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Assessing Fiscal Risks in Bangladesh

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  • Leandro Medina

Abstract

This paper identifies, quantifies, and assesses fiscal risks in Bangladesh. By performing sensitivity analysis and using stochastic simulations, it measures risks arising from shocks to GDP growth, the exchange rate, commodity prices, and interest rates. It also analyzes specific fiscal and institutional risks, such as those related to the pension system, the issuance of guarantees, the state-owned commercial banks, and the external borrowing and debt management strategy. The paper finds that fiscal aggregates are particularly sensitive to shocks to commodity prices and exchange rates. Other factors that could affect fiscal aggregates are the unfunded pension system and the limited institutional capacity.

Suggested Citation

  • Leandro Medina, 2015. "Assessing Fiscal Risks in Bangladesh," IMF Working Papers 15/110, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:15/110
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    References listed on IDEAS

    as
    1. Marco Committeri & Carola Pessino, 2013. "Understanding Countries’ Tax Effort," IMF Working Papers 13/244, International Monetary Fund.
    2. Oya Celasun & Xavier Debrun & Jonathan D. Ostry, 2006. "Primary Surplus Behavior and Risks to Fiscal Sustainability in Emerging Market Countries: A "Fan-Chart" Approach," IMF Staff Papers, Palgrave Macmillan, vol. 53(3), pages 1-3.
    3. GalĂ­, Jordi & Perotti, Roberto, 2003. "Fiscal Policy and Monetary Integration in Europe," CEPR Discussion Papers 3933, C.E.P.R. Discussion Papers.
    4. Lusine Lusinyan & Aliona Cebotari & Ricardo Velloso & Jeffrey M. Davis & Amine Mati & Murray Petrie & Paolo Mauro, 2009. "Fiscal Risks; Sources, Disclosure, and Management," IMF Departmental Papers / Policy Papers 09/01, International Monetary Fund.
    5. Willmore, Larry, 2007. "Universal Pensions for Developing Countries," World Development, Elsevier, vol. 35(1), pages 24-51, January.
    6. Timothy Irwin, 2003. "Public Money for Private Infrastructure : Deciding When to Offer Guarantees, Output-based Subsidies, and Other Fiscal Support," World Bank Publications, The World Bank, number 15117, November.
    7. Hana Polackova Brixi & Allen Schick, 2002. "Government at Risk : Contingent Liabilities and Fiscal Risk," World Bank Publications, The World Bank, number 15233, November.
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    More about this item

    Keywords

    External shocks; External borrowing; Bangladesh; Contingent liabilities; Commodity prices; Public debt; Pensions; Sensitivity analysis; Sovereign debt; Loan guarantees; Fiscal risk; exchange rate; fiscal risks; guarantees; debt; exchange; liabilities; Forecasts of Budgets; Deficits; and Debt; guarantees.;

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • H68 - Public Economics - - National Budget, Deficit, and Debt - - - Forecasts of Budgets, Deficits, and Debt

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