IMF Staff Praises Myanmar’s Progress in Economic Reform

IMF News, October 28, 2016

Source details

An International Monetary Fund (IMF) staff team led by Yongzheng Yang visited Myanmar from October 14-28 to undertake the 2016 Article IV Consultation discussions.
End-of-Mission press releases convey preliminary findings after a visit to a country; the views expressed are those of IMF staff and do not necessarily represent the views of the IMF’s Executive Board.
The mission had constructive meetings with the Governor of the Central Bank of Myanmar (CBM) U Kyaw Kyaw Maung, Deputy Governors U Set Aung, Daw Khin Saw Oo, and U Soe Min, Deputy Planning and Finance Minister U Maung Maung Win, and other senior officials; the team also met parliamentarians, private sector representatives, and civil society.
It is expected that the IMF’s Executive Board will consider the 2016 Article IV consultation in January 2017.

Myanmar remains a fast-growing economy with real GDP increasing by 7.3 percent in FY2015/16 (ending March 31).
Growth softened in the first half of FY2016/17 due to:
- a correction in the real estate market,
- an adjustment in the construction sector,
- slowing demand from major trading partners,
- weak commodity prices.
With expected increases in FDI and aid inflows, growth is expected to recover in the second half of the year and the full-year growth is projected at 6.5 percent.
Inflation is projected to stay at around 9 percent on average for FY2016/17.
The external current account deficit is projected to increase to about 6.7 percent of GDP.

Authorities have made important progress since the last Article IV consultation, including:
- enactment of the Financial Institutions Law,
- passage of the Investment Law,
- continued improvements in revenue administration, including the successful introduction of income tax self-assessment at the large taxpayer office.

Persistent macroeconomic imbalances include:
- high inflation,
- a significantly increased fiscal deficit,
- a widening external current account deficit.

Safeguard macroeconomic stability by:
- bringing down inflation,
- strengthening Myanmar’s external position,
- fortifying the banking system.
Fiscal policy:
- keep the fiscal deficit in check,
- phase out central bank financing of fiscal deficits (a priority).
Monetary and exchange rate policy:
- tighten monetary conditions,
- allow the exchange rate to move more flexibly in line with market conditions.
Financial sector and public finance:
- issue prudential regulations soon,
- reform state-owned banks to reduce risks to public finance and the financial system,
- carefully phase liberalization of the financial sector to improve financial inclusion, especially for agriculture and small and medium-sized enterprises.
Revenue mobilization and public administration:
- focus on domestic revenue mobilization, including by rationalizing tax exemptions and investment incentives,
- pass the draft Tax Administration Procedure Law,
- initiate sustained public education on the importance of taxation for economic and social development.
Structural reforms:
- accelerate reforms of state economic enterprises,
- continue efforts to streamline business regulation to create an enabling environment for the private sector.

Press Release No. 16/469 — October 28, 2016 (IMF staff statement)