Thursday, 3 April 2014

IMF urges Myanmar to focus on reserve savings

The International Monetary Fund (IMF) is urging the Central Bank of Myanmar to focus on increasing reserve money rather than currency exchange.

In a recent report, the IMF sees Myanmar’s balance of payments as stabilising but financial management still seems weak which could create more inflation.

External income will be increased within three to nine months with more foreign investment entering the country and this could boost the nation’s reserve money.

“The fiscal deficit in 2013-14 is expected to be broadly in line with the budget target of 5 percent of GDP, but should fall to 4.5 percent in 2014-15 as a result of one-off revenues from telecommunications licenses,” the IMF reported.

They went on to warn about the pressures from rapid money and credit growth, kyat depreciation and possible electricity price hikes. International reserves are still low and vulnerable to shocks.

“Treasury bonds were sold whenever the government was in budget deficit or they would print more currency notes. The reserve money that Central Bank of Myanmar has is part of the government and the private sector,” an economist said.

As of October 29 last year, 7.15 tonnes of gold and a total of US$ 8.13 billion in reserve money have been deposited to the Central Bank of Myanmar. Foreign expenses are being managed jointly by the central bank and state-owned banks which have links with foreign accounts.

The IMF expects Myanmar’s GDP to grow to 7.75 percent in the new 2014-15 fiscal year.

source: Eleven Myanmar
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