{
  "title": "Public Information Notice: IMF Executive Board Concludes 2011 Article IV Consultation with Myanmar",
  "publication": "IMF News, May 7, 2012",
  "sourceUrl": "https://www.imf.org/en/news/articles/2015/09/28/04/53/pn1244",
  "canonical": "https://www.imf.org/en/news/articles/2015/09/28/04/53/pn1244",
  "overlayPath": "/en/news/articles/2015/09/28/04/53/pn1244/index.md",
  "summary": "Each Public Information Notice contains a background section, a table of selected economic indicators, and an Executive Board assessment.",
  "publishDate": "2012-05-07",
  "sections": [
    {
      "heading": "Background and Growth Outlook",
      "content": "- Real GDP growth is estimated to have increased to 5.3 percent in FY2010/11 (April-March).\n- Growth projections:\n  - FY2011/12: 5½ percent.\n  - FY2012/13: 6 percent.\n- Inflation:\n  - CPI at 6.4 percent (year-on-year) in October 2011.\n  - Projected to decline to 4.2 percent in FY2011/12 from 8.9 percent in FY2010/11.\n  - Projected to pick up to 5.8 percent in FY2012/13 as recent drop in food prices phases out.\n- Parallel market exchange rate: kyat appreciated by 29 percent in nominal effective terms since end-FY2009/10, driven primarily by large inflows and constrained private imports under an ‘export-first’ policy."
    },
    {
      "heading": "Risks and Reform Scenarios",
      "content": "- Downside risks:\n  - Drop in regional demand could negatively affect exports.\n  - Sustained appreciation of the currency could erode external competitiveness and constrain household incomes.\n- Upside opportunities:\n  - Easing of FDI restrictions on private land use and profit repatriation.\n  - Further increase in credit.\n  - Continued progress toward exchange rate unification.\n- Authorities’ planned exchange rate reform:\n  - Move to adopt a managed float as new exchange rate regime and end the official peg to the SDR used in public sector operations since 1977.\n  - Steps to establish market infrastructure: interbank market and foreign currency operations at the Central Bank of Myanmar (CBM).\n  - Temporary measures to address appreciation pressures: allow foreign currency purchases for car imports under a special program, health and travel expenses abroad; temporarily reduced taxes on key agricultural exports."
    },
    {
      "heading": "Fiscal Policy and Public Finance",
      "content": "- Consolidated nonfinancial public sector deficit projections:\n  - Decline from 5½ percent of GDP in FY2011/12 to 4.6 percent of GDP in FY2012/13.\n  - Primary reason: higher net transfers from state economic enterprises (SEEs), primarily from gas exports, with the budget applying market-based exchange rates for SEEs’ exports and imports for the first time.\n- Social spending:\n  - Spending on education and health expected to increase to 7½ percent of total expenditures, up from 5.4 percent.\n- Monetary-fiscal interaction:\n  - CBM cut administratively-set interest rates by a cumulative four percentage points since September 2011.\n  - Revised fixed interest rate structure to incentivize banks to hold treasury bonds.\n  - Deficit monetization projected to decline to about half of the fiscal deficit in FY2011/12."
    },
    {
      "heading": "External Position and Balance of Payments",
      "content": "- Current account:\n  - Projected current account deficit to widen to 2.7 percent of GDP in FY2011/12 from 0.8 percent of GDP in FY2010/11 due to import growth linked to large FDI energy projects.\n- Reserves:\n  - Gross official reserves rose to US$7.1 billion in September 2011.\n  - Expected to remain about 9.4 months of imports in FY2011/12.\n- External debt and arrears:\n  - External debt and arrears are material considerations for policy."
    },
    {
      "heading": "Financial Sector and Structural Reforms",
      "content": "- Financial intermediation:\n  - Formal financial intermediation remains repressed by pervasive controls on banks.\n  - Recent relaxations: deposit-taking requirements, expanded administratively-set collateral list, eased branch network controls, some flexibility in deposit rates.\n  - Result: private sector credit growth has accelerated from a very low base.\n- Other measures:\n  - Harvest loans to farmers doubled.\n  - FDI rules relaxed.\n  - Imports of gasoline and palm oil liberalized.\n- Policy priorities:\n  - Modernizing the financial system and liberalizing bank operations and interest rates.\n  - Strengthening supervision and regulation to accompany financial reforms.\n  - Strengthening the statistical base and public financial management."
    },
    {
      "heading": "Executive Board Assessment and Recommendations",
      "content": "- Overall view:\n  - Directors noted Myanmar's considerable economic potential and welcomed the authorities’ reform commitments.\n  - Emphasized that improved policy frameworks and careful sequencing are key to reform success.\n- Exchange rate reform:\n  - Reforming the exchange rate system is the top priority; adoption of a managed float is the first step.\n  - Urgent need to establish market infrastructure and move away from inefficient allocation of foreign exchange.\n  - Encouraged removal of remaining exchange restrictions and elimination of multiple currency practices as soon as circumstances permit.\n- Monetary policy and central bank:\n  - Current stance of monetary policy viewed as broadly appropriate.\n  - Welcomed plans to grant the CBM operational autonomy to pursue domestic price stability and recommended transfer of all central banking functions to it.\n  - Encouraged expansion of retail sales of government securities and lifting restrictions on holdings by state-owned financial institutions, pending treasury bond auctions.\n- Fiscal policy:\n  - Welcomed plans to reduce the fiscal deficit while increasing social spending.\n  - Agreed that a broadly balanced budget for the central government is an appropriate medium-term target.\n  - Noted that growing natural resource revenues and improved tax structures will help finance social spending and infrastructure.\n  - Called for strengthened public financial management to support monetary reorientation and minimize fiscal risks, including those from fiscal decentralization and the managed float.\n  - Encouraged efforts to reconcile external arrears with all creditors to eventually clear arrears.\n- Structural and institutional reforms:\n  - Stressed need for structural reforms to remove barriers to trade and foreign investment, enhance the business climate, and improve agricultural productivity.\n  - Welcomed increased IFI and donor technical assistance and stressed coordination among providers to avoid duplication."
    },
    {
      "heading": "Selected Economic Indicators (highlights from table)",
      "content": "- GDP (2010/11): US$45.4 billion.\n- Population (2007/08): 57.5 million.\n- Quota: SDR 258.4 million.\n- Real GDP (annual percent change), staff working estimates and projections:\n  - 2007/08: 12.0\n  - 2008/09: 10.3\n  - 2009/10: 10.6\n  - 2010/11: 10.4\n  - Staff working estimates: 5.5 (2007/08), 3.6 (2008/09), 5.1 (2009/10), 5.3 (2010/11), 6.0 (2012/13 projection)\n- Agriculture (annual percent change) 4/: 8.0 (2007/08), 3.4 (2008/09), 4.7 (2009/10), 4.4 (2010/11), 4.5 (2011/12)\n- Inflation (period average): 32.9 (2007/08), 22.5 (2008/09), 8.2 (2009/10), 4.2 (2010/11), 5.8 (2011/12)\n- Public finance (in percent of GDP) 5/:\n  - Total revenue (including grants): 14.1 (2007/08), 13.1 (2008/09), 12.1 (2009/10), 11.9 (2010/11), 11.4 (2011/12), 21.6 (2012/13)\n  - Total expenditure: 17.9 (2007/08), 15.5 (2008/09), 16.9 (2009/10), 26.1 (2010/11)\n  - Overall balance: -3.8 (2007/08), -2.4 (2008/09), -4.8 (2009/10), -6.0 (2010/11), -5.5 (2011/12), -4.6 (2012/13)\n- Money and credit (annual percent change):\n  - Broad money: 21.0 (2007/08), 23.4 (2008/09), 34.8 (2009/10), 36.3 (2010/11), 33.3 (2011/12), 24.6 (2012/13)\n  - Domestic credit: 22.1 (2007/08), 24.0 (2008/09), 34.4 (2009/10), 32.5 (2010/11), 26.8 (2011/12)\n- Balance of payments (in million of dollars):\n  - Trade balance: 924 (2007/08), 302 (2008/09), 72 (2009/10), 799 (2010/11), -238 (2011/12), -1,779 (2012/13)\n  - Exports: 6,446 (2007/08), 7,241 (2008/09), 7,139 (2009/10), 8,980 (2010/11), 9,889 (2011/12), 10,491 (2012/13)\n  - Imports: -5,522 (2007/08), -6,938 (2008/09), -7,067 (2009/10), -8,181 (2010/11), -10,127 (2011/12), -12,270 (2012/13)\n  - Current account balance (excluding grants): 89 (2007/08), -920 (2008/09), -947 (2009/10), -365 (2010/11), -1,385 (2011/12), -2,379 (2012/13)\n  - Gross official reserves: 3,054 (2007/08), 3,629 (2008/09), 4,638 (2009/10), 6,070 (2010/11), 7,903 (2011/12)\n  - Reserves in months of total imports: 6.6 (2007/08), 6.3 (2008/09), 7.9 (2009/10), 9.4 (2010/11), 9.7 (2011/12)\n- External debt (in million of dollars):\n  - Total external debt (including arrears): 8,082 (2007/08), 9,101 (2008/09), 9,970 (2009/10), 11,240 (2010/11), 11,841 (2011/12), 12,419 (2012/13)\n  - (In percent of GDP) 2/: 40.0 (2007/08), 29.0 (2008/09), 28.3 (2009/10), 24.8 (2010/11), 22.8 (2011/12)\n  - External debt arrears: 3,858 (2007/08), 4,359 (2008/09), 4,781 (2009/10), 5,405 (2010/11), 5,510 (2011/12), 5,654 (2012/13)\n- Memorandum items:\n  - Official exchange rate (kyat per U.S. dollar): 5.2 (2007/08), 5.7 (2008/09)\n  - FEC (parallel) rate (kyat per U.S. dollar) 6/: 1,110 (2007/08), 992 (2008/09), 1,004 (2009/10), 861 (2010/11), 810 (2011/12)\n  - GDP in billions of kyats: 23,336 (2007/08), 28,778 (2008/09), 32,351 (2009/10), 36,436 (2010/11), 39,805 (2011/12), 44,621 (2012/13)\n  - GDP in millions of U.S. dollars 2/: 20,182 (2007/08), 31,367 (2008/09), 35,225 (2009/10), 45,380 (2010/11), 51,925 (2011/12), 54,416 (2012/13)\n\nPublic Information Notice (PIN) No. 12/44 — Executive Board conclusion on the 2011 Article IV consultation with Myanmar (concluded March 19, 2012).\n\n---\n\n Content in this bundle\n\n- Country Report (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\n References\n\n- Myanmar and the IMF\n- Public Information Notices\n- Adobe Acrobat Reader\n- http://www.imf.org/external/np/sec/misc/qualifiers.htm\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2015/09/28/04/53/pn1244"
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    "Published: May 7, 2012",
    "Real GDP growth is estimated to have increased to 5.3 percent in FY2010/11 (April-March).",
    "Growth projections:",
    "Inflation:",
    "Parallel market exchange rate: kyat appreciated by 29 percent in nominal effective terms since end-FY2009/10, driven primarily by large inflows and constrained private imports under an ‘export-first’ policy.",
    "Downside risks:",
    "Upside opportunities:",
    "Authorities’ planned exchange rate reform:",
    "Consolidated nonfinancial public sector deficit projections:",
    "Social spending:",
    "Monetary-fiscal interaction:",
    "Current account:",
    "Reserves:",
    "External debt and arrears:",
    "Financial intermediation:",
    "Other measures:",
    "Policy priorities:",
    "Overall view:",
    "Exchange rate reform:",
    "Monetary policy and central bank:",
    "Fiscal policy:",
    "Structural and institutional reforms:",
    "GDP (2010/11): US$45.4 billion.",
    "Population (2007/08): 57.5 million.",
    "Quota: SDR 258.4 million.",
    "Real GDP (annual percent change), staff working estimates and projections:",
    "Agriculture (annual percent change) 4/: 8.0 (2007/08), 3.4 (2008/09), 4.7 (2009/10), 4.4 (2010/11), 4.5 (2011/12)",
    "Inflation (period average): 32.9 (2007/08), 22.5 (2008/09), 8.2 (2009/10), 4.2 (2010/11), 5.8 (2011/12)",
    "Public finance (in percent of GDP) 5/:",
    "Money and credit (annual percent change):",
    "Balance of payments (in million of dollars):",
    "External debt (in million of dollars):",
    "Memorandum items:",
    "[Country Report (PDF)](/external/pubs/ft/scr/2012/cr12104.pdf){rel=\"external\" type=\"application/pdf\"}",
    "[Myanmar and the IMF](http://www.imf.org/external/country/MMR/index.htm)",
    "[Public Information Notices](https://www.imf.org/en/news/searchnews)",
    "[Adobe Acrobat Reader](https://www.imf.org/adobe)",
    "[http://www.imf.org/external/np/sec/misc/qualifiers.htm](https://www.imf.org/external/np/sec/misc/qualifiers.htm)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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