topic: REASONS WHY GHANA HAS FAILED TO ACHIEVE ITS INFLATION TARGETS A PRESENTATION BY GROUP 19

What is inflation? REASONS WHY GHANA HAS FAILED TO ACHIEVE ITS INFLATION TARGETS || GROUP 192 It is the rate of increase in the general price level of goods and services in an economy over a period of time. PATTERN OF INFLATION IN GHANA ( )

What is inflation targeting?  Inflation targeting is an economic policy in which a central bank estimates and makes public a projected, or "target", inflation rate and then attempts to steer actual inflation towards the target through the use of interest rate changes and other monetary tools. REASONS WHY GHANA HAS FAILED TO ACHIEVE ITS INFLATION TARGETS || GROUP 193

Pattern of inflation targeting in Ghana? YearTargeted rate %Actual rate % %8.8% %13.1% %14.50% as at March REASONS WHY GHANA HAS FAILED TO ACHIEVE ITS INFLATION TARGETS || GROUP 194

Why Ghana has failed to achieve its inflation targets  EXCHANGE RATE DEPRECIATION  NATIONAL DEBT SERVICING  EXTERNAL SHOCKS & UNFORSEEN CIRCUMSTANCES  UNREALISTIC TARGETS REASONS WHY GHANA HAS FAILED TO ACHIEVE ITS INFLATION TARGETS || GROUP 195

EXCHANGE RATE DEPRECIATION  High demand for foreign products over locally produced ones. e.g Chocolates, Rice, Shoes, Bags, Furniture, Clothing, etc.  More Dollars, Euros, and Pounds to import REASONS WHY GHANA HAS FAILED TO ACHIEVE ITS INFLATION TARGETS || GROUP 196

NATIONAL DEBT SERVICING  Increase in taxes  rise in prices of goods and services  Printing of more currencies (Cedi)  increase in the money supply  devaluation of the Cedi  increased prices REASONS WHY GHANA HAS FAILED TO ACHIEVE ITS INFLATION TARGETS || GROUP 197 DEBT TO GDP AS AT THE END OF AUGUST 2013 Public debt49.44% External debt22.11% Domestic debt27.33%

EXTERNAL SHOCKS & UNFORSEEN CIRCUMSTANCES  Increase in fuel prices  Higher transport cost  Higher cost of farming inputs i.e. diesel for irrigation pumps, tractors for ploughing farmlands, premix fuel for fishing activities, etc.  High cost of production  Natural disasters i.e. floods, fire, etc.  Destruction of farms, businesses and property  Shortage in supply of food crops, etc.  Increase in prices of goods and service REASONS WHY GHANA HAS FAILED TO ACHIEVE ITS INFLATION TARGETS || GROUP 198

UNREALISTIC TARGETS  Over optimism  Expectation of favourable conditions to occur  Political reasons  Pressure on gov’t from international bodies to reduce inflation REASONS WHY GHANA HAS FAILED TO ACHIEVE ITS INFLATION TARGETS || GROUP 199

THANK YOU FOR YOUR AUDIENCE REASONS WHY GHANA HAS FAILED TO ACHIEVE ITS INFLATION TARGETS || GROUP 1910