Beginning in the early 1980s for over a decade now, Bangladesh has been contracting structural adjustment loans from the IMF and World Bank. The loans were obtained at highly attractive terms but, ...were contingent upon fulfillment of stringent policy conditionalities. This study provides an assessment of macroeconomic performance during an entire decade of adjustment, i.e., the 1980s. The macroeconomic performance of Bangladesh in the 1980s has been discouraging. Though, the fiscal and external gaps showed a decline during the adjustment period, other major objectives relating to economic growth, investment, public expenditures, inflation etc. remained unfulfilled. The evidence suggests that contractionary demand management policies while, unable to restrict inflation significantly slowed down economic growth. Coupled with exchange rate depreciation, aggregate demand management policies failed to achieve real exchange rate depreciation. The expected results of the trade liberalization on the industrial sector in particular, were not observed as the sector continued to stagnate. Financial sector reforms were initiated very late in the reform process reflecting a major sequencing problem. Bangladesh's experience with adjustment policies while raising questions about the design of standard structural adjustment packages also reveals the critical importance of strong commitment to reforms and skillful economic management.
The fiscal deficit has assumed alarming proportions in
Pakistan; it was as large as 8.5 percent of the GDP in 1987-88. Though
it has fallen somewhat in recent years, yet it still is around 6.7
...percent of GDP. While the fiscal deficit was expected to result in a
high rate of inflation and slow growth of output, Pakistan has sustained
a high growth rate of output with price stability. This makes Pakistan a
fascinating case study.l The impact of the fiscal deficit on monetary
expansion, growth of output and price stability in various countries has
been extensively analysed. For example, see Cline (1987); Collins and
Park (1989), Corbo (1985,1989); Corbo and de Melo (1989); Corbo and Nam
(1988); Dornbusch and de Pablo (1989); Easterly (1989); Edwards (1989);
Enders and Mattione (1984); Gil Diaz (1988); Haque (1987); Kim and Yun
(1988); Kormendi (1983); Modigliani and Sterling (1986); Nash (1988);
Ocampo (1987); Reisen and van Trotsenburg (1988); van Wijnbergen (1987)
and Yellen (1989). However, very little work is available on Pakistan.
The present study is an attempt to fill that important gap. By analysing
trends in the budgetary deficit and in the pattern of financing the
deficit, the present study explores their implications for the interest
rate structure, monetary expansion, and growth of the banking sector in
Pakistan. The paper is divided into four sections. Section I traces the
trends in the fiscal deficit over time. Patterns of financing the
deficit and implications for monetary expansion are analysed in Section
II. Section III examines the implications of changes in the rate
structure of interest for the growth of money supply and the banking
sector. Section IV presents the main conclusions of the
study.
Following the failures of depository institutions in the 1980s, many analysts concluded that the rapid growth of lending activity and the deterioration of loan quality were related. Evidence suggests ...that additional lending to new or existing customers beyond what might be normal at a given stage of the business cycle lowers loan quality after a 3-year lag. This relationship, based on evidence from Texas banks, was especially strong at banks with below-average capitalization. One method of increasing lending while maintaining loan quality was through the purchase of failed banks with the assistance of the Federal Deposit Insurance Corp. (FDIC). These purchases increased lending only for the acquiring banks and did not reflect an increase in total lending for the banking industry. It is possible that FDIC resolution procedures have discouraged the acquisition of weak but still solvent banks by stronger banks and are thereby slowing the rate of needed consolidation in the banking industry.
The primary characteristic of international fishery relations between Thailand and its three Gulf of Thailand neighbours in the 1980s has been conflict. Thailand's successful fishing fleet is ...frequently accused of fishing illegally in the waters claimed by the other states. This has led to arrests, confiscation, imprisonment and sometimes violence. The fishery incidents have complicated relations between Thailand and its Indochinese neighbours and been an irritant in Thai-Malaysian relations. As the 1980s closed the fishery conflicts were easing, but resolution has not been achieved. The 1990s will see further conflicts until the Thai fishing fleet no longer roams unrestrained in the Gulf of Thailand and the adjacent South China Sea areas.
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