the two consecutive years. however, assessment of current economic conditions in the first half of 2013 indicates some growth moderation amid rising inflation. 5. economic conditions broadly remained challenging during the first half of 2013. the developments reflected a slower pace of real sector economic activity during q1 evidenced by a contraction in the real ciea and weak business and consumer sentiments in the quarter. however, economic activity and consumer confidence rebounded in q2 while business confidence continued to be weak. 6. headline inflation has consistently trended upwards in the year on account of significant increases in domestic petroleum products and seasonal food cycle which affects prices. inflation has risen to 11. 8 pct in july 2013 ( new cpi basket ), from 8. 8 pct in december 2012. in addition, inflation expectations by both businesses and consumers remained heightened. 7. on the external front, prices of ghana ’ s key commodities softened which resulted in lower export earnings. this, coupled with moderated import growth, resulted in some bis central bankers ’ speeches improvement in the trade deficit to us $ 1. 2 billion in the first half, compared with a deficit of us $ 1. 3 billion same period last year. 8. while modest gains have been made in broadly stabilizing the foreign exchange market, major vulnerabilities emanating from continuing imbalance in the supply and demand conditions on the market are currently exerting some pressure on the local currency. on a year to date basis, the ghana cedi has cumulatively depreciated by 3. 4 pct against the us dollar, compared to 17. 2 pct depreciation a year earlier. going forward, the bank of ghana stands ready to implement both short term and medium to long term measures to ensure stability in the foreign exchange market. 9. mr. chairman, as we all know, developments in the banking sector showed that banks remained profitable, liquid and well - capitalised, thanks largely to the high interest rate environment that has persisted for some time now. in contrast to low investment yields of 2 pct in global financial markets, banks in ghana on average had roe of over 20 percent and roas of over 5 percent. the capital adequacy ratio ( car ) was about 18 pct, above the prudential limit of 10 pct. asset penetration, measured as the ratio of total assets to gdp, was 40. 5 pct indicating continued deepening of the financial sector in the economy. 10. these notwithstanding

ensuring that our financial system is safe and secure. in this regard, it will be important to re - commit to the tenets of an unwritten compact that are essential to maintain the confidence and trust of the public. • the first is prudent lending system in which banks are innovative, take initiative without excessive risks out of proportion to their risk - adjusted capital, and bring full transparency and disclosure to their lending practices including pricing, fees in the delivery of services to the public. • the second is prudent borrowing and respect for loan contracts with serious commitment to honouring debt obligations whether corporate or household borrower. • the third is effective prudential supervision of the financial system within the framework of predictable transparent regulations and laws that are enforced evenhandedly. • finally, maintaining an environment of macroeconomic stability as well as wellanchored inflation expectations for business planning and investment is indispensable for a sound and dynamic financial services industry. let me say in closing that the uncertainty about the depth and duration of the global recession and restoration of global financial stability underscores the power of confidence and its mutually re - enforcing impact on expectations in shaping economic behaviour. managing the repercussions of the global crisis to stay on a sustained growth path is the task of macroeconomic and financial policies, and enhancing confidence in our financial system. i am sure that the captains of industry and all stakeholders will work hard to keep our system in a position to contribute to accelerated growth and steady improvement in living standards. thank you all for your attention.