On the IMF Stabilization Program in Bangladesh
The Empirical Economics Letters, Vol. 4, No. 4, July 2005
Posted: 28 Sep 2005
This paper shows an application of the IMF Financial Programming Model to understand the relevance of the IMF stabilization program in Bangladesh started in 2002. The model has been revitalized in an innovative way to predict an equilibrium position of the economy, which ensures a viable BOP. The model outcome suggests that a viable BOP can be achieved through expenditure cut, restraining domestic credit and increasing net foreign reserve to around 1900 million US$, equivalent to 3-month import payment in the year. The model also suggests that Bangladesh needs to increase net foreign assets at a higher rate than domestic assets to maintain stable inflation rate and viable BOP position.
Keywords: Bangladesh economy, IMF stabilization program, IMF financial programming model
JEL Classification: E10, E17, F00, F47, O11
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