NAY PYI TAW, November 21, 2017 – Better allocation of spending and raising revenues can help Myanmar meet urgent needs for investments in infrastructure and services without adding to the fiscal deficit and government debt, says a new joint report by the Ministry of Planning and Finance and World Bank.
According to the Myanmar Public Expenditure Review, economic shocks caused by the decline in commodity prices and exchange rate volatility of recent years, as well as Cyclone Komen in 2015, have constrained the country’s financial resources and investments, including foreign direct investment. The report outlines policy options that may improve Myanmar’s spending capacity, delivery of public services, and maintain economic growth.
“This joint report provides valuable suggestions on how the country can raise resources and use public spending to provide services and increase economic growth. The goal of improving public services for the people of Myanmar towards sustainable and inclusive growth is one that we share and are committed to achieving,” said Daw Nwe Nwe Win, Director General, Budget Department, Ministry of Planning and Finance.
The report points out that Myanmar can finance its priorities by shifting strategies to increase fiscal space for services and growth by pursuing capital spending efficiency, tax system efficiency, sound public debt management and assessing the fiscal impact of state economic enterprises.
“Government’s commitment to further fiscal reforms that raise resources and deliver public services and infrastructure for inclusive growth is as important as ever in the face of Myanmar’s development challenges. The country is tapping only a fraction of its investment and growth potential,” said Gevorg Sargsyan, World Bank Head of Operations for Myanmar, Laos and Cambodia.
The Public Expenditure Review also highlights the reliance of state economic enterprises on the Union Budget, and recommends improving tax revenue collection by rationalizing tax incentives and improving tax administration. In addition, the review highlights options to manage public debt, estimated at 33.2 percent of GDP in March 2017, to trim interest cost and risk, thereby reducing reliance on short-term Central Bank financing of the deficit.
To learn more, the Myanmar Public Expenditure Review 2017 is available here.