Tuesday, September 19, 2017

Fiscal deficit halves in 2016-17, but shortfalls in revenue and expenditure

The budget deficit for the 2016-2017 fiscal year ended March 31, 2017 was a little over half of the official target as a result of government under-spending, according to the preliminary data released to members of the parliament.

A statement presented in parliament revealed that the fiscal deficit for 2016-17 had halved. The Myanmar TimesA statement presented in parliament revealed that the fiscal deficit for 2016-17 had halved. The Myanmar Times

The data revealed an actual deficit of just K2.62 trillion compared to the official target of K4.01 trillion for the fiscal year.

This was mainly due to a shortfall in government spending, which amounted to K18.6 trillion during the period versus the target of K21.1 trillion.

However, the government only managed to collect K16.54 trillion in revenues for the year compared to its target of K17.09 trillion.

That’s a shortfall of K553 billion in revenues collected versus under-spending of K2.5 trillion during the fiscal year.

In comparison, during the 2015-2016 fiscal year under U Thein Sein’s government, total revenue collected was K16.29 trillion while total expenditure amounted to K19.33 trillion, resulting in a deficit of K3.16 trillion.

Not a good sign

While spending less than anticipated implies that the government is making progress towards reducing the fiscal deficit, U Ba Shein, the Pyithu Hluttaw chair for the Bill Committee, said “it cannot be taken as a good sign.”

“It’s not good to have big difference in either the deficit, the spending, or any of the targeted revenues,” he said, as huge differences between the government’s targeted and actual spending could have an adverse impact on Myanmar’s economic goals.

According to the data, the decline in revenue was due to lower inventory sales by the Ministry of Agriculture, Livestock and Irrigation as well as failure by the Ministry of Commerce to sell an oil mill at Kyaukse.

On the other hand, the Ministry of Office of the State Counsellor ended up spending less than expected in charges, maintenance and remittance of salaries, allowances, travel costs and other expenses. The Ministry of Foreign Affairs also spent less than projected.

Other payments that have yet to be made include payment for satellite rental by the Ministry of Transport and Communications and loan consultation fees to the World Bank for ten hydropower and dam projects by the Ministry of Agriculture, Livestock and Irrigation.

Meanwhile, the parliament report showed that just K324.85 billion in foreign loans was received during the fiscal year compared to the K646.01 billion targeted.

Among the foreign loans that have not been received are World Bank loans for micro projects, vessels and vehicles, loans for flood control projects and three bridge projects under the East West Economic Corridor Improvement Project.

Other shortfalls

The statement also showed the breakdown of the revenue and expenditure of central organisations, union ministries and other government departments which are not included in the budget, as well as state-owned enterprises (SOEs), military area municipal organisations, Nay Pyi Taw council and Nay Pyi Taw municipal committee.

The data revealed that central organisations’ expenditures were less than targeted, totaling K71.13 billion versus K92.9 billion targeted. That’s a difference of K21.83 billion. The central organisations that spent less than expected include the Union Auditor General’s Office, Department of Civil Service Selection & Training and the President’s Office.

Meanwhile, Myanmar’s seven SOEs generated less than expected, raking in total revenues of K5.91 trillion, about a third of the government’s budget, versus the target of K6.3 trillion.

Out of the seven SOEs, the Myanmar Timber Enterprise, No(1) Mining Enterprise and Myanmar Economic Bank received more money during the period. Taxes generated from the annual Gems Emporium also rose.

However, as there was a decline in debts repaid by farmers and in the sale of products by the Ministry for Industry, there were also organisations which received less revenue than expected.

The statement also showed that the Ministry of Transport and Communications and Ministry of Commerce had yet to receive the full sum of foreign aid promised while the Ministry of Electricity and Energy received less external loans during the fiscal year.