GMS 400 Lecture Notes - Lecture 3: International Monetary Fund, Purchasing Power Parity, Gross Domestic Product
2 Feb 2017
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They lend up to their credit limit in a country for various projects. They have other projects for which companies need financing which have to wait u(cid:374)til there is roo(cid:373) i(cid:374) the (cid:272)ou(cid:374)tr(cid:455)"s (cid:272)redit li(cid:373)it fro(cid:373) the (cid:271)a(cid:374)k. When loans are repaid, the bank can then finance other projects, up to their country limit. May not honour agreements by previous government. Domestic forces to consider (analyze degree of influence: type of government. Labour: political parties/factions, business lobbies, middle class, military, religious groups, students/intellectuals who often protest. Foreign forces: relations with adjacent countries, reliability of its major trading partners, reputation within the united nations, relations with international monetary fund (imf, hostile religious groups, relations with canada, relations with the usa: always a concern. Economic risk analysis: gross domestic product (gdp) growth (ideal is 2%, purchasing power parity, balance of payments, soft (non-convertible) versus hard currency, currency stability (exchange rate fluctuations, corporate and personal tax rates.
