Download MDTA meeting on MTMF

MDTA meeting on MTMF
March 31, 2003
The new MTMF
• Policy outcomes are somewhat less
ambitious
• Policy actions are somewhat more
ambitious
• Has been agreed with IMF staff
Growth is lower, inflation is higher
Growth and Inflation
8
7
Percent
6
5
4
3
2
1
0
FY01
FY02
real growth new
FY03
FY04
real growth old
FY05
FY06
CPI inflation new
FY07
FY08
CPI inflation old
A sharper increase in revenues
Government revenues and taxes
14
Percent of GDP
12
10
8
6
4
2
0
1
2
3
revenue new
4
5
revenue old
6
tax new
7
8
tax old
A smaller ADP
Total government expenditures and ADP
20
Percent of GDP
18
16
14
12
10
8
6
4
2
0
1
2
expenditure new
3
4
expenditure old
5
6
ADP new
7
8
ADP old
Less need for financing
Budget deficit
6
Percent of GDP
5
4
3
2
1
0
1
2
3
4
budget deficit new
5
6
budget deficit old
7
8
More credit for private sector in outer years
Credit to private sector
18
Increase in percent
16
14
12
10
8
6
4
2
0
1
2
3
4
credit to priv s new
5
6
7
credit to priv s old
8
After recovering, imports and exports
grow at lower rates
Imports and Exports
15
Increase in percent
10
5
0
-5
-10
-15
1
2
export new
3
export old
4
5
import new
6
7
import old
8
Reserves pick up more quickly,
but grow at slower pace
Reserves in months of imports
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
1
2
3
4
reserves/imports new
5
6
7
reserves/imports old
8
Comments made in subgroups on
previous MTMF
• Growth and inflation targets are ambitious—
which sectors are going to drive growth? Growth
of credit to private sector seems insufficient to
support growth targets.
• Exports seems to grow too quickly with
weaknesses in RMG/phasing out of MFA.
• What would engender increase in FDI?
• Can increase in ADP spending be absorbed?
• What is the relation between the PRS and
additional foreign financing foreseen?
Suggestions for MDTA inputs to JSA
• Could be framed as questions to be answered in the
development of MTMF toward full PRSP.
• More emphasis is needed on the role of FDI. How much is
needed to support growth target? What policy actions
(including on non-economic governance) are needed to
achieve higher FDI?
• Which economic sectors are going to drive growth? How do
expenditure framework and other actions in policy matrix
support this?
• What type of policy regarding trade, import tax, and the
exchange rate would yield this pattern of imports and
exports?
• How will Bangladesh achieve export growth in FY06 when
MFA is phased out?