balance of payments: analysis and forecasting thorvaldur gylfason tunis, february 2006

Balance of Balance of

Payments: Payments:

Analysis and Analysis and

ForecastingForecasting

Thorvaldur GylfasonThorvaldur GylfasonTunis, February 2006Tunis, February 2006

OutlineOutline1.1. Balance of payments Balance of payments accountingaccounting

– How BOP accounts are put How BOP accounts are put together and how they relate to together and how they relate to monetary, fiscal, and national monetary, fiscal, and national income accountsincome accounts

2.2. Balance of payments Balance of payments analysisanalysis– Economics of exports, imports, Economics of exports, imports,

exchange rates, etc.exchange rates, etc.

3.3. Balance of payments Balance of payments forecastingforecasting– How to forecast exports, imports, How to forecast exports, imports,

capital flows, etc. capital flows, etc.

Accounting system for Accounting system for macroeconomic analysis, in four macroeconomic analysis, in four partsparts

1.1. Balance of paymentsBalance of payments

2.2. National income accountsNational income accounts

3.3. Fiscal accountsFiscal accounts

4.4. Monetary accountsMonetary accounts

First look at balance of payments First look at balance of payments accounts, and then look at accounts, and then look at linkageslinkages

Balance of Balance of payments payments accountingaccounting1

External External transactionstransactions

GoodsGoods ServiceServicess

CapitalCapital

ExportExportss XXgg XXss FFxx

ImportImportss ZZgg ZZss FFzz

ExamplesReal transactions

Financial transactions

Balance of paymentsBOP = Xg + Xs + Fx – Zg – Zs – Fz

= X – Z + F = current account + capital accountHere

X = XX = Xgg + X + Xss Exports of good and services Exports of good and services

Z = ZZ = Zgg + Z + Zss Imports of good and servicesImports of good and services

F = FF = Fxx – F – Fzz Net exports of capital = Net exports of capital =

Net capital inflowNet capital inflow

Recording external Recording external transactionstransactions

Balance of paymentsBalance of paymentsBOP = Xg + Xs + Fx – Zg – Zs – Fz

= X – Z + F = current account + capital accountHereX = Xg + Xs Exports of good and servicesZ = Zg + Zs Imports of good and servicesF = Fx – Fz Net exports of capital =

Net capital inflow

Recording external Recording external transactionstransactions

AgainAgainBOP = X – Z + F = = RR

where where

R = reservesR = reserves

Note:Note:X, Z, and F are flowsX, Z, and F are flows

R is a stock, R is a stock, R is a flowR is a flow

Balance of Balance of payments and payments and reservesreserves

R = R – RR = R – R-1-1

AgainAgainBOP = X – Z + F = = RR

where where R = R – RR = R – R-1-1

ImplicationsImplicationsXX RR

FF RR

ZZ RR

In practiceIn practiceZZ FF or or RR

Balance of Balance of payments and payments and reservesreserves

From trade From trade balance to current balance to current accountaccount Trade balanceTrade balance

TB = XTB = Xgg + X + Xnfsnfs – Z – Zgg – Z – Znfsnfs

XXnfsnfs = X = Xss – X – Xfsfs = exports of nonfactor services = exports of nonfactor services

ZZnfsnfs = Z = Zss – Z – Zfs fs = imports of nonfactor services= imports of nonfactor services

Balance of goods and servicesBalance of goods and servicesGSB = TB + YGSB = TB + Yff

YYff = X = Xfsfs – Z – Zfsfs = net factor income = net factor income

Current account balanceCurrent account balanceCAB = GSB + TR = TB + YCAB = GSB + TR = TB + Yff + TR + TR

TR = unrequited transfers from TR = unrequited transfers from abroadabroad

Importance of net Importance of net factor income factor income Net factor income from Net factor income from laborlabor

– Remittances from domestic workers Remittances from domestic workers abroad (e.g., Turks in Germany)abroad (e.g., Turks in Germany) minus minus those of foreign workers at home those of foreign workers at home

Net factor income from Net factor income from capitalcapital– Interest receipts from domestic assets Interest receipts from domestic assets

held abroad minus interest payments held abroad minus interest payments on foreign loans (e.g., in Argentina) on foreign loans (e.g., in Argentina)

– Includes also profits and dividends Includes also profits and dividends

Transfers also matterTransfers also matter

YYff > 0 in Turkey > 0 in Turkey

YYff < 0 in Argentina < 0 in Argentina

Capital accountCapital accountAlso called Also called capital andcapital and financial financial

accountaccountFour main itemsFour main items

1.1. Direct investmentDirect investment– Involves control by ownersInvolves control by owners

2.2. Portfolio investmentPortfolio investment– Includes long-term foreign borrowingIncludes long-term foreign borrowing– Does not involve control by ownersDoes not involve control by owners

3.3. Other investmentOther investment– Includes short-term borrowingIncludes short-term borrowing

4.4. Errors and omissionsErrors and omissions– Statistical discrepancyStatistical discrepancy

Overall balance of Overall balance of paymentspayments

Five main financing items below the Five main financing items below the lineline

1.1. GoldGold2.2. SDRsSDRs3.3. Reserve position in IMFReserve position in IMF4.4. Foreign exchangeForeign exchange

Convenient to measure gross foreign Convenient to measure gross foreign reserve holdings in terms of months of reserve holdings in terms of months of import coverage – e.g., 3 months import coverage – e.g., 3 months

5.5. Exceptional financingExceptional financing Debt reschedulingDebt rescheduling Accumulation of payments arrearsAccumulation of payments arrears

Overall balance of Overall balance of paymentspayments

Five ways to finance a BOP deficitFive ways to finance a BOP deficit1.1. Drawing on gold reservesDrawing on gold reserves2.2. Using SDRsUsing SDRs3.3. Using IMF resourcesUsing IMF resources4.4. Running down foreign exchange Running down foreign exchange

reservesreserves … … by running down foreign assets or by running down foreign assets or

accumulating foreign liabilitiesaccumulating foreign liabilities

5.5. Resorting to exceptional financingResorting to exceptional financing Deferring debt repayments via Deferring debt repayments via

rescheduling or accumulation of rescheduling or accumulation of external arrearsexternal arrears

Y = C + I + G + X – ZY = C + I + G + X – Z

= E + X – Z= E + X – Zwhere where E = C + I +GE = C + I +G

CAB = X – Z = Y – E CAB = X – Z = Y – E Ignore YIgnore Yff and TR for simplicity and TR for simplicity

S = Y – C – T = I + G – T + X – Z S = Y – C – T = I + G – T + X – Z

CAB = S – I + T – GCAB = S – I + T – G

CAD = Z – X = E – Y = I – S + G – TCAD = Z – X = E – Y = I – S + G – T

National income National income accountsaccounts

Private

sector deficitPublic sector

deficit

Y = C + I + G + X – Z Y = C + I + G + X – Z

GDP = C + I + G + TBGDP = C + I + G + TB

GNP = C + I + G + CABGNP = C + I + G + CAB

GNP – GDP = CAB – TB = YGNP – GDP = CAB – TB = Yff (if TR = 0) (if TR = 0)

GNP = GDP + YGNP = GDP + Yff

GNP > GDP in Turkey where YGNP > GDP in Turkey where Yf f > 0> 0 GNP < GDP in Argentina where YGNP < GDP in Argentina where Yf f < 0< 0

GNDI = GNP + TR = GDP + YGNDI = GNP + TR = GDP + Yff + TR + TR

Links between BOP Links between BOP and national and national accountsaccounts

Links between BOP Links between BOP and national and national accountsaccountsYY X - ZX - Z DefinitionDefinition

GDPGDP Trade Trade balancebalance

Goods and Goods and nonfactor nonfactor servicesservices




GNPGNP Current Current account account excl. excl. transferstransfers

Goods and Goods and servicesservices




GNPGNP Current Current account account excl. excl. transferstransfers

Goods and Goods and servicesservices

GNDIGNDI Current Current account account incl. incl. transferstransfers

Goods and Goods and services services plus plus transferstransfers

Fiscal accounts Fiscal accounts and links to BOPand links to BOP PublicPublic sector sector

G – T = G – T = B + B + DDGG + + DDFF

PrivatePrivate sector sectorI – S = I – S = DDPP –– M M –– BB

Now, add them upNow, add them upG – T + I – S = G – T + I – S = B + B + DDGG + + DDF F + + DDPP –– M M –– B =B = DDGG + + DDF F + + DDPP –– M =M = D D –– M + M + DDFF = - = -R + R + DDFF = Z - X = Z - X

ExternalExternal sector sectorX – Z = X – Z = R - R - DDFF

M = D + R

DG + DP = D

X – Z + F = X – Z + F = RR

F = DF

Monetary accounts Monetary accounts and links to BOPand links to BOPMonetary surveyMonetary survey

M = D + RM = D + R

From stocks to flowsFrom stocks to flowsM = M = D + D + RR

Solve for Solve for RRR = R = M M –– DDMonetary approachMonetary approach to balance to balance

of paymentsof paymentsStill holds that Still holds that RR = X – Z + F= X – Z + F

Two sides of the same coinTwo sides of the same coin

Foreign exchangeForeign exchange

Real exch

an

ge r

ate

Real exch

an

ge r

ate

Imports

Exports

2

Earnings from Earnings from exports of goods, exports of goods, services, and services, and capital capital

Payments for Payments for imports of goods, imports of goods, services, and services, and capitalcapital

EquilibriumEquilibrium

Balance of Balance of payments analysispayments analysis

*P

ePQ

Q = real exchange ratee = nominal exchange rateP = price level at homeP* = price level abroad

Increase in Q means real appreciation

ee refers to

foreign currency

content of

domestic

currency

Real exchange rateReal exchange rate

*P

ePQ

Q = real exchange ratee = nominal exchange rateP = price level at homeP* = price level abroad

Devaluation or Devaluation or depreciation of e depreciation of e makes Q also makes Q also depreciate depreciate unless P rises so unless P rises so as to leave Q as to leave Q unchangedunchanged

RealReal exchange rate exchange rate


Real exch

an

ge r

ate

Real exch

an

ge r

ate

Imports

Exports

Overvaluation

Deficit

OvervaluationOvervaluationRR

R moves when e is fixedIf not, e moves

Fixed vs. flexible eFixed vs. flexible e


Pri

ce o

f fo

reig

n e

xch

ang

ePri

ce o

f fo

reig

n e

xch

ang

e

Supply (exports)

Demand (imports)

Overvaluation

Deficit

Overvaluation

works like a price

ceiling

Overvaluation, Overvaluation, againagain

Excess demand for Excess demand for

foreign exchange foreign exchange

makes its price makes its price

riserise

Equilibrium between demand and supply in foreign exchange market establishesEquilibrium real exchange rateEquilibrium in the balance of

paymentsBOP = X + Fx – Z – Fz

= X – Z + F = current account + capital

account = 0 under a flexible exchange

rate

Balance of Balance of payments payments equilibriumequilibrium

Task at handTask at hand Develop financial program for Develop financial program for

20002000 Use information available up to Use information available up to

1999, plus 1999, plus forecastsforecasts

Two stepsTwo steps Prepare Prepare baseline scenariobaseline scenario

assumingassuming unchanged economic unchanged economic policypolicy

If baseline scenario is If baseline scenario is unsatisfactory, then design unsatisfactory, then design financial programfinancial program with better with better policies and better resultspolicies and better results

Balance of payments Balance of payments forecastingforecasting3 The baseline scenario is

a financial program,

based on policies

already in place

To prepare baseline scenario, need To prepare baseline scenario, need to complete four sets of forecaststo complete four sets of forecasts National income accountsNational income accounts

Inflation, growthInflation, growth

Balance of payments accountsBalance of payments accounts Exports, imports, capital flows, reservesExports, imports, capital flows, reserves

Fiscal accountsFiscal accounts Government spending, tax revenues, creditGovernment spending, tax revenues, credit

Monetary accountsMonetary accounts Money, credit, foreign reservesMoney, credit, foreign reserves

Financial programming Financial programming frameworkframework Mutually consistent, Mutually consistent,

or interlocking, or interlocking,

forecastsforecasts

For example, based on what we For example, based on what we know in 1999, what will BOP be know in 1999, what will BOP be in 2000? in 2000? ExportsExports ImportsImports

Including interest payments on foreign Including interest payments on foreign debtdebt

Capital flowsCapital flowsIncluding foreign borrowing and FDI Including foreign borrowing and FDI

Reserve movementsReserve movementsIncluding target for reservesIncluding target for reserves

Financial programming Financial programming frameworkframework

Exogenous vs. endogenous Exogenous vs. endogenous variablesvariables All variables are endogenous, but All variables are endogenous, but

some are more endogenous than some are more endogenous than othersothers

Key Key exogenousexogenous BOP variables BOP variables ExportsExports Capital inflowsCapital inflows Reserves (target)Reserves (target)

Chief Chief endogenousendogenous BOP variable BOP variable ImportsImports

Role of forecastingRole of forecasting

Forecasts of exogenous variables Forecasts of exogenous variables enable us to forecast enable us to forecast endogenous variablesendogenous variables

For example, once we have For example, once we have forecast X, F, and forecast X, F, and R, we can R, we can derive the forecast of Z as a derive the forecast of Z as a residual: Z = X + F – residual: Z = X + F – RR

Forecast of Z needs to be Forecast of Z needs to be consistent with forecasts of consistent with forecasts of inflation and growthinflation and growth


History and targetsHistory and targets Record history, establish targetsRecord history, establish targets

ForecastingForecasting Make forecasts for balance of Make forecasts for balance of

payments, output and inflation, payments, output and inflation, moneymoney

Policy decisionsPolicy decisions Set domestic credit at a level that Set domestic credit at a level that

is consistent with forecasts as well is consistent with forecasts as well as foreign reserve targetas foreign reserve target


1)1)Make forecasts, set reserve Make forecasts, set reserve target Rtarget R**

– E.g., reserves at 3 months of importsE.g., reserves at 3 months of imports

2)2) Compute permissible imports from Compute permissible imports from BOPBOP– More imports will jeopardize reserve More imports will jeopardize reserve

targettarget

3)3) Infer permissible increase in nominal Infer permissible increase in nominal income from import equationincome from import equation

4)4) Infer monetary expansion consistent Infer monetary expansion consistent with increase in nominal incomewith increase in nominal income

5)5) Derive domestic credit as a residualDerive domestic credit as a residual

D = M – RD = M – R**

Financial programming Financial programming step by stepstep by stepDo this in the right order

Known at beginning of program Known at beginning of program period:period:MM-1-1 = 800, D = 800, D-1-1 = 650, R = 650, R-1-1 = 150 = 150

Recall: Recall: M = D + RM = D + R

XX-1-1 = 700, Z = 700, Z-1-1 = 800, F = 800, F-1-1 = 150 = 150

Recall: Recall: R = X – Z + FR = X – Z + FSo,So,RR-1-1 = 700 – 800 + 150 = 50 = 700 – 800 + 150 = 50Current account deficit, overall surplusCurrent account deficit, overall surplus

RR-1-1/Z/Z-1-1 = 150/800 = 0.1875 = 150/800 = 0.1875Equivalent to 2.25 months of importsEquivalent to 2.25 months of importsWeak reserve positionWeak reserve position

HistoryHistory2.25 months = 9 2.25 months = 9

weeksweeks

X grows by 10%, so X = 770X grows by 10%, so X = 770

F increases by 20%, so F = 180F increases by 20%, so F = 180

Suppose RSuppose R** is set at 220, up from is set at 220, up from 150150

Level of imports is consistent with Level of imports is consistent with RR** is isZ = X + F + RZ = X + F + R-1-1 – R – R**

= 770 + 180 + 150 – 220 = 880= 770 + 180 + 150 – 220 = 880

Reserve target is equivalent to 3 Reserve target is equivalent to 3 months of importsmonths of importsRR**/Z = 220/880 = 0.25/Z = 220/880 = 0.25

Forecast for balance Forecast for balance of paymentsof payments

BOP BOP fore-fore-castcastss

Increase in Z from 800 to 880, i.e., Increase in Z from 800 to 880, i.e., by 10%, is consistent with Rby 10%, is consistent with R** equivalent to 3 months of equivalent to 3 months of importsimports

Now, recall that Z depends on PY Now, recall that Z depends on PY where P is price level and Y is outputwhere P is price level and Y is output

Hence, if income elasticity of Hence, if income elasticity of import demand is 1, PY can import demand is 1, PY can increase by 10% increase by 10% E.g., 3% growth and 7% inflationE.g., 3% growth and 7% inflation

Depends on aggregate supply scheduleDepends on aggregate supply schedule

Forecast for Forecast for real sectorreal sector

If PY can increase by 10%, then, if If PY can increase by 10%, then, if income elasticity of money income elasticity of money demand is 1, M can also increase demand is 1, M can also increase by 10% by 10%

Recall quantity theory of moneyRecall quantity theory of moneyMV = PYMV = PY

Constant velocity means that Constant velocity means that

%%M = %M = %PY = %PY = %P + %P + %YY

Hence, M can expand from 800 to Hence, M can expand from 800 to 880880

Forecast for Forecast for moneymoney

˜

Recall M = D + M = D +

RR

Having set reserve target at RHaving set reserve target at R** = = 220 and forecast M at 880, we 220 and forecast M at 880, we can now compute level of credit can now compute level of credit that is consistent with our that is consistent with our reserve targetreserve target

So, D = 880 – 220 = 660, up from So, D = 880 – 220 = 660, up from 650650D/DD/D-1-1 = 10/650 = 1.5% = 10/650 = 1.5%Restrictive: implies decline in real Restrictive: implies decline in real

termstermsNeed to divide permissible credit Need to divide permissible credit

expansion between public sector expansion between public sector and private sectorand private sector

Determination of creditDetermination of credit

Financial programming Financial programming step by step: Recapstep by step: Recap

Sequence of stepsSequence of steps

RR** ZZ YY MM DD

Z = X + F + RZ = X + F + R-1-1 – R – R**

Z = mPYZ = mPY

MV = PYMV = PY

D = M – RD = M – R**

Notice that Z now means

nominal imports, not real

imports as before

Forecasts of X and

F play a key role:

Lower forecasts

mean lower D for

given R*

Need BOP forecasts to be able to Need BOP forecasts to be able to design financial programsdesign financial programs

Specifically, need forecasts ofSpecifically, need forecasts of Exports (exogenous)Exports (exogenous) Imports (endogenous)Imports (endogenous) Capital movements (exogenous)Capital movements (exogenous)

Forecasts must be consistent with Forecasts must be consistent with economic developments at home economic developments at home and abroad, and with one and abroad, and with one anotheranother

ForecastingForecasting

From From supply sidesupply side, disaggregate , disaggregate View main categories of exports View main categories of exports

separatelyseparatelyObtain price forecasts from international Obtain price forecasts from international

organizations, industry groupsorganizations, industry groups

Obtain volume forecasts by surveying Obtain volume forecasts by surveying domestic producers. Recall that domestic producers. Recall that supply supply depends on pricedepends on price

Exports of coffee: PExports of coffee: PccXXcc

Exports of tea: PExports of tea: PttXXtt

Exports of rice: PExports of rice: PrrXXrr

Total exports: Total exports: PX = PPX = PccXXc c ++ PPttXXt t ++

PPrrXXrr

Forecasting exports 1Forecasting exports 1

Small country Small country

assumption: Export assumption: Export

prices are exogenousprices are exogenous

Divide through export equation by Divide through export equation by X to get expression for export X to get expression for export price P price P

P = (XP = (Xcc/X)P/X)Pc c ++ (X(Xtt/X)/X) PPt t ++ (X(Xrr/X)/X) PPrr

Hence, aggregate export price Hence, aggregate export price index is a weighted average of index is a weighted average of export prices for individual export prices for individual commodities, with weights commodities, with weights reflecting their relative reflecting their relative importance to total exportsimportance to total exports


From From supply sidesupply side, another method , another method without disaggregation without disaggregation


Standard supply Standard supply

equation: equation:

Supply depends on Supply depends on

relative pricerelative price as well as as well as

output capacityoutput capacity

Y

p

pefX

d

x ,

X = export volume (real exports)e = nominal exchange rate (kw/$)px = price of exports in $pd = price of domestically produced goods in kwY = output capacity at home

+ +

Now defined Now defined as price of as price of foreign foreign exchangeexchange


Y

p

pefX

d

x ,

a = income elasticity of exports b = price elasticity of exports

a

b

d

x Yp

peX

d

x

p

pebYaX %%%

General formulation

Exponential Exponential

formulation with formulation with

price and income price and income

effects expressed as effects expressed as

elasticitieselasticities


Y

p

pefX

d

x ,


a

b

d

x Yp

peX

d

x

p

pebYaX logloglog

General formulation






Forecasting exports 2Forecasting exports 2a

b

d

x Yp

peX

d

x

p

pebYaX %%%

X

ΔX

X

1

dt

dX

dt

dlog(X)log(X)% X

1

%1

%1%1%

d

x

d

x

p

pe

p

peWhy?Why?


w

zxy

1

%1

%1%1%

d

x

d

x

p

pe

p

pe

100

1001000

y

105

1101151

y

So, if x rises by 15%, z rises by 10%, and w rises by 5%, then y rises not by 20% but by 20.5% because (115*110/105) = 120.476 wzxy %%%%

Simpler formula works only for small changes

From From demand sidedemand side, yet another , yet another method without disaggregation method without disaggregation


Standard demand Standard demand

equation: equation:

Demand varies inversely Demand varies inversely

with with relative pricerelative price and and

directly with incomedirectly with income

w

w

x Yp

pfX ,

X = export volume (real exports)px = price of exports in $Pw = price of similar goods in world markets in $Yw = world demand

- +


w

w

x Yp

pfX ,


aw

b

w

x Yp

pX

w

xw p

pbYaX %%% Similar

story as before

Where to get Where to get

elasticitieselasticities??

Estimate them from Estimate them from

available data or available data or

borrow them from borrow them from

comparable countriescomparable countries

From From demand sidedemand side, without , without disaggregation disaggregation

Forecasting imports 1Forecasting imports 1

Standard demand Standard demand

equation: equation:

Demand varies inversely Demand varies inversely


directly with incomedirectly with income

Y

p

pefZ

d

z ,

Z = import volume (real imports)e = nominal exchange rate (kw/$)pz = price of imports in $pd = price of domestically produced goods in kwY = domestic demand (GNP)

- +

Now defined Now defined as price of as price of foreign foreign exchangeexchange


d

z

p

peYfZ ,

m = income elasticity of imports c = price elasticity of imports

c

d

zm

p

peYZ

d

z

p

pecYmZ %%%

General formulation






Forecasting imports 1Forecasting imports 1m

c

d

z Yp

peZ

d

z

p

pecYmZ %%%

1

%1

%1%1%

d

z

d

z

p

pe

p

pe

Similar story as beforeSimilar story as before

From From supply sidesupply side, without , without disaggregation disaggregation


Standard supply Standard supply

equation: equation:

Supply varies directly Supply varies directly


with incomewith income

w

w

z Yp

pfZ ,

Z = import volume (real exports)pz = price of imports in $pw = price of similar goods in world markets in $Yw = world output capacity

+ +

Principles are the same as for Principles are the same as for goodsgoodsService exports (e.g., travel receipts) Service exports (e.g., travel receipts)

depend on depend on income income abroadabroad and and relative relative pricesprices

Service imports (e.g., transportation) Service imports (e.g., transportation) depend on depend on income income at homeat home and and relative relative pricesprices

Interest payments reflect multiple of Interest payments reflect multiple of foreign debt outstanding and interest rate foreign debt outstanding and interest rate payable on the debtpayable on the debt

Transfers, private and public, depend on Transfers, private and public, depend on past trends, income abroad, official past trends, income abroad, official commitments, special relationships (e.g., commitments, special relationships (e.g., EU) EU)

Forecasting servicesForecasting services

This is more difficultThis is more difficultForeign borrowingForeign borrowing: depends on plans of : depends on plans of

domestic authorities, commitments of domestic authorities, commitments of foreign lenders, interest rates at home foreign lenders, interest rates at home and abroadand abroad

Foreign direct investmentForeign direct investment: depends on : depends on domestic market size, labor skills, domestic market size, labor skills, investment and export opportunities, investment and export opportunities, macroeconomic stability, track record, macroeconomic stability, track record, growth prospects, stability and growth prospects, stability and transparency of regulationstransparency of regulations

Errors and omissionsErrors and omissions: depends on trends, : depends on trends, political and economic eventspolitical and economic events

Forecasting capital Forecasting capital flowsflows

Forecasting reservesForecasting reserves

The EndThe End

This is easyThis is easyBaseline scenarioBaseline scenario: reserve : reserve

movements are simply the sum of movements are simply the sum of the current account and the capital the current account and the capital account: account:

R = X – Z + FR = X – Z + FFinancial programFinancial program: reserve : reserve

movements are a policy variable, movements are a policy variable, programmed so as to meet a given programmed so as to meet a given targettarget of reserves at the end of the of reserves at the end of the program period, set, e.g., in terms program period, set, e.g., in terms of months of import coverageof months of import coverage

These slides will be posted on my website: www.hi.is/~gylfason

balance of payments: analysis and forecasting thorvaldur gylfason tunis, february 2006

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