Overview

Last updated: April 2015

Myanmar is going through important political transformation in its development path - from isolation and fragmentation to openness and integration; and from pervasive state control, exclusion and individual disengagement to inclusion, participation and empowerment. This dual shift is happening against a backdrop of broader political reforms that started in 2011 when a new administration took office. These transitions have the potential to create opportunity and shared prosperity for the people of Myanmar and for the country to resume its place as one of the most dynamic economies in Asia.

As the largest country in mainland Southeast Asia, Myanmar has one of the lowest population densities in the region, with fertile lands, significant untapped agricultural potential, and a rich endowment of natural resources. Its geographic location at the intersection of China and India, two of the world’s most dynamic economies, makes it well positioned to resume its traditional role as a regional trading hub and a key supplier of minerals, natural gas, and agricultural produce.

Since 2011, the government has embarked on an ambitious economic, political and governance reform program. It has begun a series of reforms to remove economic distortions, such as floating the currency, new fiscal regulations to rationalize personal income tax and reduce consumption tax, liberalizing the telecommunications sector, reforms aimed at developing the private sector and stimulating direct foreign investments, a review of the financial sector, promotion of access to finance, and creating an environment conducive to job creation.

Myanmar continues to grow at a strong pace on the back of reforms that are gradually opening up the space for investment. The economy is estimated to grow at 8.5% in real terms in 2014/15. This is driven largely by the ongoing construction-related boom, continued rebound in manufacturing output, and the resulting expansion in the service sector. The rapid pace of change however is stretching Myanmar’s supply side capacity, which, together with currency depreciation, is contributing to inflationary pressure. Although prices stabilized in the first half of 2014, inflation rose by 2.2% in November (6.1 percent y-o-y).

Poverty in Myanmar is disproportionately concentrated in rural areas, relying on agricultural and casual employment for their living. There are also a substantial number of households living near the poverty line who are considered to be vulnerable to poverty; the welfare of these households is likely to be sensitive to economy-wide shocks. Since the majority of the poor are engaged in subsistence agriculture, the consumption patterns of these households may be shielded from recent inflationary pressures but the urban poor are likely to be highly affected by recent bouts of food price inflation.

Although growth is expected to remain relatively strong over the medium-term on the back of continued structural reforms, downside risks have also increased. If government spending growth continues along current trends, Myanmar may face fiscal sustainability challenges. This risk is heightened by recent international commodity price developments. Although the effects of these have not yet transmitted through to Myanmar, a sustained downturn in gas prices would adversely impact government revenues, export earnings, and economic growth.

Among ASEAN countries, Myanmar has the lowest life expectancy and the second-highest rate of infant and child mortality. Less than one-third of the population has access to the electricity grid, road density remains low, at 219.8 kilometers per 1,000 square kilometers of land area, and ICT connections are still underdeveloped, with mobile phone and internet penetration rates at 20% and 10% in 2010, respectively. Growth has accelerated since the transition, buoyed by improved macroeconomic management, increased gas production and exports, and stronger performance in non-gas sectors as the economy opened up.

Last updated: April 2015

In 2014, the World Bank Group (WBG) completed a Systematic Country Diagnostic (SCD) that identified development priorities to end extreme poverty and boost shared prosperity in Myanmar.  The SCD benefitted from broad consultations in Myanmar. It laid the basis for the Country Partnership Framework (CPF) that will succeed the Interim Strategy and be the first full country strategy for Myanmar since 1984.

Working closely with different stakeholders including government, civil society organizations, private sector, and development partners, the World Bank Group is finalizing the CPF with Myanmar that is expected to include support for programs aiming at reducing rural poverty (energy, agriculture and other key development priorities), expanding access to basic services in education and health, and promoting jobs creation through a dynamic private sector.

The WBG is contributing to informed debate and decision-making on development policy within a rapidly changing Myanmar by periodically bringing most recent economic data and analysis on development issues to government policy makers, think tanks, civil society and citizens. The WBG is also undertaking analytical and diagnostic works on agricultural and energy sector, poverty assessment and trade.

Since 2013, the WBG has released a number of reports, including its first Myanmar Economic Monitor which report looks at macroeconomic developments and reforms implementation, the Public Expenditure and Financial Accountability Assessment which provides a snapshot of the condition of Myanmar's public expenditure, procurement and financial accountability systems, and the Investment Climate Assessment which reviews the main bottlenecks to private investment and job creation in Myanmar.

The WBG is providing financial assistance through the following projects for Myanmar:

  • US$80 million IDA grant – the National Community Driven Development Project  is empowering rural communities in 15 townships to identify and implement investments they need most, such as roads, bridges, irrigation systems, schools, health clinics, and rural markets.
  • US$140 million IDA credit – the Myanmar Electric Power Project supports the installation of a modern, high-efficiency 106 MW electricity power plant in Mon State. With new technology, this plant will produce 250% more electricity with the same amount of gas and reduced emissions.
  • US$31.5 million IDA credit – the  Telecommunications Sector Reform Project supports increasing low cost access to mobile phones, technical assistance for the review of key telecommunication laws and to develop legal and regulatory tools in line with international best practices, and establishing priority eGovernment technological foundations (portal) and institutional capacity for Government to embark on its public sector reform program.
  • US$30 million IDA credit – the Modernization of Public Finance Management Project supports efficient, accountable and responsive delivery of public services. The Multi-Donor Trust Fund grants from the Australian government (US$8.5million) and the UK Department for International Development (UKAID) (US$16.5 million) co-finance the project, whose total cost is US$55 million.
  • US$80 million IDA credit – the Decentralizing Funding to Schools Project will help 8.2 million students in Myanmar benefit from better-financed schools and more than 100,000 poor students receive financial support to attend classes through this project. Australia is providing an additional US$20 million through the Myanmar Partnership Multi-Donor Trust Fund to improve and expand the Myanmar Government’s School Grants Program and Students Stipends Program.
  • US$100 million IDA credit - the Essential Health Services Access Project provides funding for increased and improved coverage of critical health services across Myanmar’s 330 townships. The project is expected to benefit more than 4 million pregnant women and young children and it also supports the country’s efforts to achieve universal health coverage by 2030.
  • US$100 million IDA credit- the Ayeyarwady Integrated River Basin Management Project will help put in place the institutions, tools, and information needed to implement sustainable integrated river basin management in the Ayeyarwady River.

IFC, the WBG’s member exclusively focused on private sector development, is supporting reforms and investments to help revive the private sector and to create jobs. IFC is working with the government and the private sector in developing a new investment law and other regulations that will create a level playing field for both local and foreign investors. It has supported the establishment of the Myanmar Business Forum - a public-private dialogue platform that will help facilitate the reform process. IFC is also providing financing and capacity building to local banks and financial institutions so that they can meet SME needs, such as trade finance, loans, and microfinance.  In addition, IFC is also helping the Central Bank of Myanmar improve its financial infrastructure. This will help banks serve their clients better, with diversified products and services. IFC is covering Myanmar’s infrastructure needs, with an initial focus on the power and telecommunications sectors.

Last updated: April 2015

The WBG is supporting Myanmar’s National Community-Driven Development (CDD) Project. The project is empowering villagers to choose, plan, build, and monitor small infrastructure projects that communities need most, such as bridges, roads, health clinics, and schools. It aims to reach about 3,000 villages and about 2.5 million people across Myanmar over six years.

The first cycle of the project implementation has been completed in three townships, reaching 390 villages and resulting in 357 sub-projects. The next cycle will be expanded into six additional townships, adding almost 2,000 additional villages.

In 2014, the government, the World Bank, and development partners completed the first CDD project multi-stakeholder review. This event brought together senior Myanmar government officials, local township authorities, representatives from non-governmental organizations, civil society organizations, and beneficiary communities to review implementation and identify opportunities for improvement.

In June 2014, the Ministry of Education expanded their nationwide school grants program with the support of the WBG and Australian government. As a result of the expansion, schools across the country received grants ranging from US$800 to US$1,600 a year depending on the number of primary students in the schools. The objective of this program is to improve educational outcomes through strengthening the supply of education. In addition, the Ministry of Education piloted an expanded pilot stipends program (a Conditional Cash transfer program) to support the education of poor children at risk of dropping out of school. In the 2014-15 school year, approximately 37,000 students in 8 townships received between US$6 and US$10 a month depending on their grade level. The program will expand to 12 new townships in the 2015-16 school year and include a further 20 new townships in the 2016-17 school year.


LENDING

Myanmar: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments