Assessing Fiscal Risks in Bangladesh

This paper identifies, quantifies, and assesses fiscal risks in Bangladesh. By performingsensitivity analysis and using stochastic simulations, it measures risks arising from shocks toGDP growth, the exchange rate, commodity prices, and interest rates. It also analyzesspecific fiscal and institutional risks, such as those related to the pension system, the issuanceof guarantees, the state-owned commercial banks, and the external borrowing and debtmanagement strategy. The paper finds that fiscal aggregates are particularly sensitive toshocks to commodity prices and exchange rates. Other factors that could affect fiscalaggregates are the unfunded pension system and the limited institutional capacity.