MPs ques­tion fi­nance min­istry over for­eign loan

The Myanmar Times - - News - SWAN YE HTUT swanye­htut@mm­ – Trans­la­tion by Zar Zar Soe and Thiri Min Htun

MPS are de­mand­ing an ex­pla­na­tion from the fi­nance min­istry as to how they will spend – and re­pay – a US$100 mil­lion World Bank loan af­ter is emerged that $60 mil­lion of the pro­posed fund­ing will be spent within the fi­nance min­istry it­self.

Pyithu Hlut­taw law­maker U Aung Hlaing Win (NLD; Min­gal­adon) said the min­istry will need to give a clear rea­son for the loan.

“Min­istries are ap­proach­ing par­lia­men­tary com­mit­tees to seek per­mis­sion to take out fur­ther enor­mous for­eign loans,” he told the Pyi­daungsu Hlut­taw on Au­gust 12.

“No coun­try in the world has de­vel­oped its econ­omy by bor­row­ing from abroad. We must re­pair our econ­omy and try to de­velop it by our­selves. The bud­get faces deficits and we have to find a way to re­pay ex­ist­ing debts. Why are we look­ing to bor­row more?”

Par­lia­men­tar­i­ans were dis­cussing a pro­posal from Pres­i­dent U Htin Kyaw to ac­cept the loan for the de­vel­op­ment of the coun­try’s mon­e­tary sec­tor.

Deputy Fi­nance Min­is­ter U Maung Maung Win told the Pyi­daungsu Hlut­taw on Au­gust 9 that the min­istry planned to spend $60 mil­lion of the $100 mil­lion loan in bud­get sup­port on the min­istry’s reg­u­lar ex­pen­di­ture, ex­pand­ing min­istry-run en­ter­prises and pay­ing staff salaries, al­lowances and pen­sions.

U Aung Hlaing Win said, “The min­istry has to pro­vide a clear ex­pla­na­tion. It said $60 mil­lion would be spent on rais­ing staff salaries, but par­lia­ment has heard no min­istry plans for rais­ing salaries. So what is the money for? It seems to be just go­ing to the Min­istry of Plan­ning and Fi­nance alone.” He added, “It’s not ap­pro­pri­ate to make our chil­dren pay off our debts.”

He said the min­istry’s pre­sen­ta­tion had in­cluded plans to use the loan to re­form state-owned banks. “I think it’s time to change the habit of seek­ing in­ter­na­tional loans and to start con­sid­er­ing re­form­ing a sec­tor which is go­ing down­hill,” he said.

“Myanma Eco­nomic Bank loses money ev­ery year. It lost K60 bil­lion last year and is ex­pected to lose an­other K75 bil­lion this year. That’s the sum ex­pected to be raised from the 5 per­cent tax on mo­bile phones. Tax rev­enue col­lected from the pub­lic is be­ing spent by a sin­gle loss-mak­ing bank,” he said.

“Even if we pro­vided fi­nan­cial and tech­ni­cal sup­port to this bank, it can’t make a profit. It doesn’t make sense to in­ject more in­vest­ment into an en­ter­prise that’s al­ready los­ing money,” he said.

Amyotha Hlut­taw MP U Than Soe (NLD; Yan­gon 4) said Myan­mar had yet to form a cen­tral or work­ing com­mit­tee to man­age for­eign fi­nan­cial aid. “If large num­bers of such plans are al­lowed to pro­ceed, the state will be bur­dened with debt,” he said, adding that the state owed $9 bil­lion in for­eign loans taken out to fund 882 plans.

He said he feared the coun­try would be­come overly de­pen­dent on for­eign aid rather than de­vel­op­ing its own mar­ket econ­omy. “The coun­try needs multi­na­tional in­vest­ment, not grants and loans. Though there may be some in­crease in per­for­mance due to grants and loans, we have to be care­ful not to waste the money,” he said.

Deputy Min­is­ter U Maung Maung Win said if the govern­ment agreed to the terms, the min­istry would re­ceive $75 mil­lion and the Cen­tral Bank would re­ceive $25 mil­lion of the 38year in­ter­est-free World Bank loan.

Of the min­istry’s share, $60 mil­lion would go to­ward nor­mal budgeted ex­pen­di­tures in­clud­ing projects, staff salaries and pen­sions. The other $15 mil­lion would be spent on fi­nan­cial sec­tor de­vel­op­ment.

Of this, $7 mil­lion would go to­ward re­struc­tur­ing and re­form­ing the coun­try’s four un­com­pet­i­tive state-owned banks, $5 mil­lion would be used to de­velop legal frame­works and in­vest in IT for the mi­cro­fi­nance and in­sur­ance sec­tors, and $3 mil­lion would be spent on ca­pac­ity build­ing for min­istry staff.

The Cen­tral Bank would use its $25 mil­lion share for four projects, deputy gov­er­nor Daw Khin Saw Oo told par­lia­ment. Of this, $6 mil­lion would be used to open an ac­count­ing and fi­nance train­ing school, $2 mil­lion would be spent on IT and ca­pac­ity build­ing, $2 mil­lion on build­ing staff ca­pac­ity, and $15 mil­lion on up­grad­ing pay­ment sys­tems and fi­nan­cial in­fra­struc­ture.

Be­fore the min­istry can draw down on the $60 mil­lion ear­marked for op­er­a­tional sup­port, it would need to meet sev­eral dis­burse­ment-linked in­di­ca­tors, U Maung Maung Win said.

While the loan is in­ter­est-free, he added, the govern­ment would pay an an­nual ser­vice charge of 0.75 per­cent af­ter a six-year grace pe­riod.

The Pyi­daungsu Hlut­taw Speaker an­nounced that the govern­ment could present its ex­pla­na­tion in a fu­ture ses­sion.

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