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Potential Effects Of Budget Deficit 2008-09

This study analyzes the potential effects of budget deficit in 2008-09 on the economy, comparing financing sources and consequences like interest rates and investments. Suggestions for actions to mitigate the deficit are provided.

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Potential Effects Of Budget Deficit 2008-09

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  1. Presented by: Md. Sadiqur Rahman Chowdhury Rayhana Sultana Hafiz-Al-Ashad Potential Effects Of Budget Deficit2008-09 Supervisor Liton Chakraborty Lecturer, School of Business University of Liberal Arts Bangladesh

  2. Comparison with previous year School of Business, ULAB

  3. Comparison with previous year School of Business, ULAB

  4. Deficit in Budget 2008-09 School of Business, ULAB

  5. Comparison of financing sources School of Business, ULAB

  6. Comparison of Domestic Financing Sources School of Business, ULAB

  7. Consequence of Budget Deficit Interest Rate Amount of Interest Rate S I D L Amount of Loanable Funds School of Business, ULAB

  8. Consequence of Budget Deficit New Interest Rate S’ Amount of Interest Rate S I’ I D L’ L Amount of Loanable Funds School of Business, ULAB

  9. Consequence of Budget Deficit New Interest Rate S’ I’ Amount of Interest Rate S I D’ D L’ L Amount of Loanable Funds School of Business, ULAB

  10. Possible Effects of Budget Deficit • Lending rate may rise • Private Investment may shrink (crowding out) • Unemployment may increase • Price level may boost up • Interest rate on bank deposit may increase School of Business, ULAB

  11. Possible Effects of Budget Deficit • Capital market activities may be hampered • Banking sector may show monopoly power • Growth rate of economy may slow down • The gap between rich & poor may be enlarged School of Business, ULAB

  12. Actions could be taken • Government can urge banks to raise the paid up capitals • Use capital market instruments • Find useless & unnecessary expenditures and shift those to meet deficit • Allow undisclosed money to be invested - Special Bond for Undisclosed money School of Business, ULAB

  13. THANK YOU. Any question?

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