Oxford Business Group - 27 April 2015
A new budget signalled major funding boosts in Myanmar for the power and education sectors, both of which have been identified as structural weaknesses in the economy.

The Ministry of Electrical Power was a key recipient under the MMK20trn ($18.5bn) budget for 2015/16, which came into effect on April 1. According to local media, the ministry plans to spend MMK2.5trn ($2.3bn), including foreign loans, to improve electricity supply and distribution, making it the fourth-largest spender behind the finance, energy and defence portfolios. Since 2011, the ministry's budget has increased from MMK40.9bn ($37m) to MMK87.7bn ($81.3m), during which time capacity has risen from 1591 MW to 2300 MW.

Spending on education rose to just under MMK1.4trn ($1.3bn), up from MMK1.1trn ($1bn) last year, with some of the funds to be set aside for hiring an additional 50,000 teachers. In a separate move, the country's free schooling system will be extended to include higher education this year, in a bid to boost the number of graduates entering the workplace. The budget also approved resources for university stipends and scholarships as well as financial support for students attending technical institutions, as part of a push to boost take-up of vocational courses.

While Myanmar's economy is expected to perform strongly in the fiscal year 2015/16, with the ADB projecting GDP growth of 8.3%, advances will be offset by higher inflation. Consumer prices are forecast to reach as high as 8.1%, according to government data, compared to an ADB estimate of 8.4%, up from 6.5% in the last fiscal year.

The World Bank -24 March 2015 

Access to finance is the top constraint for private enterprises as Myanmar’s economy undergoes market-oriented reforms after emerging from decades of isolation, and addressing this and other challenges will help create a strong private sector to drive the country’s future growth and create much-needed jobs, the World Bank Group’s first Investment Climate Assessment report in Myanmar finds.

Among more than 1,000 foreign and domestic non-agricultural businesses interviewed in the report, merely 1 percent of fixed-asset investment costs are financed by bank borrowing, while 92 percent of firms rely on their own funds – a percentage higher than that of any other comparable country. Difficulties in getting land-use rights, power outages, and inadequate workforce skills are other main barriers to business operation and growth in Myanmar.

AFP - 24 March 2015

The Asian Development Bank Tuesday predicted economic growth in Myanmar will surge by over eight percent for the next two years as it urged the nation to press on with reforms before landmark elections.

Myanmar, which has implemented broad economic and political changes since a half-century of military rule ended in 2011, is expected to see output grow from 7.7 percent in the 12 months to March to 8.3 percent in the 2015 fiscal year, the ADB said. It estimated that gross domestic product (GDP) growth in the fiscal year 2016 would "remain close to this pace".

Statement at the end of the IMF Staff Visit to Myanmar
IMF Press Release - 11 February 2015
The IMF team reports that real GDP growth is expected to decelerate slightly to 7.8 percent in fiscal year (FY) 2014/15 (year ending March) from 8.3 percent in FY2013/14 due to slower growth in the agricultural sector. Inflation is expected to pick up to around 6 percent year on year (y/y) in FY2014/15 from 5.8 percent in FY2013/14. 

The recent kyat depreciation is primary driven by the global strengthening of the U.S. dollar and a widening external current account deficit. The trade deficit increased to 5.5 percent of GDP in December 2014 as imports grew by 25 percent y/y for the period April-December 2014 while exports growth remained flat. Against this background, the CBM’s net international reserves fell to US$4.5 billion at end-December. Credit to the private sector continued to grow rapidly at 36 percent y/y in November.

“The growth outlook of the Myanmar economy remains favorable over the medium term, but downside risks for the near term have increased. Read on....

Gearing up for Burma's new Stock Exchange
Democratic Voice of Burma - 12 January 2015
Applications for licenses to practice on the Yangon [Rangoon] Stock Exchange (YEX), set to open in October 2015, have been given the go-ahead by the Burmese Securities and Exchange Commission (SECM) by Maung Maung Thein, Deputy Minister for Finance and Revenue and SECM Chairman. “We are ready to start it on October,” Maung Maung Thein said. “The Securities Exchange Commission will issue licences to the stock companies. It will be happen two or three months later.”

Underwriting, dealing, brokerage and consultancy businesses will be able to apply for the licenses, with certification costs ranging from 7 billion kyat (US$ 7 million) to 30 billion kyat, depending on the type of business. Licenses will be on sale from 19 January, with submission of applications closing on 27 February.These service providers will be able to undergo joint ventures with foreign companies in the drive to successfully establish the fledgling stock market.

Financial and Economic News from Mizzima

ISEAS - Trends in Southeast Asia
Establishing Infrastructure Projects: Priorities for Myanmar’s Industrial Development 
Part I: The Role of the Private Sector
Part II: The Role of the State 

Stuart Larkin, Visiting Fellow at the Institute of Southeast Asian Studies (ISEAS) in Singapore, argues that Myanmar has attracted much interest with its “opening up” and wide-ranging reforms of recent years. But the Thein Sein government’s lovefest with western donors over “Washington Consensus” policies may intensify resource curse dynamics without delivering the infrastructure upgrade that Myanmar needs for labour-intensive manufacturing export competitiveness. Foreign investors struggle with local conditions and the very people who may be able to get big projects off the ground, the local tycoons, are often shunned by their president and precluded from western financing by USA blacklisting. The alternative model is the “developmental state” where the state harnesses big business for the purpose of rapid industrialization, for which there is much successful precedent in the region, unlike the western neo-liberal approach. Granted the necessary infrastructure concessions, Myanmar’s tycoons can then seek financing from the new China-led multilateral development banks (MDBs).      

IMF Press Briefing on Asia-Pacific
IMF Press Release - 10 October 2014
Extract: "Myanmar is the one country that at this moment our Asian Pacific Department is very heavily engaged and with very close collaboration. So we actually are working very closely with the government. Regarding your question about foreign bank cooperation we are advising them that before the enactment of the foreign bank operation law and before the system is built, we are recommending them to review and allow them to start their operations. So even though the many, you know, the nine foreign banks got their license, probably it will take a little more time for Myanmar to prepare their system and then start operations."

On September 24, 2014, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Myanmar.

Growth is accelerating and the external balance remains stable. Output growth is estimated to have risen to 8¼ percent in fiscal year (FY) 2013/14 (April-March). Inflation has broadly stabilized, and stood at 6 percent (year-on-year) in April 2014. 

International reserves held by the Central Bank of Myanmar (CBM) increased to US$4.5 billion by end-March, covering 2¾ months of prospective imports. While the base remains low, broad money and private sector credit continue to grow rapidly, at 32¼ and 58½ percent (y/y), respectively in February. The headline fiscal deficit in 2013/14 is estimated at 1½ percent of GDP. A debt sustainability analysis indicates that Myanmar is now at a low risk of debt distress.

The economic outlook is favorable. Growth is expected to average 8¼ percent in the next few years, led by rising gas production and investment. Inflation is expected to remain under control at around 6 percent over the medium term. The current account deficit is projected to remain broadly stable, while the CBM’s international reserves are forecast to continue to increase rapidly as foreign inflows intensify. 

Medium and long-term prospects remain strong, but require sustained policy and institutional reforms even as the authorities’ capacity is being strained. 

ADB predicts GDP to grow to 9.5% by 2030
Global Post/Xin Hua - 12 September 2014
The Asian Development Bank (ADB) has predicted that Myanmar will see annual average gross domestic growth (GDP) as high as 9.5 percent by 2030, according to a new report of the regional institution available here Friday.

The country will reach a per capita income of nearly 5,000 U.S. dollars by 2030 from about 900 U.S. dollars now.

However, the forecast growth calls for full realization of the country's economic potential and the need to ensure infrastructural development and investment in human capital and education, stressed Cyn-Young Park, ADB assistant chief economist, in the bank's launch of its new report on Myanmar's growth prospects.

"Myanmar must upgrade its infrastructure and improve the quality of human capital to achieve sustainable economic growth and reap the full benefit from its ambitious reform agenda," the report said.

Myanmar: Between economic miracle and myth
Stuart Paul Larkin: ISEAS Perspective - 11 July 2014
The writer, who is a Visiting Fellow at ISEAS in Singapore, points out that U Thein Sein’s government and international donor agencies are optimis­tic that Myanmar can become a middle-income nation and significantly increase its per capita income by 2030 if political reforms and current growth rates of around 8 per cent are maintained.

However, foreign investments into resource enclaves and the recycling of “resource rents” earned by government elites into the country’s real es­tate and consumer imports boom may undermine its economic potential and perpetuate a “resource curse”. For growth to be inclusive and sustainable, the economy requires struc­tural change to accommodate labour-intensive manufacturing-exports platforms. A currency devaluation is necessary to promote competitive­ness, along with infrastructure development. Continue reading…..

Statement by the IMF Mission to Myanmar
IMF Press Release - 17 June 2014
An International Monetary Fund (IMF) team led by Mr. Matt Davies visited Myanmar during June 4–17 to hold the 2014 Article IV Consultation discussions with the authorities. Davies said that: “The economic outlook is favorable. Real GDP growth is expected to accelerate slightly to 8½ percent in fiscal year (FY) 2014/15 (year ending March) from 8¼ percent in FY 2013/14, led by rising gas production and investment. Inflation is expected to remain contained at around 6½ percent (y/y) in FY2014/15 while increasing capital inflows outweigh a widening external current account deficit. Broad money and credit to the economy will continue to expand at double-digit rates. There are, however risks to the outlook. Continue reading.....

IMF Completes Review of Staff-Monitored Program
IMF Press Release - 28 March 2014
Myanmar is undergoing a far-reaching economic transition. Key recent economic reforms include adopting a floating exchange rate and removing exchange restrictions; establishing an autonomous central bank; and significantly increasing spending on health and education.

The current economic outlook is favorable. Real GDP growth in fiscal year (FY) 2012/13 (year ending in March) reached 7.3 percent, led by services, and is expected to rise further to 7½ percent in FY2013/14 and 7¾ percent in 2014/15. Growth of credit to the private sector is projected to moderate from current high levels but remain rapid at around 30 percent. The fiscal deficit in FY2013/14 is expected to be broadly in line with the budget target of 5 percent of GDP, but should fall to 4½ percent in FY2014/15, as a result of one-off revenues from telecommunications licenses.

However, inflation is expected to exceed 6 percent by end FY2013/14 and remain elevated in FY2014/15. The external current account deficit is projected to widen further to about 5 percent of GDP in this period. As a result, the Central Bank of Myanmar (CBM)’s accumulation of international reserves during FY2013/14 has been slower than projected, but should pick up in FY2014/15 as foreign direct investment and other inflows outweigh the current account deficit.

EIA: Most Myanmar log exports illegal
Associated Press - 25 March 2014
The Environmental Investigation Agency (EIA) has said that an analysis of international trade statistics shows that global buyers reported importing 22.8 million cubic meters of logs from Myanmar in 2000 to 2013 - 16.4 million cubic meters more than was listed in the government's own export figures. This suggests that 72 percent of the log shipments were illicit, the London and Washington-based group said.

The report noted, however, that "Myanmar's government has claimed that most illegal logging and timber smuggling occurs in areas controlled by ethnic groups, particularly in Kachin State bordering China's Yunnan province, a major recipient of illegal timber. SThe imposition of a log export ban in Myanmar from April 1, 2014, indicates that the government is now attempting to stop the flow of logs from the country," the EIA said. "This is a long overdue acknowledgment that Myanmar's forests have been systematically looted during the past 15 years. Reform of the timber sector is urgently needed to counter the pervasive corruption and secrecy which continue to threaten Myanmar's dwindling forests."

World Bank Group to invest US$ 2 billion to support reforms
Press Statement by the World Bank - Yangon 26 January 2014
On his first visit to Myanmar, President Jim Yong Kim today announced World Bank Group plans for a US$2 billion multi-year development program. It will include projects that dramatically improve access to energy and health care for poor people and support other key government development priorities.

The World Bank Group will harness expertise and resources from IDA, IFC and MIGA to support the government’s multi-year investment program. This will include US$1 billion in Bank Group financial support to expand electricity generation, transmission and distribution. Over 70 percent of Myanmar’s people do not have access to reliable electricity.

Kim said the investment will include US$200 million in IDA funding to help Myanmar achieve universal health coverage by 2030. Together with financing previously committed by other international development partners, the IDA financing will help Myanmar scale up access to quality, essential health services for women and children through results-based financing, and remove out-of-pocket payments as a barrier to health care for the poorest people.

Statement by recent IMF mission to  Myanmar
IMF Press Release - 21 January 2014
An International Monetary Fund (IMF) team led by Mr. Matt Davies visited Myanmar during January 9–21, 2014 for the second and final review of the Staff- Monitored Program (SMP) for 2013

In the view of the mission: "The current economic outlook is favorable. Real GDP growth in fiscal year (FY) 2012/13 (year ending March) reached 7.3 percent, led by services and manufacturing. We expect it to rise further to 7½ percent in FY2013/14 and 7¾ percent in 2014/15. Credit to the private sector is expected to decline from current high levels but remain rapid at around 30 percent. The fiscal deficit in FY2013/14 is expected to be broadly in line with the budget target of 5 percent of GDP, but should fall to 4½ percent in FY2014/15, as a result of one-off revenues from telecommunications licenses.

“However, inflation is expected to exceed 6 percent by end FY2013/14 and remain elevated in FY2014/15. Also, the external current account deficit in is expected to widen further to about 5 percent of GDP in this period. As a result, the government’s accumulation of international reserves during FY2013/14 was slower than projected. Overall reserves still remain above 3 months of imports and accumulation should pick up in FY2014/15 as foreign direct investment and other inflows outweigh the current account deficit.


Preparation of Union Budget Bill 2014-2015

Derek Tonkin writes: Details have started to emerge of the Union Budget for FY 2014-2015. The National Plan targets a growth of 3.9% in the agricultural, 10.4% in the industrial and 12.4% in the services sectors. The education budget is increased to 5.92% from 5.43% and the health budget to 3.38% from 3.15%. The grow of major regions is set at 9.3 percent for Yangon, 12. 4 percent for Mandalay and 28.2 percent for Nay Pyi Taw. The main defence budget is set at 12.26%, but this does not include the Special Fund.

The President has stressed the need to attract foreign investment to develop technology and human resources, and to double domestic production in seven sectors in order to reach an 8% increase in GDP. The seven sectors are cited as industry, agriculture, infrastructure, energy, mining, tourism, finance and communications.

For comparison

Network Myanmar understands that English versions of these laws are published as an Annex to the The New Light of Myanmar, but these Annexes are not available on the Internet.

World Bank revises GDP growth to 6.8% on strong outlook
The Myanmar Times - 7 October 2013
The World Bank has revised its 2013 economic forecast for Myanmar up to 6.8% from 6.5% following better than expected results in gas production, services and construction. 

Myanmar has benefited from gas exports that reached a record-setting US$4 billion in the 2012/13 fiscal year, surpassing $3.5 billion last year, according to Bank’s East Asia and Pacific Economic Update. Foreign direct investment this year has also risen sharply from 3.7pc to 5.2pc in the same period. “Gas production is expected to increase significantly, with new fields coming on stream in 2013/14, while many development partners, including the World Bank, are likely to ramp up their support to Myanmar,” the report states.

It also said that exports would improve with Myanmar’s recent reinstatement into the EU’s Generalized System for Preferences for least-developed countries, which will give it duty free access to the lucrative EU market for most goods. Continue reading.....

 Government denies reports that US$11 billion held in Singapore banks
The Irrawaddy - 13 September 2013
The Myanmar Government has denied reports from the Washington-based Banking Information Center that it holds up to US$ 11 billion in foreign exchange reserves in a small number of accounts in Singapore. Asia Program Manager Jetson Garcia had claimed that his information came from World Bank, IMF and ADB officials who allegedly added that: "They did not give the exact worth  and specific banks as they themselves did not know that much." Continue reading......  

Derek Tonkin writes: The 2013 IMF Article IV Consultation Report released in August 2013 estimates projected Official Reserves mainly in State Banks at US$ 5.537 billion, while the Central Bank of Myanmar holds another estimated US$ 4.261 billion, giving a  total of US$ 9.798 billion. The Report adds that: "All reserves held by State Banks are projected to  be transferred to the Central Bank of Myanmar by 2014/2015".  

"Up to US$ 11 billion" is accordingly not far off what is already public knowledge. It is however highly unlikely, indeed scarcely credible that these reserves would all be kept in a handful of accounts in a single country, Singapore. Indeed, the article quotes the activist organisation Earth Rights International (ERI) as saying that funds held in Singapore had been moved out of Singapore some four years ago and that they had since "lost track of these funds". 

Data quoted in the article is generally highly speculative, even illusory. The World Bank has issued a statement distancing itself from Garcia. Nay Pyi Taw (U Ye Htut, Deputy Minister of Information) has refuted the allegations.