Press Release: Statement at the Conclusion of an IMF Staff Mission to Myanmar

IMF News, November 21, 2012

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Canonical URL: Press Release: Statement at the Conclusion of an IMF Staff Mission to Myanmar

Mission dates: November 5–22, 2012.
Publication date of statement: November 21, 2012.
Objective: Hold discussions on macroeconomic policies to support the authorities’ reform program over the next year.
Outcome: Reached an understanding that could form the basis of a possible Staff-Monitored Program during January-December 2013.
Principal interlocutors: U Win Shein, Union Minister of Finance and Revenue; U Than Nyein, Central Bank of Myanmar Governor; other senior officials, parliamentarians, private sector and donor representatives.
IMF Mission Chief: Meral Karasulu.

Exchange rate regime: Changed from a peg to a managed float.
Financial sector reforms: Partial deposit rate liberalization and relaxation of some restrictions on private banks.
Parliamentary process: This year’s fiscal budget was debated in Parliament for the first time, yielding increased spending in health, education, and infrastructure.
Legislative reforms passed: Laws on land reforms, microfinance, and foreign investment.
External arrears: Discussions on clearing Myanmar’s external arrears are progressing.
Growth projection: Growth is expected to accelerate to around 6¼ percent in FY2012/13, bolstered by foreign investment in natural resources and exports of commodities.
Inflation projection: Inflation has declined rapidly and should remain moderate at around 6 percent next year.
International reserves: increasing to US$4 billion.
Poverty and development context: Myanmar remains one of the poorest countries in Asia, with economic development stymied by many distortions.

Consolidating exchange rate unification:
- Rationale: Foundational step for macroeconomic stability, and to boost competitiveness and trade.
- Measures: Bring more flows from the informal to the formal market; remove remaining exchange restrictions; ensure a level playing field for private banks.
Establishing a consistent monetary policy framework:
- Objective: Achieve low and stable inflation.
- Immediate tasks: Enable the Central Bank of Myanmar to build core central banking functions and improve capacity for monetary management.
- Supporting measures: Develop financial markets while containing risks; facilitate domestic financing of the budget deficit; modernize regulations and strengthen supervisory capacity in the near-term.
Fiscal consolidation and revenue mobilization:
- Goal: Contain fiscal deficits and stage higher and stable revenues to fund development needs.
- Planned steps: Strengthen revenue administration; simplify tax rates; broaden the tax base; improve public financial management; limit non-concessional external borrowing; develop government securities markets.

IMF role: Continue to provide technical assistance to the Myanmar government across reform areas.
Other support: Other international financial institutions and bilateral donors are supporting the authorities’ broader reform efforts.
Conditional benefits: Commitment to strong reforms and sound economic management would facilitate successful resolution of arrears, re-engagement with the global community, and ensure debt sustainability.
Development promise: With commitment to reforms, Myanmar has the potential to vastly improve living standards and emerge as Asia’s next rising star.

Appreciation: The mission thanked the authorities for excellent cooperation, frank and constructive discussions, and generous hospitality during the visit.
Note on Staff-Monitored Program: A staff-monitored program is an informal and flexible instrument for dialogue between the IMF and a member country on its economic policies; it is not accompanied by financial support from the Fund. In Myanmar’s case, it will involve joint monitoring of progress on the government’s own reform plans.

IMF Press Release No. 12/453