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THE JOURNAL OF ECONOMIC SCIENCES: THEORY AND PRACTICE, V.70, # 2, 2013, pp. 32-66

group of homogenous commodities and/or individual commodity basis. However, it has to be

mentioned that these import modelling equations, have distinguished between import of
commodities and services imported [Imported services are meant to include payments to shipping, insurance and

transportation of imported commodities into Bangladesh. This also includes expenditures of Bangladeshi travelers abroad and
government services. This, however, has been calculated and forecasted as a given percentage of total imports into the
economy]. That said, Moreover, and in order to establish the overall macroeconomic equilibrium
of the economy, equation (54) has been structured and numerically characterized to stipulate the

equilibrium conditions of the Bangladesh economy and the way its evolving through time. This,
by and large, is imperative from macroeconomic stability conditions, where a balanced supply

and demand within the national economy is adhered to, at each point of time. Such an

equilibrium state in the economy is vital, and can be considered as a development prerequisite
norm, to achieve, amongst others, general price stability, balancing aggregated saving with

investment, a stabilized exchange rate, and fluctuation-free changes in commodity stocks.
Government revenue, as part of fiscal sector modelling segment; revenue forecasts are

widely regarded as a key element for the design and execution of sound fiscal policies. Forecasts
should be realistic and have a minimum margin of error otherwise large forecast errors can create

significant budget and fiscal management problems, such as budget deficit and hindering the

spending policy, and imposing a serious obstacle to the development of a meaningful medium-term
budget framework. Moreover, unrealistic budget framework settings are inconsistent with basic

principles of transparency and reduce accountability of fiscal operations. In developing countries,

forecasting errors cannot be avoided entirely and in many cases revenue estimates have
systematically deviated from actually realized revenue. However, the principle of sustainable

government finances requires government spending to be covered by government revenue over the
medium-term (around three to four years). A key element of prudent fiscal policy is that it helps

create the conditions for maximizing sustainable economic growth. Importantly, it can contribute to
national saving, facilitate a lower interest rate environment, promote steady and sustainable demand

growth, provide a reasonable degree of stability and predictability of policy, and provide for efficient

government taxation and spending systems [For further details of the equations’ economic and other interpretations
and fiscal policy orientations and directions, See Al-Ali, Hashim (2012)]. Given such economic and fiscal

significance of having better and more realistic revenue forecasting, equations (55-63) of the macro-
fiscal forecasting model, have been designed, structured and numerically solved to determine the

likely revenues that can be flow into the government treasury, and hence, to determine the budgetary

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