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The Present Global Macro-economic Policy
There is no denying the fact that the loom to macroeconomic stabilization in developing countries underwent a major change in the late 1970s paving the way for the implementation of structural adjustment programmes in developing countries supported by the IMF and World Bank in the early 1980s. The experience of the 1960s and 1970s suggested that the causes of macroeconomic disequilibria were profoundly deep-seated in the make-up of the economy and could not be addressed through short-term fiscal and monetary policies alone. The focus of stabilization policies shifted from the macro economy per se, to include the macro, and micro economy. Structural adjustment policies have come to influence all sectors of the economy and permeate virtually every aspect of short and medium term economic management in Bangladesh due to the country’s excessive dependence on confessional external assistance. In July 1975, in an agreement with IDA and IMF, the government of Bangladesh made a major adjustment programme with a devaluation of exchange rate by 58% and agreed to initiate adjustment measures such as liberalisation of import, tight control on Bank credit, increase of Bank rate and other interest rates, abolition of multiple currency system, reduction of Bank borrowing, rationalisation of the tax system, gradual reduction of subsidy on food grains and agricultural inputs, enhancing efficiency and financial performance of the public enterprises. ‘The government launched a medium- term structural adjustment program in the mid 1980s to promote financial stability and the efficient use of resources. The program was supported by the IMF, the World Bank, and other organisations. The government adopted a policy program to:
1. To spur private investment through financial reform, exchange and trade liberalisation, and industrial deregulation, 2. To facilitate public invested by domestic revenues, curtailing government consumption, and improving project implementation, 3. To Reduce inflation, and 4. To improve human resource development’.
Bangladesh, like many other embryonic countries, is still struggling with the traditional administrative systems which never come out with desired objectives. Public sector organisations of Bangladesh have similar patterns following the traditional administrative system at the cost of taxpayer’s money but not responsible and accountable to the taxpayers. Bangladesh being a typical Third World country is practically over loaded with reforms. In fact, it is one of the first nations in the South Asian region which accepted the SAP reform packages as early as the 1980s .Structural adjustment in Bangladesh started with the IMF in December 1980 on extended fund facilities. It was followed up by another loan agreement under the conditionality in the name of Structural Adjustment Facilities (SAF) for the period 1986-87 to 1988-89. After a year, Bangladesh contracted another three-year loan under the enhancement structural adjustment facility of IMF covering the period 1990-91 to 1992-93. Structural adjustment policies adopted in Bangladesh fall into three broad categories:
(1) Demand management policies; (2) Structural policies; and (3) Institutional policies.
Demand management policies are aimed at bringing aggregate demand in line with aggregate supply. The major instruments used in this regard include
(1) tight monetary policy through restrictions on credit in the form of savings and controls on both the public and private sector with improving the balance of payments; and (2) tight fiscal policy with cut backs of government expenditures as its main feature aimed at reducing the fiscal deficit. Structural policies include those aimed at improving provision and productive efficiency and increasing domestic savings and investment. Specific policies under this package include: (1) withdrawal of food and input subsidies, and output price support; (2) financial liberalization to allow the financial markets to reflect the true opportunity cost of capital; (3) rationalization of public enterprise pricing policies to eliminate haziness between cost and revenues; and (4) liberalization of trade through abolition of quantitative restrictions on imports and reductions in the level of tariff protection. Institutional policies essentially consist of denationalisation and privatisation policy allowing greater competition in the economy.
In view of the above it is evident that the structural adjustment policies in Bangladesh as a whole thus cover every aspect of public policy and most sectors of the economy viz, public expenditures interest rates, exchange rates, credit ceilings, tax and tariff regimes, market structures, reforms in public enterprises, civil administration reform, financial sector reforms, decentralization, privatisation, improved management practices, rationalization of pricing policy etc. One of the primary foci of SAP in the context o9f Bangladesh is to rationalize the administrative set up and enhance the productive capacity of public administration. As far as public administration is concerned the reform package under the SAP has stressed taking measures to improve the performance of public sector enterprises, privatise selected areas of the public sector; and rationalize the scope of public delivery and services. The public sector is the dominant sector in Bangladesh and covers about 75% of the development outlay of the country. A major sector of the economy is controlled by public enterprises whose performance is found to be disappointing. The rate of completion of targeted public sector development projects in Bangladesh during the last one and a half decades never exceeded an average of 45% . In spite of its importance in the economy, almost all the public sector enterprises are running on recurrin
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Article Tags: Economy, Developing, Supporting, Structural Article Source: http://www.articlesbase.com/article-writing-articles/the-present-global-macroeconomic-policy-457748.html About the Author:
Kh. Atiar Rahman is a prominent author as well as a poet. He has many publication in national and International media.
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