By Joseph Allchin
Burma’s economy expects growth rates of more than eight percent over the coming year, Finance Minister Hla Tun said in an optimistic address to the International Monetary Fund (IMF) in Washington DC.
The rise would largely be attributed to “growths in the agricultural sector and services sector”, he told the gathering, and were projected at 8.8 percent despite Burma’s ongoing currency crisis.
The IMF is expected to send a technical team to the country next month with a view to helping Burma with its “immediate needs for redesigning the prevailing exchange rate system,” which has cursed the economy for decades.
The comments made by Hla Tun were published on the website of the IMF.
Burma’s agriculture sector, which employs some 70 percent of the workforce, has however taken a big hit in recent months as exports dried up due to the nearly 25 percent appreciation of the kyat against the US dollar. This led to the dumping of agricultural commodities on the domestic market, which has reportedly pushed farmer to accrue huge debts.
But services have benefited from the strengthening of the currency, given that they cannot be traded outside the country.
Hla Tun further stated that the “policy focus of the elected government is based on the twin objectives of economic management and poverty alleviation.”
Economic management has recently seen the government reduce export taxes on key agricultural sectors in an attempt to offset the kyat’s rise and to lower slightly the country’s high interest rates. This it hopes will increase liquidity and decrease the value of the local currency.
However the finance minister only made vague reference to the country’s burgeoning debt, stating that it “has taken measures both in terms of revenue and expenditure consistent with the fiscal consolidation plans.”
This has, according to the Economist Intelligence Unit (EIU), seen the value of the government’s bonds grow by almost a third in the last financial year, although that figure was not released by the government despite Hla Tun stating that “the major thrust of these measures is to establish transparency”.
The EIU said that Burma has seen a “389% year-on-year rise in revenue from commodity, services and commercial taxes,” which formed part of a 260 percent rise in general tax revenue to some $US100 million.
No indication of where the government would consolidate spending was made – while tax revenues have risen to $US100 million, government spending on the military continues to eat up about a quarter of expenditure, costing the country some $US2 billion each year, slightly less than the country’s entire gas profits.
According to senior government adviser U Myint, the rampant corruption in tax collecting is responsible for incongruous export taxes.
U Myint has in the past questioned government growth figures, claiming in 2009 that “these growth rates have become highly politicised, and in the process, credibility and good sense have fallen by the wayside.”