IMF says Myanmar should ensure level playing field for private banks
An IMF mission visited Myanmar during November 5–22, 2012, to hold discussions on macroeconomic policies that could support the authorities’ ambitious reform program over the next year. The IMF mission met with U Win Shein, Union Minister of Finance and Revenue; Central Bank of Myanmar Governor U Than Nyein; and other senior officials. The mission also briefed parliamentarians and had discussions with representatives of the private sector and donors.
IMF Mission Chief Meral Karasulu at the conclusion of the mission said Myanmar has embarked on a historic set of reforms to modernize and open up its economy. Managed well, these reforms will facilitate strong and inclusive growth that reduces poverty.
The government has made rapid strides over the last two years. The exchange rate regime has been changed from a peg to a managed float. The financial sector is being gradually modernized, starting with partial deposit rate liberalization and the relaxing of some restrictions on private banks. These reforms are already bearing fruit. Growth is expected to accelerate to around 6¼ percent in FY2012/13, bolstered by foreign investment in natural resources and exports of commodities. Inflation has declined rapidly and should remain moderate at around 6 percent next year. Meanwhile, the exchange rate has been stable in recent months, with international reserves increasing to $4 billion.
Nevertheless, the government recognizes there is still a long way to go. Myanmar remains one of the poorest countries in Asia, with economic development stymied by many distortions. On the macroeconomic front, the government’s overarching priorities are twofold: to maintain stability during the transition process, and to build the modern tools and institutions necessary to manage a rapidly changing economy. Meeting these challenges will hinge on implementing a core set of policies, as emphasized by the government’s own economic plans. Commitment to such reforms and sound economic management would also facilitate a successful resolution of arrears, which is crucial for Myanmar to re-engage with the global community.