• Domestic finance
• Agricultural credit and insurance
• Aid flows
• Budgets
• Education financing
• Governance
• Pensions
• Taxation

Domestic finance

As only the second central bank in Sub-Saharan Africa, the Bank of Ghana has adopted an inflation-targeting regime.  This paper argues that this step is wrong and comes at a bad time as:

• rising prices in Sub-Saharan Africa are supply-side problems, mostly externally imposed
• the global slowdown triggered by the financial crisis in the US will reduce sub-Saharan growth considerably

Against this background, inflation-targeting will:

• excessively slow down growth and therefore hurt the poor already suffering from high food prices
• increase Ghana's already high vulnerability from terms-of-trade shock

Rising food and oil prices are likely to slow growth in Ghana. There is also a risk that US recession could dampen the growth of Ghana's exports. The combination of these two can be dangerous and the paper recommends exchange rate management as the best way of coping with these challenges. Also, fiscal policies should be freed to protect domestic investment and consumption from worsening external shocks that will have an adverse affect on trade balances, growth prospects and mass poverty.

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