The International Monetary Fund (IMF) last Wednesday outlined their outlook for this fiscal year in Myanmar, predicting economic growth but larger internal issues.
IMF country head Yongzheng Yang told reporters, “Economic growth is expected to remain strong at 8.5 percent, led by strong domestic demand,” however, conceded that the strength of the dollar and the low price of natural gas would hurt the country’s economy somewhat.
This forecast of 8.5 percent remains unchanged from the prediction made one year ago.
Yang said, “The rapid liberalisation of the financial sector should be carefully managed despite its overall benefits. These potential risks could affect the economy given weak capacity and thin policy buffers.”
Yang also noted the growing budget deficit, currently financed by the Central Bank of Myanmar, and gave suggestions for correcting this situation.
He said that there was growing transfer of money to regional governments, and that the union government should also transfer some responsibilities with this money.
Yang said that the government should minimise tax incentives for businesses to increase government income, and pointed out the suspended tax on telecom companies as an area that could be cut.
Finally, Yang said that the government needs to step up its efforts at tax collection, and provide better funding to tax collection and enforcement agencies.
Myanmar's trade deficit hit 6 percent of GDP in the 2014-2015 fiscal year, and is expected to grow further this year, and that this would accompany increased inflation.
The IMF last week concluded its meetings with leaders from the Myanmar government. Yang said that Myanmar is the world’s largest recipient of IMF support, and touted the unification of the Kyat’s exchange rate as an IMF accomplishment.