Reserve in 2009 will be equivalent to only 1.7 months' import payment
Shakhawat Hossain | Sunday, 6 July 2008
The country's reserve in 2009, as projected by the International Monetary Fund (IMF), will be equivalent to only 1.7 months' import payment due to impact of combined shocks of fuel oils and food prices hikes in the international market.
The International Monetary Fund (IMF) in a study on Food and Fuel Prices-Recent Developments, Macroeconomic Impact, and Policy Responses, released on June 30 last projected that the country's external position in 2009 would be minus 2.0 per cent of the GDP for the combined shocks.
Before the combined shocks, the country's reserve position was equivalent to 2.4 months' import payment and -0.7 per cent of the GDP (gross domestic product).
For the oil price shock alone, the reserve position has been projected to come down equivalent to 1.9 months. And in percentage of GDP, it would be -1.7 per cent, said the IMF on the Impact of Oil and Food Price Increases on the Projected 2009 External Position of PRGF-eligible countries.
For the food price shock the country's reserve position, however, has been projected to cover 2.2 months import bills, it added.
Among others South Asian countries, Sri Lankan reserve has been projected to cover 1.4 months import payment, Pakistan 1.4 months, the Maldives -2.5 months, India 9.0 months and Afghanistan 6.5 months.
The IMF said it estimates a hypothetical impact of a further increase in oil and food prices on international reserves as a measurement of its impact.
The price increase exercise compares the projections of 2009 reserves coverage of the baseline with a calculated alternative level of reserves coverage that would result from increased prices under a transparent set of broad assumptions.
Besides, the IMF assumes that the net oil import bill in 2008 and 2009 change as follows in the modeled oil price increase:
In 2008, this bill is modelled to increase by 17.9 per cent (US$ 112 per barrel after revision compared to US$95 per barrel before). In 2009, this bill is modelled to increase by 23 per cent (US$ 116.25 per barrel after revision compared to US$ 94.50 before).
For the food price increase, the IMF also assumes a price in 2008 and 2009 that is 20 per cent higher than projected in the baseline.
Rocketing oil and food prices are being increasingly felt around the globe and surging commodity prices could worsen poverty in many poor countries, said the IMF.
The IMF said many poor and developing countries would likely have to change their economic policies in response to soaring commodity prices.
The International Monetary Fund (IMF) in a study on Food and Fuel Prices-Recent Developments, Macroeconomic Impact, and Policy Responses, released on June 30 last projected that the country's external position in 2009 would be minus 2.0 per cent of the GDP for the combined shocks.
Before the combined shocks, the country's reserve position was equivalent to 2.4 months' import payment and -0.7 per cent of the GDP (gross domestic product).
For the oil price shock alone, the reserve position has been projected to come down equivalent to 1.9 months. And in percentage of GDP, it would be -1.7 per cent, said the IMF on the Impact of Oil and Food Price Increases on the Projected 2009 External Position of PRGF-eligible countries.
For the food price shock the country's reserve position, however, has been projected to cover 2.2 months import bills, it added.
Among others South Asian countries, Sri Lankan reserve has been projected to cover 1.4 months import payment, Pakistan 1.4 months, the Maldives -2.5 months, India 9.0 months and Afghanistan 6.5 months.
The IMF said it estimates a hypothetical impact of a further increase in oil and food prices on international reserves as a measurement of its impact.
The price increase exercise compares the projections of 2009 reserves coverage of the baseline with a calculated alternative level of reserves coverage that would result from increased prices under a transparent set of broad assumptions.
Besides, the IMF assumes that the net oil import bill in 2008 and 2009 change as follows in the modeled oil price increase:
In 2008, this bill is modelled to increase by 17.9 per cent (US$ 112 per barrel after revision compared to US$95 per barrel before). In 2009, this bill is modelled to increase by 23 per cent (US$ 116.25 per barrel after revision compared to US$ 94.50 before).
For the food price increase, the IMF also assumes a price in 2008 and 2009 that is 20 per cent higher than projected in the baseline.
Rocketing oil and food prices are being increasingly felt around the globe and surging commodity prices could worsen poverty in many poor countries, said the IMF.
The IMF said many poor and developing countries would likely have to change their economic policies in response to soaring commodity prices.