The Institute of Economic Affairs (IEA) has taken with much amazement, government's single digit inflation target for this year.It noted that annual inflation had eased quite drastically since 2002, but a single digit target for 2008 is purely unrealistic.Speaking to B&FT on the economic dimensions to the December 2008 Polls, Dr. Kwabena Anaman, Director of Research of the Institute pointed out that the year poses a major challenge to the level of government expenditure vis-a-vis projected revenue resources.He said government is rather over optimistic in its seven percent annual inflationary target considering that election years have been identified with high government spending without the corresponding expansion in goods and services.“In 1999 annual inflation was 12.4 percent. In the following year which happened to be an election year, the rate almost doubled to 25.2 percent. After four years in 2004, against a single digit target, the outturn was 12.6 percent," Dr. Anaman cited.He observed that aside the influence of the spending associated with political campaigns and the high transitory expenditure due from the CAN 2008 tournament, the year in particular faces the challenges posed by the volatile world crude oil prices amidst the impact of the increased utility tariffs, vagaries of the weather, and likely labour agitations for higher wages."There is nothing wrong with government setting realistic economic targets to guide the business community and not to give cause for complaints over any deviations at the outturn. Factoring the above elements, the lEA has rather pegged the expected outturn in the range of 10 and 15 percent," Dr. Anaman said.He was however optimistic that the gross domestic product (GDP) growth target of seven percent can be attained.The optimism is informed by the high projected, government expenditure, a booming real economy to be led by cocoa in the agricultural sector and construction in the industrial sector and boosters such as the UNCTAD Conference as well as the CAN 2008 tournament.Government's total expenditure projection for the year stands at GH¢7,107.2 million to 30.8 percent higher than in 2007. Provisional figures show that overall fiscal deficit for 2007 stood at 5.7 percent of GDP while four percent is projected for 2008.Last year, the performance of the economy was undermined by the energy crisis and rising fuel prices. Indications are that the energy crisis shaved off about 0.5 to 1.0 percentage points in real GDP growth.Source: Business & Financial Times