## IMF Executive Board Approves a SDR 258.4 Million Disbursement under the Rapid Credit Facility and Purchase under the Rapid Financing Instrument to Myanmar to Address the COVID-19 Pandemic

_IMF News, January 13, 2021_

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## Bibliographic details
- Published: January 13, 2021

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### Approval and Financial Details
- The Executive Board approved:
  - a disbursement of SDR 86.1 million (16.67 percent of quota) under the Rapid Credit Facility (RCF).
  - a purchase of SDR 172.3 million (33.33 percent of quota) under the Rapid Financing Instrument (RFI).
- The IMF described this as the second emergency financial assistance under the RFI/RCF for Myanmar since the outbreak of the pandemic.
- The IMF stated the assistance is equivalent to about US$350 million for this round.
- Earlier disbursement: on June 26, 2020, the IMF Executive Board approved a disbursement of US$ 356.5 million.
- The combined IMF financial assistance provided to Myanmar to address the COVID-19 pandemic was reported as about US$ 700 million after this approval.

### Purpose and Intended Use
- The financing aims to:
  - meet urgent balance-of-payments needs arising from the COVID-19 pandemic.
  - support the government’s recovery measures to ensure macroeconomic and financial stability while supporting affected sectors and vulnerable groups.
  - catalyze additional support from the international community.
- The IMF emergency assistance, together with additional external support and the Debt Service Suspension Initiative, would:
  - cover higher social spending needs under continued strains on revenues.
  - mitigate the risk of excessive monetary financing.

### Economic Impact and Projections
- The IMF reported that Myanmar’s economy was hit hard by the second wave of the COVID-19 pandemic, inflicting large economic and social costs and straining the healthcare system.
- Growth projections reported:
  - Economic growth is projected at 3.2 percent for FY2019/20 (starting October 1), a sharp decline from 6.8 percent in FY2018/19.
  - For FY2020/21, growth is expected to fall to 0.5 percent.
  - Growth is expected to rebound to 7.9 percent in FY2021/22 reflecting the gradual recovery and strong base effects.
- The IMF warned of:
  - disproportionate effects on lower income groups, SMEs, and those in conflict regions.
  - permanent losses in medium-term output, raising concerns of increased poverty.

### Government Response: CERP and MERRP
- The government is formulating the Myanmar Economic Resilience and Reform Plan (MERRP).
- The MERRP:
  - builds on last April’s emergency relief measures under the COVID-19 Economic Relief Plan (CERP).
  - extends relief measures and adds macroeconomic and financial stability measures to guide the recovery.
  - prioritizes increasing healthcare spending, tax relief measures, and transfers to vulnerable households.
  - emphasizes equitable extension of programs across the country, including in conflict regions and ethnic minorities.
- The IMF noted the authorities’ progress in enhancing spending transparency and their commitment to further enhance governance, transparency, and accountability to ensure appropriate use of this emergency financing.

### Recommendations and Observations from the Acting Chair (Mr. Mitsuhiro Furusawa)
- Observations:
  - Myanmar’s economy suffered from a second COVID-19 wave, resulting in extensive lockdowns, declines in tourism, and supply chain disruptions.
  - The accommodative monetary policy stance is appropriate and the Kyat is adjusting flexibly, with limited rules-based interventions managing excessive short-term volatility.
- Recommendations and suggested actions:
  - Once conditions allow, focus on enhancing the effectiveness of the monetary policy framework and further building external buffers.
  - Further strengthen banking sector stability to underpin the recovery:
    - monitor non-performing loans (NPLs).
    - accelerate preparation of contingency plans to better manage banking sector stresses, should they materialize.
    - conduct targeted asset quality reviews of systemically important banks, followed by a comprehensive strategy for NPL resolution and bank recapitalization.
  - Address remaining gaps in the AML/CFT framework.
  - Continue leveraging capacity development and technical assistance from the Fund and other development partners to further reforms.

### Additional Information
- The press release noted links for more information:
  - IMF Lending Tracker for emergency financing requests.
  - Calendar of the IMF Executive Board meetings.

*IMF Press Release No. 21/9, January 13, 2021 — IMF Communications Department*

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## References

- [https://www.imf.org/-/media/images/imf/bios/imfboard.jpg](https://www.imf.org/-/media/images/imf/bios/imfboard.jpg)
- [The Executive Board](https://www.imf.org/external/np/sec/memdir/eds.aspx)
- [Myanmar and the IMF](http://www.imf.org/external/country/MMR/index.htm)
- [Special Drawing Rights (SDRs) -- A Factsheet](https://www.imf.org/en/about/factsheets/sheets/2023/special-drawing-rights-sdr)
- [Press Releases](https://www.imf.org/en/news/searchnews)
- [PRESS CENTER](http://presscenter.imf.org/)
- [IMF Press Release No. 20/247](https://www.imf.org/en/News/Articles/2020/06/26/pr20247-myanmar-imf-executive-board-approves-a-us-356-5m-disbursement-address-covid19)
- [https://www.imf.org/en/Topics/imf-andcovid19/Policy-Responses-to-COVID-19](https://www.imf.org/en/Topics/imf-andcovid19/Policy-Responses-to-COVID-19)
- [https://www.imf.org/external/NP/SEC/bc/eng/index.aspx](https://www.imf.org/external/NP/SEC/bc/eng/index.aspx)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2021/01/13/pr219-myanmar-imf-execboardapproves-sdr258-4m-disburse-under-rcf-purchase-rfi-address-covid19_