic, he examined the Freightos Baltic Index (FBI) Global Container Freight Index. This index, he explained, serves as a measure of shipping cost on major routes worldwide.

He noted that 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,” he stated.

He, therefore, asked Randy Abbey if he is saying that the NPP or President Akufo-Addo had control over these increased prices in 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 Ph.D. holder fails to grasp? Strange!,” he indicated.

Usage of US dollar in analysis

He believes that Randy Abbey seems to have issues with why the Danquah Institute used the US Dollar in its analysis instead of the Ghana Cedi, there is a reason. He said the US dollar was used in such analysis due to its status as the world’s primary reserve currency, and its widespread usage in international trade.

He added that the US dollar was recognized for its stability, maintaining its unit of account and purchasing power consistently over extended periods. “Another important takeaway 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,” he mentioned.

He stated that, for example, the public debt of $29.2 billion in 2016 would have been the equivalent of about GHc380 billion today without any borrowing. As a result, he said it is disingenuous to suggest even remotely that this government had borrowed more than any other administration and also had taken the debt from around GHS140 Billion to about GHC610 Billion.

He reiterated that Akufo-Addo had borrowed almost the same amount of monies Mahama borrowed and he has done more with his borrowing than his predecessor.

Reason for rise

He said “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”.

He also outlined 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),” he pointed out

“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, translating 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),” he added in the letter.

K.P Sarpong further emphasided that the NDC never faced a quarter of the challenges the Akufo-Addo/Bawumia administration had encountered, yet the currency had 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 Danquah Institute cannot be controverted. Your people failed Ghana even when the global economic conditions were favourable,” he stressed.

Comments driven by emotions

Relatedly, the Executive Director of the Danquah Institute (DI), Dr. Antoinette Tsiboe-Darko, stated that Randy Abbey’s critique was emotionally driven and lacked a clear understanding of the facts and figures presented by the Institute.

She emphasised that the DI’s analysis was solely based on an examination of the country’s debt situation. Dr. Tsiboe-Darko, therefore, urged Abbey to conduct thorough research before making judgments.

She reiterated that the Danquah Institute remains steadfast in its conviction that a thorough examination and discussion of facts, supported by rigorous research and data were essential in providing the citizens of Ghana with enhanced clarity, information, and context regarding pertinent national issues.

She added that through DI’s commitment to evidence-based discourse, it strives to foster a more informed and enlightened public discourse that promotes transparency, accountability, and progress in Ghana’s socio-political landscape.

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