The International Monetary Fund has released its 2014 Article IV Consultation on Myanmar that contains an IMF staff report on the findings, debt sustainability analysis and a statement from the Executive Director of the lender.
This year’s report highlighted the continued growth of Myanmar and its hold on inflation, but still warned about the impact of the entry of international banks and how the Central Bank of Myanmar (CBM) must modernise its operations in order to protect the economy.
Myanmar’s GDP now sits at $56.8 billion with inflation standing at around 6 percent and the current account deficit has widened to 5.5 of GDP with the CBM’s international reserves having increased to $4.5 billion at the end of March.
Economic growth is expected to continue as outlined in the 2014/15 projections, inflation is to be contained and the debt stress is low. This is likely to have come from reforms that have triggered large investments from telecommunications and banking, the report says.
The report notes that regulation and supervision of the banking sector needs to be upgraded as foreign banks are on their way in, while policy reforms are needed to allow modern regulation regimes to be in place before they arrive.
Competent staff are needed to monitor risks and this should be extended to the state banking system, the report said.
Major concerns in the risk assessment matrix point at rising inflation, fiscal risks and the entry of foreign banks. All the factors are expected to have high impact on the economy, if not properly dealt with, IMF said.
The DC-based lender said intense technical assistance is needed to assist the government in monitoring Myanmar’s finance statistics and national accounts.
“There is no comprehensive monthly or quarterly compilation of fiscal date. Monthly cash-based budget execution data are available in local language, but are not published.
“Coverage of the growing private sector is incomplete due to a lack of comprehensive annual establishment/ enterprise economic surveys,” it said, adding that in order to produce comprehensive and accurate data the IMF must have informative and up to date statistics.
Myanmar is participating in programs that are being run by the Japanese government designed to improve finance statistics, while providing a long-term GFS advisor who will be posted in the country soon under a separate program.
Within the region Myanmar’s living standards remain amongst the lowest, putting it in between Laos PDR and Cambodia as well as social wellbeing where it ranks 149th out of 186 countries.
However, when comparing Myanmar to a group of peers that range from Mongolia, Vietnam, Papua New Guinea and Bangladesh, show that Myanmar’s inflation has declined significantly and is one of the lowest in its bracket while also holding moderate deficits.
The statement written by Abdul Ghaffour, alernative executive director and Moe Moe, senior advisor to executive director for Myanmar, noted: “Although growth outlook is favourable, the authorities are mindful of the challenges in implementing reform measures on many fronts given
the capacity of constraints. To this end, our authorities acknowledge that institutional capacity building needs to be enhanced in a speedier way to help smooth reform process to ensure current growth momentum is sustainable.”